EXTERNAL FACTORS AND
CULTURAL DIFFERENCES
Louie Palmer
U00056968
,Introduction
In this report I will be discussing Tesco and potential international ventures for
them. Currently, Tesco operate worldwide, however, they’re countries which
Tesco either haven’t tried to enter or have failed to enter successfully. In this
report I will be analysing two potential international ventures, and which
would be the most suitable for Tesco. The two countries I will be analysing on
their suitability for Tesco are Germany and China.
, External influences on international business
There are many external factors and influences which have an impact on an
international business such as Tesco. PESTLE is a tool which can be useful in
order to see the impact of these external influences. PESTLE stands for
Political, Social, Technological, Legal and regulatory, Environmental and ethical.
The first type of factors which in fluence international business is political.
There is a huge political influence on international business and how it is
conducted. Governments and groups such as the EU come with their own
particular viewpoints which may clash with the way a business such as Tesco
wants to operate. This also applies to China, who are a communist state. This
may also make trading more difficult and may also come with more
restrictions. Democratic countries can also come with difficulties due to their
individual viewpoints. Some governments may want to protect local
employment, therefore will be opposed to international businesses.
Furthermore, the government may use methods of protectionism for other
reasons such as protecting infant industries.
Tesco could be affected by tax policies or trade tariffs. These both would have
a similar impact on Tesco as they would both increase the businesses costs.
This is turn would make it a lot harder for Tesco to enter these new markets
with their now smaller profit margins.
Therefore, this shows that the political influences on international business
would have a negative impact on Tesco and their international business.
The next influence is economic. International businesses, such as Tesco, are
impacted by the economic condition of the country they operate in.
Inflation is the cost of living. If inflation is high, this means that prices go up.
However, if wages do not go up as well, the amount of money people have left
over will decrease. Usually, inflation would have a positive impact on Tesco.
This is because the price of their products will go up, in turn increasing
revenue. However, sometimes inflation can cause products to go down in
value. This was shown in 2015. It could be because customers won’t buy a
product or service in the hope that it will become cheaper in the future. The
uncertainty that comes with the impact of inflation is a negative for an
international business. Having economic stability would definitely make it
easier for Tesco to succeed in an international market.
Interest rates will also have an impact on Tesco’s international operations. If
they’re high interests, it is likely that people with loans and mortgages will
have less spending power. This means there may not be enough demand for
Tesco to succeed. It could also directly affect Tesco as it may mean they would
CULTURAL DIFFERENCES
Louie Palmer
U00056968
,Introduction
In this report I will be discussing Tesco and potential international ventures for
them. Currently, Tesco operate worldwide, however, they’re countries which
Tesco either haven’t tried to enter or have failed to enter successfully. In this
report I will be analysing two potential international ventures, and which
would be the most suitable for Tesco. The two countries I will be analysing on
their suitability for Tesco are Germany and China.
, External influences on international business
There are many external factors and influences which have an impact on an
international business such as Tesco. PESTLE is a tool which can be useful in
order to see the impact of these external influences. PESTLE stands for
Political, Social, Technological, Legal and regulatory, Environmental and ethical.
The first type of factors which in fluence international business is political.
There is a huge political influence on international business and how it is
conducted. Governments and groups such as the EU come with their own
particular viewpoints which may clash with the way a business such as Tesco
wants to operate. This also applies to China, who are a communist state. This
may also make trading more difficult and may also come with more
restrictions. Democratic countries can also come with difficulties due to their
individual viewpoints. Some governments may want to protect local
employment, therefore will be opposed to international businesses.
Furthermore, the government may use methods of protectionism for other
reasons such as protecting infant industries.
Tesco could be affected by tax policies or trade tariffs. These both would have
a similar impact on Tesco as they would both increase the businesses costs.
This is turn would make it a lot harder for Tesco to enter these new markets
with their now smaller profit margins.
Therefore, this shows that the political influences on international business
would have a negative impact on Tesco and their international business.
The next influence is economic. International businesses, such as Tesco, are
impacted by the economic condition of the country they operate in.
Inflation is the cost of living. If inflation is high, this means that prices go up.
However, if wages do not go up as well, the amount of money people have left
over will decrease. Usually, inflation would have a positive impact on Tesco.
This is because the price of their products will go up, in turn increasing
revenue. However, sometimes inflation can cause products to go down in
value. This was shown in 2015. It could be because customers won’t buy a
product or service in the hope that it will become cheaper in the future. The
uncertainty that comes with the impact of inflation is a negative for an
international business. Having economic stability would definitely make it
easier for Tesco to succeed in an international market.
Interest rates will also have an impact on Tesco’s international operations. If
they’re high interests, it is likely that people with loans and mortgages will
have less spending power. This means there may not be enough demand for
Tesco to succeed. It could also directly affect Tesco as it may mean they would
