Unit 5 – International Business
Aim C – Investigate the external factors that influence international
businesses.
Introduction
Chosen Business: Rolls-Royce Holdings PLC
Rolls-Royce is multi-national British aerospace defence and power systems company. The company
manufactures and distributes power systems for other industries. After General Electric, Rolls-Royce
is the world second-largest maker of aircraft engines. Rolls-Royce also has major businesses in the
marine propulsion and energy sectors
C.P5 – Explain the external factors that influence a selected business considering
trading internationally
It is important for the business to understand external factors as they can impact the businesses
success. One of the tools that businesses use is PESTLE analysis. This analysis focuses on different
factors such as:
Political : The political influence of a country includes things such as tax policies, trade tariffs and
more. This factor has influence on how business in conducted and what type of business they
operate internationally with. Rolls-Royce sells to multiple countries it is important for them to stay
on top of any political changes that occur to ensure that they can prepare. One example being, post-
Brexit the company has had to face a lot of uncertainties. This involves things such as having to
reduced ease of operation as employee safety concerns have been rising. This factor is especially
important since RR’s headquarters are located in London.
Economic : These conditions can have a significant impact on the business and other factors such as:
- Inflation
- Interest rates
- Tax rates
- Employment rates
- Stage of economic cycle
- Demand for products/ services
- Consumer ability to buy products.
Rolls-Royce, being the large company that it is, has to constantly be up to date on all economical
indicators of countries they operate in and are in business with. Other economic factors that can
affect the company include industry lifecycle, labour market conditions and more.
Social : These factors can vary from country to country, they are affected by things such as
population, health factors, ethnic make-up of the country and more. Examples of social factors
include:
- Disposable income
, - Level of education and attitudes towards it
- Family sizes
- Lifestyle habits
- Approach to immigration/emigration
- Religion and beliefs
- Population growth or decline
- Environment attitudes
Rolls-Royce must also assess different social factors that can affect their business. This includes
things such as understanding demographic trends and societal norms.
Technological : Technology and its changes often positively affect businesses in terms of their
communication to other partners and consumers, automation of business operations and research
and development. The attitudes and acceptance of technology within the workplace can also affect a
business operation, customer retention and more. However, this factor can also negatively affect a
business if they are unable to keep up with the advancements, their business may face less customer
retention for example and may be left behind or substituted for another company by consumers.
Rolls-Royce has stated they are aiming to create innovations which are both efficient and
environmentally friendly. To do so they have started multiple different research and development
projects related to technological advancement such as going completely electric, going emission-less
and producing hybrid engines. They may potentially use this research for new designs in the future.
Legal and regulatory : Every country has legal systems and legislations that affect how a business
operates, these laws and regulations cover different areas of international business such as:
- Criminal law
- Environmental law
- Employment law
- Taxes
- Business operations and licences
- Legal structure off business
Rolls-Royce operates in numerous countries and therefore must follow all the correct laws and
regulations in regard to the environment and health and safety as they affect the production and
innovation of engines and other aerospace mobiles. Especially with technology leading to more
advanced tech, to avoid being sued the company need to keep up to date on which countries allow
such high tech to be released into their countries.
Environmental : The environment can affect a business’ operations; therefore they must consider
multiple factor such as :
- Recycling during delivery or production
- Climate
- Transport links
- Access to medical services and housing
- Infrastructure
Aim C – Investigate the external factors that influence international
businesses.
Introduction
Chosen Business: Rolls-Royce Holdings PLC
Rolls-Royce is multi-national British aerospace defence and power systems company. The company
manufactures and distributes power systems for other industries. After General Electric, Rolls-Royce
is the world second-largest maker of aircraft engines. Rolls-Royce also has major businesses in the
marine propulsion and energy sectors
C.P5 – Explain the external factors that influence a selected business considering
trading internationally
It is important for the business to understand external factors as they can impact the businesses
success. One of the tools that businesses use is PESTLE analysis. This analysis focuses on different
factors such as:
Political : The political influence of a country includes things such as tax policies, trade tariffs and
more. This factor has influence on how business in conducted and what type of business they
operate internationally with. Rolls-Royce sells to multiple countries it is important for them to stay
on top of any political changes that occur to ensure that they can prepare. One example being, post-
Brexit the company has had to face a lot of uncertainties. This involves things such as having to
reduced ease of operation as employee safety concerns have been rising. This factor is especially
important since RR’s headquarters are located in London.
Economic : These conditions can have a significant impact on the business and other factors such as:
- Inflation
- Interest rates
- Tax rates
- Employment rates
- Stage of economic cycle
- Demand for products/ services
- Consumer ability to buy products.
Rolls-Royce, being the large company that it is, has to constantly be up to date on all economical
indicators of countries they operate in and are in business with. Other economic factors that can
affect the company include industry lifecycle, labour market conditions and more.
Social : These factors can vary from country to country, they are affected by things such as
population, health factors, ethnic make-up of the country and more. Examples of social factors
include:
- Disposable income
, - Level of education and attitudes towards it
- Family sizes
- Lifestyle habits
- Approach to immigration/emigration
- Religion and beliefs
- Population growth or decline
- Environment attitudes
Rolls-Royce must also assess different social factors that can affect their business. This includes
things such as understanding demographic trends and societal norms.
Technological : Technology and its changes often positively affect businesses in terms of their
communication to other partners and consumers, automation of business operations and research
and development. The attitudes and acceptance of technology within the workplace can also affect a
business operation, customer retention and more. However, this factor can also negatively affect a
business if they are unable to keep up with the advancements, their business may face less customer
retention for example and may be left behind or substituted for another company by consumers.
Rolls-Royce has stated they are aiming to create innovations which are both efficient and
environmentally friendly. To do so they have started multiple different research and development
projects related to technological advancement such as going completely electric, going emission-less
and producing hybrid engines. They may potentially use this research for new designs in the future.
Legal and regulatory : Every country has legal systems and legislations that affect how a business
operates, these laws and regulations cover different areas of international business such as:
- Criminal law
- Environmental law
- Employment law
- Taxes
- Business operations and licences
- Legal structure off business
Rolls-Royce operates in numerous countries and therefore must follow all the correct laws and
regulations in regard to the environment and health and safety as they affect the production and
innovation of engines and other aerospace mobiles. Especially with technology leading to more
advanced tech, to avoid being sued the company need to keep up to date on which countries allow
such high tech to be released into their countries.
Environmental : The environment can affect a business’ operations; therefore they must consider
multiple factor such as :
- Recycling during delivery or production
- Climate
- Transport links
- Access to medical services and housing
- Infrastructure
