Sami
Unit 5 - Explore the international context for business operations
P1: Explain why two businesses operate in contrasting international markets
Main types of international business
Exporting Business – Businesses that sells their goods and services to customers in other customers
are exporting them – they are producing them in one country and shipping them to another.
Importing Business – They bring the goods from one country for the purpose of reselling them in
another country. When it comes to sourcing products to sell, for many products, foreign sources of
supply can provide higher quality, lower costs or some other desirable feature in comparison to US
sources.
Multinational Business – It is a business organisation that operate in several countries and the
organisational form that defines foreign direct investment.
Associated Business – This is when a business is associated with another business at a particular
time, during that time or at any other time within the preceding 12 months. One business has
control of the other. Examples would be logistics, haulage, marketing and insurance.
Tesco
Tesco is a multinational grocery and merchandise retailer and there main headquarters is located in
Welwyn Garden City in Hertfordshire in the United Kingdom. It is the largest retailer in the world
measured by profits and also the 9th largest retailer measured by revenues. It operates in 10
countries according to their website and these countries include the United Kingdom, China, India,
Hungary, Poland and Slovakia.
McDonalds
McDonalds is an American fast food company that was found 1940 as a restaurant operated by
Richard and Maurice McDonald in California, United States. They rechristened their business as a
hamburger stand but then turned the company into a franchise with the Golden Arches logo being
introduced in 1953 at a location in Phoenix Arizona.
Growth
Business growth can be achieved by either by boosting the income of the business by producing high
amount of sales or service income. Growth makes it easier to acquire new assets, attract new talent
and fund investments.
Tesco recorded its strongest growth in seven years, boosted by its acquisition of the Booker cash and
carry group. It is also been said that the UK and Irish sales increased by 3.5% in the most recent
three months, which meant it was there 10 th consecutive quarter of growth. Also, by introducing
other new stores across the country it increases the growth for Tesco as they are planning to add 30
more new stores in the UK which currently 691 stores operating.
McDonalds generic strategy determines its basic approach to developing its business and
competitive advantage. As the biggest fast food restaurant chain in the world, McDonalds uses it’s
sensitive growth strategies to support continued business development and expansion.
,Sami
Additional Revenue Streams
It is a source of revenue of a business. A revenue can generally be made of either recurring revenue,
transaction based revenue and service revenue.
Tesco is aiming to grab another £2.5bn of sales in the UK as it teams up with wholesaler booker to
sell its product to independent corner shops, restaurant and café. The UK biggest supermarket
unveiled the plan as it announced a 28% increase in operating profits which then bolstered by better
than expected sales growth in the last three months of its financial year. It was also said that Tesco
made a pretax profit before exceptional items of £1.64bn in the year to 24 th February as total group
sales went up to 2.8% which lead to £57.5bn. The sales that were established in the UK and Ireland
stores increased to 2.4% in the final quarter, which is slightly ahead of the 2.2% expected by data
analysts. Tesco make their revenue from goods or services because they gain their revenue by selling
products within the store as well as providing services to their customers.
No company has used their income base as a tool for developing new business ventures than the
McDonalds corporation. McDonalds offers a consistent product from an efficient assembly line
whose invention did for the industry what Henry Ford did for the auto industry. Majority of
McDonalds profit comes from not only food sales but also through Real Estate.
Brand Exploitation
When you have identified, valued and protected your brands, the business is then in a position to be
able to exploit the potential in those brands. For an example treat Advertising as an investment
rather than an expense as a brand should actually increase value through use.
The Tesco brand is synonymous with shopping in the UK. After questionable investment decisions
and multiple scandals rocked the business in 2013 and 2014, the business began facing
unprecedented quarterly. Consumer confidence in the brand plummeted and sales began to reflect
that new reality. The business began to try out a new form of marketing – humour – in its Christmas
commercial campaigns. With Tesco using previous commercial actors in a new setting, the business
was able to keep a familiar spirit around a new concept.
The main thing that McDonalds always get right with their branding is managing to appeal to their
target audience. With the creation of the happy meals and the iconic figure of Ronald McDonald it’s
been clear for decades that McDonalds has been marketed towards children and it has worked.
Access to New Markets
By entering a new market with a new product or service this means that customers have a wider
access to a wider range of products to choose from. This could lead to better quality or just different
to home brands.
Tesco has been able to strengthen and expand into new markets by showing sales growth in in South
Korea which is their biggest market outside Britain as well as increasing sales in China, Thailand and
India. In China and Thailand the sales went up by 8.3% and 3.4% in the same period, down from 9.3%
and 4.8% growth respectively in the second quarter while underlying the sales in Malaysia were up
by 0.5% following a second quarter decline of 2%.
McDonalds is claiming it’s “I’m lovin it” campaign a success as it launches 13 new ads that will run
around the world. It comes after 8 months after launch despite scepticism elsewhere about the
campaign which launched at a time when the fast food giant was under attack for their unhealthy
food and facing legal suits about obesity.
, Sami
Diversification
It is the corporate strategy to enter into a new product or product lines, new services and new
markets that involves substantially different skills, technology and also knowledge. It can help
businesses increase the sales and revenue.
Selling new products to new customers is not going to be easy. Tesco started as a grocery business
and over time it diversified into many areas. Credit Cards, Mortgages and Insurance products that
are some common examples. Tesco’s diversification strategy has proven to be quite successful for
the company. It has clothing range, home-ware items, mobile phones business, music downloads
and DVD rentals, school uniforms, financial and telecom services, and cotton fair-trading across the
globe.
McDonalds diversification strategy constantly changes throughout the years. A common example
would be McCafe. McCafe is McDonalds attempt into product development and establishing new
market. It is known as a service café.
Market Share
The market share represents the percentage of an industry, or a market’s total sales that is earned
by a particular company over a specified time period. It is calculated by taking the company sales
over the period and dividing it by the total sales of the industry over the same period.
Tesco has a market capitalisation of £21,957 with roughly around 9,793m shares in issue. Over the
last year, Tesco share price has been traded in a range of 56.7, hitting a high of 260.4 and also a low
of 203.7.
McDonalds has a market share of 7.7% in the quick service industry in the United States. It also holds
a market of 43% in the burger segment. However, it may need to grow in the non-burger fast food
market, in order to attract more customers.
Market Leadership
Market Leadership is the position of the company with the largest market share or the highest
profitability margin in a given market for goods and services. Market share can be measured by
either the volume of goods sold or the value of those goods.
Even despite a competitive grocery market and also subdued consumer spending, Tesco however
has managed to retain their position as the UK number 1 supermarket chain by their market share.
Under new leadership of Dave Lewis, Tesco have made a successful recovery through a five year
strategy which has included revamping products as well as reducing prices and improve the
customer service by employing more staff members.
McDonalds is a famously known market leader in the fast food industry or otherwise known as the
burger industry. Ever since they started operating in 1948, it has managed to emerge triumphant in
spite of a number of companies entering the fast food industry. The business has successfully
established a very popular brand image.
Technological Dominance
It posits a decision maker may become reliant on an intelligent decision aid under two conditions:
The decision maker is low in task experience and the other is that the decision maker is high in all of
the factors.
Unit 5 - Explore the international context for business operations
P1: Explain why two businesses operate in contrasting international markets
Main types of international business
Exporting Business – Businesses that sells their goods and services to customers in other customers
are exporting them – they are producing them in one country and shipping them to another.
Importing Business – They bring the goods from one country for the purpose of reselling them in
another country. When it comes to sourcing products to sell, for many products, foreign sources of
supply can provide higher quality, lower costs or some other desirable feature in comparison to US
sources.
Multinational Business – It is a business organisation that operate in several countries and the
organisational form that defines foreign direct investment.
Associated Business – This is when a business is associated with another business at a particular
time, during that time or at any other time within the preceding 12 months. One business has
control of the other. Examples would be logistics, haulage, marketing and insurance.
Tesco
Tesco is a multinational grocery and merchandise retailer and there main headquarters is located in
Welwyn Garden City in Hertfordshire in the United Kingdom. It is the largest retailer in the world
measured by profits and also the 9th largest retailer measured by revenues. It operates in 10
countries according to their website and these countries include the United Kingdom, China, India,
Hungary, Poland and Slovakia.
McDonalds
McDonalds is an American fast food company that was found 1940 as a restaurant operated by
Richard and Maurice McDonald in California, United States. They rechristened their business as a
hamburger stand but then turned the company into a franchise with the Golden Arches logo being
introduced in 1953 at a location in Phoenix Arizona.
Growth
Business growth can be achieved by either by boosting the income of the business by producing high
amount of sales or service income. Growth makes it easier to acquire new assets, attract new talent
and fund investments.
Tesco recorded its strongest growth in seven years, boosted by its acquisition of the Booker cash and
carry group. It is also been said that the UK and Irish sales increased by 3.5% in the most recent
three months, which meant it was there 10 th consecutive quarter of growth. Also, by introducing
other new stores across the country it increases the growth for Tesco as they are planning to add 30
more new stores in the UK which currently 691 stores operating.
McDonalds generic strategy determines its basic approach to developing its business and
competitive advantage. As the biggest fast food restaurant chain in the world, McDonalds uses it’s
sensitive growth strategies to support continued business development and expansion.
,Sami
Additional Revenue Streams
It is a source of revenue of a business. A revenue can generally be made of either recurring revenue,
transaction based revenue and service revenue.
Tesco is aiming to grab another £2.5bn of sales in the UK as it teams up with wholesaler booker to
sell its product to independent corner shops, restaurant and café. The UK biggest supermarket
unveiled the plan as it announced a 28% increase in operating profits which then bolstered by better
than expected sales growth in the last three months of its financial year. It was also said that Tesco
made a pretax profit before exceptional items of £1.64bn in the year to 24 th February as total group
sales went up to 2.8% which lead to £57.5bn. The sales that were established in the UK and Ireland
stores increased to 2.4% in the final quarter, which is slightly ahead of the 2.2% expected by data
analysts. Tesco make their revenue from goods or services because they gain their revenue by selling
products within the store as well as providing services to their customers.
No company has used their income base as a tool for developing new business ventures than the
McDonalds corporation. McDonalds offers a consistent product from an efficient assembly line
whose invention did for the industry what Henry Ford did for the auto industry. Majority of
McDonalds profit comes from not only food sales but also through Real Estate.
Brand Exploitation
When you have identified, valued and protected your brands, the business is then in a position to be
able to exploit the potential in those brands. For an example treat Advertising as an investment
rather than an expense as a brand should actually increase value through use.
The Tesco brand is synonymous with shopping in the UK. After questionable investment decisions
and multiple scandals rocked the business in 2013 and 2014, the business began facing
unprecedented quarterly. Consumer confidence in the brand plummeted and sales began to reflect
that new reality. The business began to try out a new form of marketing – humour – in its Christmas
commercial campaigns. With Tesco using previous commercial actors in a new setting, the business
was able to keep a familiar spirit around a new concept.
The main thing that McDonalds always get right with their branding is managing to appeal to their
target audience. With the creation of the happy meals and the iconic figure of Ronald McDonald it’s
been clear for decades that McDonalds has been marketed towards children and it has worked.
Access to New Markets
By entering a new market with a new product or service this means that customers have a wider
access to a wider range of products to choose from. This could lead to better quality or just different
to home brands.
Tesco has been able to strengthen and expand into new markets by showing sales growth in in South
Korea which is their biggest market outside Britain as well as increasing sales in China, Thailand and
India. In China and Thailand the sales went up by 8.3% and 3.4% in the same period, down from 9.3%
and 4.8% growth respectively in the second quarter while underlying the sales in Malaysia were up
by 0.5% following a second quarter decline of 2%.
McDonalds is claiming it’s “I’m lovin it” campaign a success as it launches 13 new ads that will run
around the world. It comes after 8 months after launch despite scepticism elsewhere about the
campaign which launched at a time when the fast food giant was under attack for their unhealthy
food and facing legal suits about obesity.
, Sami
Diversification
It is the corporate strategy to enter into a new product or product lines, new services and new
markets that involves substantially different skills, technology and also knowledge. It can help
businesses increase the sales and revenue.
Selling new products to new customers is not going to be easy. Tesco started as a grocery business
and over time it diversified into many areas. Credit Cards, Mortgages and Insurance products that
are some common examples. Tesco’s diversification strategy has proven to be quite successful for
the company. It has clothing range, home-ware items, mobile phones business, music downloads
and DVD rentals, school uniforms, financial and telecom services, and cotton fair-trading across the
globe.
McDonalds diversification strategy constantly changes throughout the years. A common example
would be McCafe. McCafe is McDonalds attempt into product development and establishing new
market. It is known as a service café.
Market Share
The market share represents the percentage of an industry, or a market’s total sales that is earned
by a particular company over a specified time period. It is calculated by taking the company sales
over the period and dividing it by the total sales of the industry over the same period.
Tesco has a market capitalisation of £21,957 with roughly around 9,793m shares in issue. Over the
last year, Tesco share price has been traded in a range of 56.7, hitting a high of 260.4 and also a low
of 203.7.
McDonalds has a market share of 7.7% in the quick service industry in the United States. It also holds
a market of 43% in the burger segment. However, it may need to grow in the non-burger fast food
market, in order to attract more customers.
Market Leadership
Market Leadership is the position of the company with the largest market share or the highest
profitability margin in a given market for goods and services. Market share can be measured by
either the volume of goods sold or the value of those goods.
Even despite a competitive grocery market and also subdued consumer spending, Tesco however
has managed to retain their position as the UK number 1 supermarket chain by their market share.
Under new leadership of Dave Lewis, Tesco have made a successful recovery through a five year
strategy which has included revamping products as well as reducing prices and improve the
customer service by employing more staff members.
McDonalds is a famously known market leader in the fast food industry or otherwise known as the
burger industry. Ever since they started operating in 1948, it has managed to emerge triumphant in
spite of a number of companies entering the fast food industry. The business has successfully
established a very popular brand image.
Technological Dominance
It posits a decision maker may become reliant on an intelligent decision aid under two conditions:
The decision maker is low in task experience and the other is that the decision maker is high in all of
the factors.
