Assignment 1 Unit 5
Introduction
In this assignment I will be explaining why the following two contrasting businesses
trade internationally. The companies I have chosen are Tesco and Apple. I will also
be explaining the impact of globalisation on a business and explore the role of trading
blocs on international trade.
Reasons why Tesco operate internationally
Tesco is a multinational merchandise and grocery retailer. It is the world largest
retailer and currently operates in 13 different countries such as the UK, India, Lotus,
Poland, China, Malaysia, Czech Republic, Slovakia and Hungary. They have around
500,000 employees and they operate as a multi-national company. By operating in
an international market Tesco expand rapidly due to high exposure.
The main reasons why the company decided to pursue the international market was
that the local UK market had reached saturation and maturity making it hard for them
to expand without engaging international opportunities.The company aims at being
the market leader in the foreign country it enters within five years. The success
of Tesco in the international market has been aided by its sensitivity to the local
culture of the host countries and the market environment. The global expansion and
diversification of Tesco has allowed the company to gain sustainable growth and
development.
Tesco Plc has consistently preferred to use international joint ventures as an entry
strategy in the Asian market. This is due to the countries have large context cultures
that require organisations to build personal relationships. It has allowed these
companies to build trust and relationships during business interactions. The
importance of these relationships arises from the fact that they have high uncertainty
avoidance levels; therefore relationships and trust reduce the level of uncertainties,
risks and ambiguities. This also promotes diversity and allows the company to appeal
to people of all races as well as employing people of different sex, race and age.
The reasons why Tesco operate internationally is due to the expansion for Tesco. It
allows them to access new markets. Since Tesco was successful in the UK it was a
good idea to operate internationally. By creating access to new markets Apple have
created a new customer base. This highly increases the chances of brand
exploitation. More people will discover your business and as a result the awareness
of your business will expand which will gain you more consumers.
Moreover this is a good move in order to stay ahead of competition. If you access a
market before your competitor does, then you have the upper hand. Your visibility is
brighter than your competitors.
, One of the main advantages why companies such as Tesco benefit from international
expansion is due to the increase in business growth. By entering overseas markets it
allows further visibility and growth for the company. Extending the companies global
footprint allows consumers that have never heard of your business to explore your
products.
You need to think about some of the reasons such as Growth, Brand exploitation,
diversification, access to new markets,
Do the same for Apple
Types of finance and support for Tesco
Government Grants: Tesco the UK’s biggest supermarket therefore they require
many staff. As a result the government can give Tesco grants and money to invest
back into Tesco. The government will benefit from this as if Tesco the granted money
works in Tesco favour it will generate loads more money which means Tesco will pay
more tax.
An example of Tesco receiving a government grant was in 2009 when they received
£5 million to open a new store located in Glasgow. The main benefit of this is that
Tesco doesn’t have to pay anything back. This is free capital which helps them out.
This also helps them expand their business. The cons of this include that there is an
uncertainty that the grant will be renewed. You suddenly may not receive funding
which means you have to re apply which costs money and is very time consuming.
HP: Hire purchase is when a company or person lends out goods to companies for a
short period of time, with added interest. Tesco could benefit from this as they could
lend out equipment such as; machinery, property and vehicles, and then they could
gain interest. Disadvantages of this are that you are in a fixed contract and if you
cannot pay the monthly repayments you may lose the asset.
Suppliers credit: Supplier’s credit is when a supplier offers the buyer the product they
want on credit. This benefits Tesco as it gives them more time to slowly pay
something off. They could also order as much stock as they need even if they haven’t
got the finances at that time. However the disadvantage include, penalties for late
payments and interest payable on outstanding credit. More to this, this can create a
negative impact on credit rating. Overall it can harm your business reputation.
Support from the government may be offered to Tesco if they are struggling with
been able to spend money on buying new products and better products. For
example, loans will be offered. For instance, during the recession Tesco suffer.
Therefore they can take a loan out from the government. Grants are also available
for Tesco as it is linked with direct support. Grants are funded often by a trust or
government department. Tesco have a charity called "Tesco charity trust". On
Introduction
In this assignment I will be explaining why the following two contrasting businesses
trade internationally. The companies I have chosen are Tesco and Apple. I will also
be explaining the impact of globalisation on a business and explore the role of trading
blocs on international trade.
Reasons why Tesco operate internationally
Tesco is a multinational merchandise and grocery retailer. It is the world largest
retailer and currently operates in 13 different countries such as the UK, India, Lotus,
Poland, China, Malaysia, Czech Republic, Slovakia and Hungary. They have around
500,000 employees and they operate as a multi-national company. By operating in
an international market Tesco expand rapidly due to high exposure.
The main reasons why the company decided to pursue the international market was
that the local UK market had reached saturation and maturity making it hard for them
to expand without engaging international opportunities.The company aims at being
the market leader in the foreign country it enters within five years. The success
of Tesco in the international market has been aided by its sensitivity to the local
culture of the host countries and the market environment. The global expansion and
diversification of Tesco has allowed the company to gain sustainable growth and
development.
Tesco Plc has consistently preferred to use international joint ventures as an entry
strategy in the Asian market. This is due to the countries have large context cultures
that require organisations to build personal relationships. It has allowed these
companies to build trust and relationships during business interactions. The
importance of these relationships arises from the fact that they have high uncertainty
avoidance levels; therefore relationships and trust reduce the level of uncertainties,
risks and ambiguities. This also promotes diversity and allows the company to appeal
to people of all races as well as employing people of different sex, race and age.
The reasons why Tesco operate internationally is due to the expansion for Tesco. It
allows them to access new markets. Since Tesco was successful in the UK it was a
good idea to operate internationally. By creating access to new markets Apple have
created a new customer base. This highly increases the chances of brand
exploitation. More people will discover your business and as a result the awareness
of your business will expand which will gain you more consumers.
Moreover this is a good move in order to stay ahead of competition. If you access a
market before your competitor does, then you have the upper hand. Your visibility is
brighter than your competitors.
, One of the main advantages why companies such as Tesco benefit from international
expansion is due to the increase in business growth. By entering overseas markets it
allows further visibility and growth for the company. Extending the companies global
footprint allows consumers that have never heard of your business to explore your
products.
You need to think about some of the reasons such as Growth, Brand exploitation,
diversification, access to new markets,
Do the same for Apple
Types of finance and support for Tesco
Government Grants: Tesco the UK’s biggest supermarket therefore they require
many staff. As a result the government can give Tesco grants and money to invest
back into Tesco. The government will benefit from this as if Tesco the granted money
works in Tesco favour it will generate loads more money which means Tesco will pay
more tax.
An example of Tesco receiving a government grant was in 2009 when they received
£5 million to open a new store located in Glasgow. The main benefit of this is that
Tesco doesn’t have to pay anything back. This is free capital which helps them out.
This also helps them expand their business. The cons of this include that there is an
uncertainty that the grant will be renewed. You suddenly may not receive funding
which means you have to re apply which costs money and is very time consuming.
HP: Hire purchase is when a company or person lends out goods to companies for a
short period of time, with added interest. Tesco could benefit from this as they could
lend out equipment such as; machinery, property and vehicles, and then they could
gain interest. Disadvantages of this are that you are in a fixed contract and if you
cannot pay the monthly repayments you may lose the asset.
Suppliers credit: Supplier’s credit is when a supplier offers the buyer the product they
want on credit. This benefits Tesco as it gives them more time to slowly pay
something off. They could also order as much stock as they need even if they haven’t
got the finances at that time. However the disadvantage include, penalties for late
payments and interest payable on outstanding credit. More to this, this can create a
negative impact on credit rating. Overall it can harm your business reputation.
Support from the government may be offered to Tesco if they are struggling with
been able to spend money on buying new products and better products. For
example, loans will be offered. For instance, during the recession Tesco suffer.
Therefore they can take a loan out from the government. Grants are also available
for Tesco as it is linked with direct support. Grants are funded often by a trust or
government department. Tesco have a charity called "Tesco charity trust". On
