Gurkirat Singh Group C
40146526
Unit 5 International Business
P1: Explain why two businesses operate in contrasting international markets
Tesco
Tesco plc is a British multinational and merchandise retailer with
its headquarters in Hertfordshire, England. Tesco is the market
leader of groceries in the UK and is the ninth-largest in the world
measured by revenues and the largest retailer in the world.
Tesco currently operates in 13 countries, including between
Europe, the USA, and Asia.
This graph shows that Tesco
has the highest market share
in 2018.
This company was founded in 1919 by Jack Cohen as a group of market stalls in Hackney,
London. Their first shop opened in 1931 in London and it grew up very rapidly, and after 10
years there were over 100 shops across the country.
Tesco started expanding internationally in the early 1990s with around 11 countries. The
reason this company started operating in other countries is that this allows the creation of
new markets and this leads the business to increase sales and profits.
Another reason is the innovation of the business. Running the business in different countries
will help the business to get new ideas, production techniques, and new technology.
For import and export to other countries, Tesco needs proper licenses and to make the
export declaration to customs through the National Export System (NES). This is used by
exporters to declare their intention to export goods to third countries and they need to make
sure that VAT, import taxes in the destination countries are paid where necessary and this is
done to ensure that they follow transport procedures. Brexit will also have an impact on the
import and export of Tesco as they might need to pay higher taxes to travel in European
countries.
Tesco is a multinational company and there are various advantages and disadvantages of
being in the international market. According to BBC, in 2014 Tesco reported a third
consecutive quarter of falling sales as the UK's largest supermarket chain faces increasing
competition from rivals. The reason why Tesco is seeing competition from online stores is
that a minority of people prefer to go shopping in stores rather than shopping online as
,Gurkirat Singh Group C
40146526
people are used to it. The reason why they are getting competition from small stores is that
some of their products are expensive; however, they have invested in Tesco value products,
which are cheaper for consumers to purchase.
Tesco deals with developed countries such as the UK. The advantage of this is that there
are higher employment rates for people in these countries which means that it improves the
economy and there are established trading which means that they know the rules and
regulations to follow whilst trading to avoid breaking the law and getting fined.
The disadvantage is that the market is already competitive so Tesco needs to be on top of
its game to have the largest market share which means they need to sell products that are
affordable to beat the 6 big stores in the UK which are ASDA, Sainsbury, Morrison’s, Aldi,
Lidl, and Waitrose.
In new emerging countries such as Czech Republic, Hungary, Malaysia, and Poland, Tesco
provides them jobs which is a beneficial thing for these countries’ local people and
economies. An advantage of running a business in these countries that Tesco has is that
they pay a reduced amount of taxes and get a high profit, as they are helping growing up
their economy and new job opportunities.
They might offer lower wages in those countries, which means that they might get low sales
growth as people from other countries would not want to shop with them as they are not
treating their employee’s right and their employees will be less motivated to perform their job
efficiently and effectively
India and China are two large countries with a very wide population. These two are
secondary rising countries which means there will be a big growth in sales for them as there
are billions of people living there which means a high profit for businesses like Tesco,
similarly with Slovakia and Vietnam. However, Tesco needs to research those countries to
ensure they know their target markets in order to dominate the market in such countries.
Amazon
Amazon, Inc.is an American multinational technology company
based in Seattle, Washington. This company was founded in 1994
and started as an online marketplace for books. This business
started with selling books online in the USA, and over time they
grew up and expanded the business to sell electronics, software,
video games, apparel, furniture, food, toys, and jewellery worldwide.
Today this company is considered one of the most influential economic and cultural forces in
the world and is also named as the most valuable brand in the world and operates in 13
countries worldwide. Amazon dominates the US e-commerce market, and over the last few
years, the company has aggressively spread its footprint overseas.
Amazon’s marketing strategy is mainly based on technological capabilities for business
success and following a cost leadership strategy that minimizes expenditure and maximizes
profitability. The key business strategy is aimed at offering the maximum value for its
customers by offering the lowest price in the market.
, Gurkirat Singh Group C
40146526
Amazon has got an added advantage of international sites in Canada, United Kingdom,
Germany, Japan, France and China. All about what the customers have to do to browse the
site with their language is by clicking to their national site. For example, if you clink Japan,
immediately the whole website will change its descriptions and instructions into the
Japanese language. This is not at all applicable for a customer in Malaysia or any other
regions of Asia. It should expand and add more language options in its site to accumulate its
customers. Giving customers what they want is also one strategy not all online businesses
can do but if this can be proven in Amazon’s case then it has all the potential to be the one.
Amazon has all the assets and resources to proceed and build up its online strength in the
advanced world. Organizations like Amazon have contributed and built up their plan of action
with the assistance of innovation to support greater market opportunity on those nations.
Their effective business procedures, for example, innovation and advancement are
enormous lifts for the organization to the degree their organizations are in those new
business sectors with the ease technique. This method helps organizations to offer clients
low-value items and administration with the assistance of innovation and its improvements in
those nations. The biggest inconveniences for the organization to the degree their online
exchange in those nations are general sets of laws and authority.
P2: Explain the types of finance available for international business
Tesco and Amazon are both international businesses, so they need to think of different ways
to finance their business in order to develop their organisations. International businesses can
finance their business in four ways. This depends on the situation they are in and they might
decide that one method is better to finance their business than the other one based on
certain reasons. Amazon makes money through its retail, subscriptions, and web services,
among other channels. Amazon has also launched Amazon Music in 2007 and Amazon
Video in 2006 which is the best comparison of Netflix where prime members can see
movies, web series, etc.. Retail remains Amazon's primary source of revenue, with online
and physical stores accounting for the biggest share. Amazon recently had a great growth of
income and profits from the business as there was a lockdown because of COVID-19.
People during the lockdown preferred shopping online rather than going outside in the
markets for their safety, and this was not good just for Amazon, but also for grocery markets
such as Tesco as they also do home delivery for their customers.
PREPAYMENT BY THE IMPORTER
Cash in advance or prepayment is a method in which an importer makes the payment for the
items to be imported in advance prior to the shipment of goods. The importer has the
responsibility to trust that the supplier will ship the product on time and that the goods will be
as advertised. This method of payment creates a lot of risk factors for the importers. This
can happen if your business is new, these suppliers are not used to your way of business,
and you do not have a stable and reputable organisation. However, this method of payment
is inexpensive as it involves direct importer-exporter contact without commercial bank
involvement.
In international trade of businesses, the prepayment methods of payment are usually used
when:
40146526
Unit 5 International Business
P1: Explain why two businesses operate in contrasting international markets
Tesco
Tesco plc is a British multinational and merchandise retailer with
its headquarters in Hertfordshire, England. Tesco is the market
leader of groceries in the UK and is the ninth-largest in the world
measured by revenues and the largest retailer in the world.
Tesco currently operates in 13 countries, including between
Europe, the USA, and Asia.
This graph shows that Tesco
has the highest market share
in 2018.
This company was founded in 1919 by Jack Cohen as a group of market stalls in Hackney,
London. Their first shop opened in 1931 in London and it grew up very rapidly, and after 10
years there were over 100 shops across the country.
Tesco started expanding internationally in the early 1990s with around 11 countries. The
reason this company started operating in other countries is that this allows the creation of
new markets and this leads the business to increase sales and profits.
Another reason is the innovation of the business. Running the business in different countries
will help the business to get new ideas, production techniques, and new technology.
For import and export to other countries, Tesco needs proper licenses and to make the
export declaration to customs through the National Export System (NES). This is used by
exporters to declare their intention to export goods to third countries and they need to make
sure that VAT, import taxes in the destination countries are paid where necessary and this is
done to ensure that they follow transport procedures. Brexit will also have an impact on the
import and export of Tesco as they might need to pay higher taxes to travel in European
countries.
Tesco is a multinational company and there are various advantages and disadvantages of
being in the international market. According to BBC, in 2014 Tesco reported a third
consecutive quarter of falling sales as the UK's largest supermarket chain faces increasing
competition from rivals. The reason why Tesco is seeing competition from online stores is
that a minority of people prefer to go shopping in stores rather than shopping online as
,Gurkirat Singh Group C
40146526
people are used to it. The reason why they are getting competition from small stores is that
some of their products are expensive; however, they have invested in Tesco value products,
which are cheaper for consumers to purchase.
Tesco deals with developed countries such as the UK. The advantage of this is that there
are higher employment rates for people in these countries which means that it improves the
economy and there are established trading which means that they know the rules and
regulations to follow whilst trading to avoid breaking the law and getting fined.
The disadvantage is that the market is already competitive so Tesco needs to be on top of
its game to have the largest market share which means they need to sell products that are
affordable to beat the 6 big stores in the UK which are ASDA, Sainsbury, Morrison’s, Aldi,
Lidl, and Waitrose.
In new emerging countries such as Czech Republic, Hungary, Malaysia, and Poland, Tesco
provides them jobs which is a beneficial thing for these countries’ local people and
economies. An advantage of running a business in these countries that Tesco has is that
they pay a reduced amount of taxes and get a high profit, as they are helping growing up
their economy and new job opportunities.
They might offer lower wages in those countries, which means that they might get low sales
growth as people from other countries would not want to shop with them as they are not
treating their employee’s right and their employees will be less motivated to perform their job
efficiently and effectively
India and China are two large countries with a very wide population. These two are
secondary rising countries which means there will be a big growth in sales for them as there
are billions of people living there which means a high profit for businesses like Tesco,
similarly with Slovakia and Vietnam. However, Tesco needs to research those countries to
ensure they know their target markets in order to dominate the market in such countries.
Amazon
Amazon, Inc.is an American multinational technology company
based in Seattle, Washington. This company was founded in 1994
and started as an online marketplace for books. This business
started with selling books online in the USA, and over time they
grew up and expanded the business to sell electronics, software,
video games, apparel, furniture, food, toys, and jewellery worldwide.
Today this company is considered one of the most influential economic and cultural forces in
the world and is also named as the most valuable brand in the world and operates in 13
countries worldwide. Amazon dominates the US e-commerce market, and over the last few
years, the company has aggressively spread its footprint overseas.
Amazon’s marketing strategy is mainly based on technological capabilities for business
success and following a cost leadership strategy that minimizes expenditure and maximizes
profitability. The key business strategy is aimed at offering the maximum value for its
customers by offering the lowest price in the market.
, Gurkirat Singh Group C
40146526
Amazon has got an added advantage of international sites in Canada, United Kingdom,
Germany, Japan, France and China. All about what the customers have to do to browse the
site with their language is by clicking to their national site. For example, if you clink Japan,
immediately the whole website will change its descriptions and instructions into the
Japanese language. This is not at all applicable for a customer in Malaysia or any other
regions of Asia. It should expand and add more language options in its site to accumulate its
customers. Giving customers what they want is also one strategy not all online businesses
can do but if this can be proven in Amazon’s case then it has all the potential to be the one.
Amazon has all the assets and resources to proceed and build up its online strength in the
advanced world. Organizations like Amazon have contributed and built up their plan of action
with the assistance of innovation to support greater market opportunity on those nations.
Their effective business procedures, for example, innovation and advancement are
enormous lifts for the organization to the degree their organizations are in those new
business sectors with the ease technique. This method helps organizations to offer clients
low-value items and administration with the assistance of innovation and its improvements in
those nations. The biggest inconveniences for the organization to the degree their online
exchange in those nations are general sets of laws and authority.
P2: Explain the types of finance available for international business
Tesco and Amazon are both international businesses, so they need to think of different ways
to finance their business in order to develop their organisations. International businesses can
finance their business in four ways. This depends on the situation they are in and they might
decide that one method is better to finance their business than the other one based on
certain reasons. Amazon makes money through its retail, subscriptions, and web services,
among other channels. Amazon has also launched Amazon Music in 2007 and Amazon
Video in 2006 which is the best comparison of Netflix where prime members can see
movies, web series, etc.. Retail remains Amazon's primary source of revenue, with online
and physical stores accounting for the biggest share. Amazon recently had a great growth of
income and profits from the business as there was a lockdown because of COVID-19.
People during the lockdown preferred shopping online rather than going outside in the
markets for their safety, and this was not good just for Amazon, but also for grocery markets
such as Tesco as they also do home delivery for their customers.
PREPAYMENT BY THE IMPORTER
Cash in advance or prepayment is a method in which an importer makes the payment for the
items to be imported in advance prior to the shipment of goods. The importer has the
responsibility to trust that the supplier will ship the product on time and that the goods will be
as advertised. This method of payment creates a lot of risk factors for the importers. This
can happen if your business is new, these suppliers are not used to your way of business,
and you do not have a stable and reputable organisation. However, this method of payment
is inexpensive as it involves direct importer-exporter contact without commercial bank
involvement.
In international trade of businesses, the prepayment methods of payment are usually used
when:
