BTEC level 3 Extended Diploma in Business
Unit 5 International Business.
Assignment title: External factors and cultural differences
Learning aims:
C: Investigate the external factors that influence international businesses
D: Investigate the cultural factors that influence international business
5/C. P5 Explain the external factors that influence a selected business considering trading
internationally.
External factors are situations which are not in the control of the business or the business
owner. This can have an impact on the choices the business makes as the factors are
uncontrollable. Some examples of this are Political, Economic, Social, Technological,
Environmental and Competitive. Companies can be affected in several different ways and
this could be, it affects the Economy, Legislation and Market. It is good for a business to
keep up to date with the changes and be aware of how the changes affect them. There
could be a negative impact in whereby they are unable to meet their objectives because of
the External factors.
,The business which is suitable that can consider trading internationally is Richer Sounds.
This which is a British based company. They have fifty-two stores around the U.K,
customers can also shop online. This business was once owned by a man called Julian
Richer. However, later he gave the business over to the employees who work in and for
the company.
For businesses to expand internationally, there can be many factors which come in the
way and risks that can change decisions. A business may do well in one country
internationally and not so good in another. It could be challenging to trade abroad, having
to research countries and find accurate information. If this is not done efficiently, it may
mean that there will be negative results as there needs to be a lot of trust with partners
who trade abroad in order to be successful with trading internationally. In order to have a
more depth analysis of the Environmntal factors on a business, PESTLE is good to use so
people have more knowledge about how their business is affected and look at not the
short-term impact but also the long term. By doing this, businesses are not at so much risk
as they understand the factors.
PESTLE:
Political - There can be many Political factors which affect a business that wants to trade
abroad. All countries will follow different rules and regulations. Businesses have to adapt
to each country they wish to trade in, all government and policies will not be the same so
businesses that wish to take their business abroad will have to adhere to what the policies
require. If Richer Sounds started to trade in a country such as America, this would be
easier for the U.K to have international ties with them than a country such as China.
America is a Democratic country and China is a Communist country. China is not similar
to democratic countries in whereby the third parties have the least Political influence.
Countries such as Cuba, Vietnam, Laos and China are all Communist. Businesses coming
from democratic countries into communist countries will face more barriers as there are
more restrictions with trading.
Economic – External factors have large effects on how well the business is performing.
The issues that companies face is Economic competition, Demographics and furthermore
Legal climate. If businesses want to trade abroad, need to look into the countries more
thoroughly and figure out whether the business can do well in that specific country. If the
economy is doing well, the inflation and interest rates also. Products may sell at a higher
price and that could do more harm than good for the business as it won’t do so well
, overseas, the customers may not want to buy.
Sociocultural – Society and Culture play a part in how the business is managed and how it
continues to affect multinational companies overseas. When deciding to expand in
another country, it is necessary to have in mind the values and attitudes of that country.
Some will have different values and they can clash with the employees in host countries,
which then this leads to functional problems. These factors are normally not in the control
of the managers, the company will need to foresee any problems that are beyond the
managers and their control. Culture should be understood as in one country, the
behaviour may be normalised but in another it may not. To avoid having
misunderstandings, it is better for businesses to see how culture affects international
businesses.
Technological – Technology has been part of the businesses growth as it has managed to
revolutionise how it all works. Receiving information and selling prices at lower prices has
changed how businesses work. If a business traded globally, they would use electronic
communication, it allows the companies to store their information easily, the tracking
information is done through texting and emailing. Companies can expand abroad easier;
this allows the businesses to have greater assurance with outsourcing their operations.
Companies can make calls to another country or make conference calls. The
improvement of technology shows that it has been better to expand globally.
Legal - There are Legal issues to consider when wanting to trade abroad. Such issues as,
the location of the supplier and customer differ and so this affecting which country the
regulation applies to. All payment issues should be sorted so there is no risk of the non-
payment. Looking into the choice of currency. If the business is going to be global, it
means that it’s the manager’s responsibility to protect the property for any damage or
theft.
Environmental – Many examples show how Environmental factors make a difference to a
business, these are Climate, Pollution and Weather. These are Ecological factors. If the
business wanted to expand in a country such as Dubai, it is important to know as this is a
hot country, it means for the workers that their working production will not be as high to
those in another countries.
Opportunities: Businesses that go abroad and expand their business globally will have a
rise in opportunities especially as the economy rebounding. Now Richer Solutions has
been in the U.K for many years and still growing as a company, it will benefit the company
Unit 5 International Business.
Assignment title: External factors and cultural differences
Learning aims:
C: Investigate the external factors that influence international businesses
D: Investigate the cultural factors that influence international business
5/C. P5 Explain the external factors that influence a selected business considering trading
internationally.
External factors are situations which are not in the control of the business or the business
owner. This can have an impact on the choices the business makes as the factors are
uncontrollable. Some examples of this are Political, Economic, Social, Technological,
Environmental and Competitive. Companies can be affected in several different ways and
this could be, it affects the Economy, Legislation and Market. It is good for a business to
keep up to date with the changes and be aware of how the changes affect them. There
could be a negative impact in whereby they are unable to meet their objectives because of
the External factors.
,The business which is suitable that can consider trading internationally is Richer Sounds.
This which is a British based company. They have fifty-two stores around the U.K,
customers can also shop online. This business was once owned by a man called Julian
Richer. However, later he gave the business over to the employees who work in and for
the company.
For businesses to expand internationally, there can be many factors which come in the
way and risks that can change decisions. A business may do well in one country
internationally and not so good in another. It could be challenging to trade abroad, having
to research countries and find accurate information. If this is not done efficiently, it may
mean that there will be negative results as there needs to be a lot of trust with partners
who trade abroad in order to be successful with trading internationally. In order to have a
more depth analysis of the Environmntal factors on a business, PESTLE is good to use so
people have more knowledge about how their business is affected and look at not the
short-term impact but also the long term. By doing this, businesses are not at so much risk
as they understand the factors.
PESTLE:
Political - There can be many Political factors which affect a business that wants to trade
abroad. All countries will follow different rules and regulations. Businesses have to adapt
to each country they wish to trade in, all government and policies will not be the same so
businesses that wish to take their business abroad will have to adhere to what the policies
require. If Richer Sounds started to trade in a country such as America, this would be
easier for the U.K to have international ties with them than a country such as China.
America is a Democratic country and China is a Communist country. China is not similar
to democratic countries in whereby the third parties have the least Political influence.
Countries such as Cuba, Vietnam, Laos and China are all Communist. Businesses coming
from democratic countries into communist countries will face more barriers as there are
more restrictions with trading.
Economic – External factors have large effects on how well the business is performing.
The issues that companies face is Economic competition, Demographics and furthermore
Legal climate. If businesses want to trade abroad, need to look into the countries more
thoroughly and figure out whether the business can do well in that specific country. If the
economy is doing well, the inflation and interest rates also. Products may sell at a higher
price and that could do more harm than good for the business as it won’t do so well
, overseas, the customers may not want to buy.
Sociocultural – Society and Culture play a part in how the business is managed and how it
continues to affect multinational companies overseas. When deciding to expand in
another country, it is necessary to have in mind the values and attitudes of that country.
Some will have different values and they can clash with the employees in host countries,
which then this leads to functional problems. These factors are normally not in the control
of the managers, the company will need to foresee any problems that are beyond the
managers and their control. Culture should be understood as in one country, the
behaviour may be normalised but in another it may not. To avoid having
misunderstandings, it is better for businesses to see how culture affects international
businesses.
Technological – Technology has been part of the businesses growth as it has managed to
revolutionise how it all works. Receiving information and selling prices at lower prices has
changed how businesses work. If a business traded globally, they would use electronic
communication, it allows the companies to store their information easily, the tracking
information is done through texting and emailing. Companies can expand abroad easier;
this allows the businesses to have greater assurance with outsourcing their operations.
Companies can make calls to another country or make conference calls. The
improvement of technology shows that it has been better to expand globally.
Legal - There are Legal issues to consider when wanting to trade abroad. Such issues as,
the location of the supplier and customer differ and so this affecting which country the
regulation applies to. All payment issues should be sorted so there is no risk of the non-
payment. Looking into the choice of currency. If the business is going to be global, it
means that it’s the manager’s responsibility to protect the property for any damage or
theft.
Environmental – Many examples show how Environmental factors make a difference to a
business, these are Climate, Pollution and Weather. These are Ecological factors. If the
business wanted to expand in a country such as Dubai, it is important to know as this is a
hot country, it means for the workers that their working production will not be as high to
those in another countries.
Opportunities: Businesses that go abroad and expand their business globally will have a
rise in opportunities especially as the economy rebounding. Now Richer Solutions has
been in the U.K for many years and still growing as a company, it will benefit the company
