Unit 5 Assignment 2
Jake Watkins
Learning Aim C (P5 P6 M3): Investigate the external factors that influence international business
P5: Explain the external factors that influence a selected business considering trading internationally
McArthur Glen has 26 designer outlets in 10 countries, meaning that they do not operate in many
countries at all. All the countries are European and the two countries I am going to write about are
France and Portugal
France has a population of over 67 million as of 2020 with an employment rate of over 7%. Females
make up just over half of the population with 51%. The average household disposable income per
capita is USD 34,375 a year, alongside France being a relatively easier market to enter than a lot of
other countries as it is cheaper and takes less time
Portugal has a population of just over 10 million with a low employment rate of 7.2%. Female
population is similar to Spain with them making up just over half of the population as well. The
average income in Portugal is just under 20,000 euros per year. Furthermore, Portugal has a large
attraction for UK businesses like McArthur Glen which makes the country an open market to enter.
The external environment refers to factors outside the businesses control, these impact the
performance and the strategy of the business. Businesses like McArthur Glen decide whether they
operate in a certain country by looking through the acronym ‘PESTLE’. These help identify and
monitor factors that influence their performance of the business
P- Political
E- Economic
S- Sociological
T- Technological
L- Legal
E- Ethical/Environmental
Political:
The political environment is the government actions that impact on the strategic and functional
decisions made by businesses. They impact on the competitive environment businesses operate in
and the infrastructure that allows businesses to operate effectively. Government policy also an
impact on the exchange of goods and services between countries, the UKTI helps businesses export
to foreign markets whilst identifying opportunities there. McArthur Glen wants to start trading in
France and Portugal so the UKTI would help them break into the market and identify opportunities
there, such as there being a gap in the market for high quality clothing brands. Tax is also a factor
that affects McArthur glen wanting to operate in France and Spain as the French government may
enforce new policies which would result in tax increasing to ensure these policies go ahead, causing
McArthur Glen to steer away from trading in countries like France and reducing their business
opportunities. Furthermore, the government has also announced plans to cut capital gains to attract
business investment to France, meaning that it would be easier for the enterprise to trade in France.
Illustrating the positive and negative politics have on businesses in France and Portugal
1
, Unit 5 Assignment 2
Jake Watkins
Economic:
As McArthur Glen imports clothes to the international markets they operate in, exchange rates could
make importing cheaper which could be beneficial to them as they can import more at a cheaper
price, but exporting would be made more expensive. In France the euro is worth 1.20 so imports
would be cheaper as the euro is stronger, meaning that more clothes can be imported at a cheaper
price so more revenue can be generated. Whereas in Portugal the euro is 0.84 which is very weak,
therefore importing would be made more expensive so McArthur Glen would struggle to import
their clothes to Portugal, illustrating the difficulty they would face importing in Portugal as it is very
expensive. Disposable income is also an economic factor that affects businesses. Because of external
influences like Covid people are more likely to have less disposable income so there is less money to
spend on luxuries. Meaning that French/Portuguese consumers are less likely to buy clothing from a
new brand like McArthur Glen due to having less money in their pocket and prioritising necessities
instead, resulting in a small sum of market share gained by the firm
Sociological:
Social factors refer to the behaviour of consumers which are influenced by businesses. The country
that businesses want to operate in need to consider the demographics. In France for example there
are between 3 and 4 million Muslims, so McArthur Glen could consider globalisation techniques and
produces hijabs for women over in France to ensure their needs are catered to, this applies to other
demographics as well as the proportion of males and females in France as well. This makes
consumers feel valued that the business is catering to their needs, benefitting their brand image, and
helping McArthur Glen break into the French market successfully. Furthermore, Portugal has very
hot weather all year round so the enterprise should consider importing more summer clothes
instead of winter clothing items like hats and gloves, this would appeal more to the Portuguese
market and therefore more sales revenue will be generated which would result in a larger sum of
market share being gained.
Technological:
Technology or technological change describes the ongoing development of innovation, invention
and sharing of technological processes which impact business and consumer behaviour. Unilever
operates technologically at times by selling various goods online, they also take advantage of the use
of social media, for instance they have over 10k followers on Twitter so that they can engage with
customers. This is only the UK account though so if they want to trade in Portugal and France, they
could create a general Twitter account or a French/Portuguese one so that customer awareness
increases and they can interact with them online, to understand their wants and needs.
Legal:
Legislation involves enacting and creating laws in order to protect businesses and individuals as a
whole. The Product Safety and Product Quality Code is a legislation that businesses like McArthur
Glen have to follow where they’re obliged to provide branded products and services that are of high
quality and safe. Furthermore, there are also French and Portuguese legislation that McArthur Glen
must follow if they want to start trading there which could impact how they produce their clothing
and where they are sold, which is something that they need to consider as a business.
Environmental/Ethical:
2
Jake Watkins
Learning Aim C (P5 P6 M3): Investigate the external factors that influence international business
P5: Explain the external factors that influence a selected business considering trading internationally
McArthur Glen has 26 designer outlets in 10 countries, meaning that they do not operate in many
countries at all. All the countries are European and the two countries I am going to write about are
France and Portugal
France has a population of over 67 million as of 2020 with an employment rate of over 7%. Females
make up just over half of the population with 51%. The average household disposable income per
capita is USD 34,375 a year, alongside France being a relatively easier market to enter than a lot of
other countries as it is cheaper and takes less time
Portugal has a population of just over 10 million with a low employment rate of 7.2%. Female
population is similar to Spain with them making up just over half of the population as well. The
average income in Portugal is just under 20,000 euros per year. Furthermore, Portugal has a large
attraction for UK businesses like McArthur Glen which makes the country an open market to enter.
The external environment refers to factors outside the businesses control, these impact the
performance and the strategy of the business. Businesses like McArthur Glen decide whether they
operate in a certain country by looking through the acronym ‘PESTLE’. These help identify and
monitor factors that influence their performance of the business
P- Political
E- Economic
S- Sociological
T- Technological
L- Legal
E- Ethical/Environmental
Political:
The political environment is the government actions that impact on the strategic and functional
decisions made by businesses. They impact on the competitive environment businesses operate in
and the infrastructure that allows businesses to operate effectively. Government policy also an
impact on the exchange of goods and services between countries, the UKTI helps businesses export
to foreign markets whilst identifying opportunities there. McArthur Glen wants to start trading in
France and Portugal so the UKTI would help them break into the market and identify opportunities
there, such as there being a gap in the market for high quality clothing brands. Tax is also a factor
that affects McArthur glen wanting to operate in France and Spain as the French government may
enforce new policies which would result in tax increasing to ensure these policies go ahead, causing
McArthur Glen to steer away from trading in countries like France and reducing their business
opportunities. Furthermore, the government has also announced plans to cut capital gains to attract
business investment to France, meaning that it would be easier for the enterprise to trade in France.
Illustrating the positive and negative politics have on businesses in France and Portugal
1
, Unit 5 Assignment 2
Jake Watkins
Economic:
As McArthur Glen imports clothes to the international markets they operate in, exchange rates could
make importing cheaper which could be beneficial to them as they can import more at a cheaper
price, but exporting would be made more expensive. In France the euro is worth 1.20 so imports
would be cheaper as the euro is stronger, meaning that more clothes can be imported at a cheaper
price so more revenue can be generated. Whereas in Portugal the euro is 0.84 which is very weak,
therefore importing would be made more expensive so McArthur Glen would struggle to import
their clothes to Portugal, illustrating the difficulty they would face importing in Portugal as it is very
expensive. Disposable income is also an economic factor that affects businesses. Because of external
influences like Covid people are more likely to have less disposable income so there is less money to
spend on luxuries. Meaning that French/Portuguese consumers are less likely to buy clothing from a
new brand like McArthur Glen due to having less money in their pocket and prioritising necessities
instead, resulting in a small sum of market share gained by the firm
Sociological:
Social factors refer to the behaviour of consumers which are influenced by businesses. The country
that businesses want to operate in need to consider the demographics. In France for example there
are between 3 and 4 million Muslims, so McArthur Glen could consider globalisation techniques and
produces hijabs for women over in France to ensure their needs are catered to, this applies to other
demographics as well as the proportion of males and females in France as well. This makes
consumers feel valued that the business is catering to their needs, benefitting their brand image, and
helping McArthur Glen break into the French market successfully. Furthermore, Portugal has very
hot weather all year round so the enterprise should consider importing more summer clothes
instead of winter clothing items like hats and gloves, this would appeal more to the Portuguese
market and therefore more sales revenue will be generated which would result in a larger sum of
market share being gained.
Technological:
Technology or technological change describes the ongoing development of innovation, invention
and sharing of technological processes which impact business and consumer behaviour. Unilever
operates technologically at times by selling various goods online, they also take advantage of the use
of social media, for instance they have over 10k followers on Twitter so that they can engage with
customers. This is only the UK account though so if they want to trade in Portugal and France, they
could create a general Twitter account or a French/Portuguese one so that customer awareness
increases and they can interact with them online, to understand their wants and needs.
Legal:
Legislation involves enacting and creating laws in order to protect businesses and individuals as a
whole. The Product Safety and Product Quality Code is a legislation that businesses like McArthur
Glen have to follow where they’re obliged to provide branded products and services that are of high
quality and safe. Furthermore, there are also French and Portuguese legislation that McArthur Glen
must follow if they want to start trading there which could impact how they produce their clothing
and where they are sold, which is something that they need to consider as a business.
Environmental/Ethical:
2
