lOMoARcPSD|3013804
Unit 5 assignment 2: International business:
Management Accounting: Costing (North Warwickshire & South
Leicestershire College)
, lOMoARcPSD|3013804
Unit 5 Assignment 2: External factors and cultural differences:
The business I have chosen to use in this report is Morrisons, my reasons for doing so is
because they are one of the largest supermarkets within the UK and operate very successfully.
However, they do not trade with any countries outside the UK, their current reasons for this is
because they wish to source and produce most of their food items locally.
P5:Explain the external factors that influence a selected business considering
trading internationally:
P- Two political reasons that Morrisons would have to consider include, trade
tariffs and tax policies. For instance, if Morrisons were to trade internationally
they would have to think about the trading tariffs as it may make the price of
their products increase, which would make existing consumers unhappy.
Especially because Morrisons tries to offer the best, lowest price to its customers.
However, by trading in other countries it will benefit them as the tariffs will
produce revenue on the goods and services that are being imported, these tariffs
can help bring in more money for the government. This is the same for tax
policies, this can either benefit the business as it will make it prosper and lead to
increased amount of trading in various other countries; or it will set Morrison’s
back, especially its employees, as it could cause them to deflate workers wages in
order to redeem a higher profit return for their items.
E- Economic reasons would be foreign exchange rates and interest rates, these
could negatively affect Morrison’s if they wished to trade internationally because
exchange rates can fluctuate it gives uncertainty to the business. It also means
that if a country has a weak exchange rate that their exports are higher, however
it makes imports of goods very expensive. As well as the disadvantages, exchange
rates can be good for correcting payment deficits as it can help restore the
competitiveness of exports. Floating exchange rates can also act as a protection
from external shocks, for example, the price of oils, therefore this should help
reduce the negative impact on external products. Secondly, interest rates can
affect trade in such ways as higher interest rates tend to attract foreign capital
which causes the exchange rate to rise which would be beneficial. However,
when the interest rates are increased, it means that borrowing money comes at a
higher price of return. This can result in the economy slowing down as businesses
will borrow less money, and they will hire less people and spend less as a
business.
Unit 5 assignment 2: International business:
Management Accounting: Costing (North Warwickshire & South
Leicestershire College)
, lOMoARcPSD|3013804
Unit 5 Assignment 2: External factors and cultural differences:
The business I have chosen to use in this report is Morrisons, my reasons for doing so is
because they are one of the largest supermarkets within the UK and operate very successfully.
However, they do not trade with any countries outside the UK, their current reasons for this is
because they wish to source and produce most of their food items locally.
P5:Explain the external factors that influence a selected business considering
trading internationally:
P- Two political reasons that Morrisons would have to consider include, trade
tariffs and tax policies. For instance, if Morrisons were to trade internationally
they would have to think about the trading tariffs as it may make the price of
their products increase, which would make existing consumers unhappy.
Especially because Morrisons tries to offer the best, lowest price to its customers.
However, by trading in other countries it will benefit them as the tariffs will
produce revenue on the goods and services that are being imported, these tariffs
can help bring in more money for the government. This is the same for tax
policies, this can either benefit the business as it will make it prosper and lead to
increased amount of trading in various other countries; or it will set Morrison’s
back, especially its employees, as it could cause them to deflate workers wages in
order to redeem a higher profit return for their items.
E- Economic reasons would be foreign exchange rates and interest rates, these
could negatively affect Morrison’s if they wished to trade internationally because
exchange rates can fluctuate it gives uncertainty to the business. It also means
that if a country has a weak exchange rate that their exports are higher, however
it makes imports of goods very expensive. As well as the disadvantages, exchange
rates can be good for correcting payment deficits as it can help restore the
competitiveness of exports. Floating exchange rates can also act as a protection
from external shocks, for example, the price of oils, therefore this should help
reduce the negative impact on external products. Secondly, interest rates can
affect trade in such ways as higher interest rates tend to attract foreign capital
which causes the exchange rate to rise which would be beneficial. However,
when the interest rates are increased, it means that borrowing money comes at a
higher price of return. This can result in the economy slowing down as businesses
will borrow less money, and they will hire less people and spend less as a
business.
