Unit 5 assignment 2
Introduction...................................................................................................1
Explaining the external factors that influence a selected business
considering trading internationally...............................................................1
Explaining how business support systems enable a selected business to
trade internationally.....................................................................................5
Exploring the cultural differences affecting international business.............7
Situational analysis on two countries Tesco may consider trading in...........9
How cultural differences affect international business...............................17
A country that Tesco could target for international trade, justifying my
decision....................................................................................................20
Evaluating the impact of cultural differences on international business..22
Introduction
In this report I will talk about factors that affect international businesses and I will
determine which country would be more suitable for Tesco to operate in.
Explaining the external factors that influence a selected business
considering trading internationally.
External influences
PESTLE factors that impact Tesco when trading internationally:
Political
Changes in government can impact Tesco when trading internationally as a new
government could bring in new laws and regulations which could lead to taxes
being increased and this would decrease Tesco’s revenue by taxes being high. For
example, in Brazil, the government is frequently being changed so new laws and
regulations are being introduced because of political instability and deal with issues
such as corruption which makes it impossible for Tesco to operate in Brazil as
people will also spend less money. Trade barriers can also make it more difficult for
Tesco to obtain raw materials which means that customers will pay higher prices for
lower quality products. In the US, tariffs placed by the US government on imported
products which makes it more expensive for Tesco to import products so Tesco has
,to abide by the laws and requirements that the US government imposes in order to
trade.
Economic
Stable income can allow people to spend and increases consumption which can
increase sales for Tesco however when people’s incomes are low this can lead to
fewer purchases for Tesco. The economy in Germany, for example is good and
people have a high income so Tesco adjusts their products to sell to customers in
Germany as their economy is growing at 1.80% per year which benefits Tesco. In
mexico the economy is less stable and people’s income are low which impacts
Tesco’s profit negatively as people can’t afford to buy products from Tesco.
Social
Tesco stays ahead of changing markets by being aware of lifestyle trends of
different populations in different countries when trading internationally. In Malaysia
for example the majority of people practice Islam so Tesco that they make products
that are halal to fit Muslim consumers and cater to their needs. They do this to
encourage diversity and gain a good reputation in different countries. In Japan,
Tesco has partnered with local suppliers to source traditional Japanese products like
matcha tea and sushi to suit customer preferences and by doing this their sales
have increased in 2020 by 1.2 billion.
Technological
Tesco can easily connect with customers and sell more widely because of
technology. This makes it possible for Tesco to communicates with customers
worldwide more effectively through technology to also make their brand well known
and increase sales. In China Tesco has allowed for customers to use mobile
payment systems in their stores which gives their customers an easier shopping
experience through the use of technology. In the United Kingdom Tesco has used e-
commerce so that customers can be able to search for their different ranges of
products on their websites or by using the Tesco mobile app and inserting items
into a virtual shopping cart.
Legal and regulatory
Tesco makes sure that the products they sell adhere to the safety requirements
which involves storing products properly and products being protected whilst being
transported. Tesco also has to appropriately label their products with enough detail
such as correct ingredients, allergen notices sand correct expiration dates to keep
their customers safe. In the US, Tesco has to follow rules made by the food and drug
Administration and the United States department of agriculture who set standards
to guarantee the quality and safety of food products that are sold to customers. The
United States department of agriculture are in charge of controlling meat, poultry
and eggs and the Food and Drug Administration is in charge of food labelling,
, packaging and safety regulations. This is the same in European countries such as
France where Tesco has to abide by the same rules made by the European Food
Safety Authority and receive advice and guidance on keeping food safe when
trading in European countries
Environmental and ethical factors
Tesco has to reduce the impact of their operations on the environment in order to
keep the environment safe. This includes recycling products, reducing waste,
carbon emissions, climate and the weather. Environmental: In Tesco stores and
warehouses, they have built solar panels and wind turbines to provide renewable
energy and have planned to install solar panels on 100 stores in the next 3 years in
the United Kingdom. In India, waste management is an issue and only a small
portion of their waste are managed each year. Tesco’s subsidiary who are the Tesco
Hindustan service centre are responsible for their operation in India and they have
put in place plans ways to manage waste to encourage recycling and lower the
amount of waste dumped in landfills. Ethical: Tesco make sure that all their
employees in the UK are treated fairly, work in safe working conditions and have
fair salaries. They work with labor unions solve issues received by employees as
well as improve working conditions for them. Tesco also prioritises local
employment and promote the creation of jobs in the areas where they operate
within the UK. Tesco operates in Malaysia and because Malaysia deals with ethical
issues associated with animal care, they have out in place guidelines for the
sourcing of meat and dairy products to guarantee that the animals in their supply
chain are treated properly. Tesco in Malaysia also work with animal welfare groups
to encourage ethical behaviour.
The internet is an important factor in Tesco’s international trade and has helped
the business expand and reach over 150 countries worldwide. They use social
media apps such as Instagram, Facebook, Twitter, emails and their website and
post regularly on their social media platforms to inform their consumers about new
products, updates and discounts and use email marketing. In order to increase
online viewers to their websites, Tesco uses search engines as a website that has
stronger search engine will appear more on the internet and increases Tesco’s
visibility. Tesco also uses the internet to communicate with suppliers and external
stakeholders via email as it can be expensive and time consuming to meet in
person.
Advantages
Through the use of internet Tesco can run their website which allows
customers to shop 24/7 online and have less queues in stores.
Introduction...................................................................................................1
Explaining the external factors that influence a selected business
considering trading internationally...............................................................1
Explaining how business support systems enable a selected business to
trade internationally.....................................................................................5
Exploring the cultural differences affecting international business.............7
Situational analysis on two countries Tesco may consider trading in...........9
How cultural differences affect international business...............................17
A country that Tesco could target for international trade, justifying my
decision....................................................................................................20
Evaluating the impact of cultural differences on international business..22
Introduction
In this report I will talk about factors that affect international businesses and I will
determine which country would be more suitable for Tesco to operate in.
Explaining the external factors that influence a selected business
considering trading internationally.
External influences
PESTLE factors that impact Tesco when trading internationally:
Political
Changes in government can impact Tesco when trading internationally as a new
government could bring in new laws and regulations which could lead to taxes
being increased and this would decrease Tesco’s revenue by taxes being high. For
example, in Brazil, the government is frequently being changed so new laws and
regulations are being introduced because of political instability and deal with issues
such as corruption which makes it impossible for Tesco to operate in Brazil as
people will also spend less money. Trade barriers can also make it more difficult for
Tesco to obtain raw materials which means that customers will pay higher prices for
lower quality products. In the US, tariffs placed by the US government on imported
products which makes it more expensive for Tesco to import products so Tesco has
,to abide by the laws and requirements that the US government imposes in order to
trade.
Economic
Stable income can allow people to spend and increases consumption which can
increase sales for Tesco however when people’s incomes are low this can lead to
fewer purchases for Tesco. The economy in Germany, for example is good and
people have a high income so Tesco adjusts their products to sell to customers in
Germany as their economy is growing at 1.80% per year which benefits Tesco. In
mexico the economy is less stable and people’s income are low which impacts
Tesco’s profit negatively as people can’t afford to buy products from Tesco.
Social
Tesco stays ahead of changing markets by being aware of lifestyle trends of
different populations in different countries when trading internationally. In Malaysia
for example the majority of people practice Islam so Tesco that they make products
that are halal to fit Muslim consumers and cater to their needs. They do this to
encourage diversity and gain a good reputation in different countries. In Japan,
Tesco has partnered with local suppliers to source traditional Japanese products like
matcha tea and sushi to suit customer preferences and by doing this their sales
have increased in 2020 by 1.2 billion.
Technological
Tesco can easily connect with customers and sell more widely because of
technology. This makes it possible for Tesco to communicates with customers
worldwide more effectively through technology to also make their brand well known
and increase sales. In China Tesco has allowed for customers to use mobile
payment systems in their stores which gives their customers an easier shopping
experience through the use of technology. In the United Kingdom Tesco has used e-
commerce so that customers can be able to search for their different ranges of
products on their websites or by using the Tesco mobile app and inserting items
into a virtual shopping cart.
Legal and regulatory
Tesco makes sure that the products they sell adhere to the safety requirements
which involves storing products properly and products being protected whilst being
transported. Tesco also has to appropriately label their products with enough detail
such as correct ingredients, allergen notices sand correct expiration dates to keep
their customers safe. In the US, Tesco has to follow rules made by the food and drug
Administration and the United States department of agriculture who set standards
to guarantee the quality and safety of food products that are sold to customers. The
United States department of agriculture are in charge of controlling meat, poultry
and eggs and the Food and Drug Administration is in charge of food labelling,
, packaging and safety regulations. This is the same in European countries such as
France where Tesco has to abide by the same rules made by the European Food
Safety Authority and receive advice and guidance on keeping food safe when
trading in European countries
Environmental and ethical factors
Tesco has to reduce the impact of their operations on the environment in order to
keep the environment safe. This includes recycling products, reducing waste,
carbon emissions, climate and the weather. Environmental: In Tesco stores and
warehouses, they have built solar panels and wind turbines to provide renewable
energy and have planned to install solar panels on 100 stores in the next 3 years in
the United Kingdom. In India, waste management is an issue and only a small
portion of their waste are managed each year. Tesco’s subsidiary who are the Tesco
Hindustan service centre are responsible for their operation in India and they have
put in place plans ways to manage waste to encourage recycling and lower the
amount of waste dumped in landfills. Ethical: Tesco make sure that all their
employees in the UK are treated fairly, work in safe working conditions and have
fair salaries. They work with labor unions solve issues received by employees as
well as improve working conditions for them. Tesco also prioritises local
employment and promote the creation of jobs in the areas where they operate
within the UK. Tesco operates in Malaysia and because Malaysia deals with ethical
issues associated with animal care, they have out in place guidelines for the
sourcing of meat and dairy products to guarantee that the animals in their supply
chain are treated properly. Tesco in Malaysia also work with animal welfare groups
to encourage ethical behaviour.
The internet is an important factor in Tesco’s international trade and has helped
the business expand and reach over 150 countries worldwide. They use social
media apps such as Instagram, Facebook, Twitter, emails and their website and
post regularly on their social media platforms to inform their consumers about new
products, updates and discounts and use email marketing. In order to increase
online viewers to their websites, Tesco uses search engines as a website that has
stronger search engine will appear more on the internet and increases Tesco’s
visibility. Tesco also uses the internet to communicate with suppliers and external
stakeholders via email as it can be expensive and time consuming to meet in
person.
Advantages
Through the use of internet Tesco can run their website which allows
customers to shop 24/7 online and have less queues in stores.
