BTEC L3 Extended Dip In Business Yr2 Gp1
830216 Unit 39: International Business
(P6) Explain the business strategies used by a business operating internationally.
Introduction
All businesses are required to come up with strategies for the operations of their business; however
it is much more important for international businesses to adopt many different strategies essential
for the running of the business in different, international markets. Strategies have to be designed for
each operational aspect of the business and have to be made specifically for each market. In this
assignment I will look at how a business operating internationally approaches the task and makes
arrangements using a range of techniques to work successfully in an international market.
Reasons why businesses go international:
There are many reasons why businesses expand into new international markets: growth,
diversification, emerging markets, economies of scale, cost reduction taxation regime and legal and
regulatory regime. All of the reasons mentioned can encourage businesses to go international in
order to give its company and product a value, to sell as much products as possible and become
globally known. Going international will automatically create different streams of income for the
business. Entering emerging markets can make it easier for the business to become popular as
competition is low and establishing the business can be relatively cheap. Taxation and legal regimes
can be less of a limitation in international markets comparing to the domestic market. Cost
reduction is yet another reason as every business wants to save as much money as possible on the
production of its products, including: raw material, transportation and water and electricity costs.
Marketing
International businesses always try to find new markets for their products/services, however before
marketing their product they always carry out market research and analyse the data collected in
order to identify the market, customer needs and potential product success – and base their
decision on such information collected. The next step in marketing for international businesses is
advertising. International companies do not simply use one advertising method for all markets, but
they come up with advertising that is very likely to interest one specific market. As every country is
different in culture, the company has to make sure that it has a lot of knowledge about the culture
of the country it operates in to be able and bring the message across as clearly as possible through
their advertising techniques. International businesses also have to ensure that their advertising
methods do not offend the local customers in any way. The products must also be labelled in a local
language so local customers know exactly what it is they are purchasing. Company Management
should also monitor their marketing information system to be able and keep track of ongoing
changes in data collected by internal and external research sources and current market trends,
competitors and customers. The business must also ensure that their product has a patent to
protect it from being copied and sold by local competitors.
Production and Distribution
Page 1 of 3
, BTEC L3 Extended Dip In Business Yr2 Gp1
830216 Unit 39: International Business
When producing and distributing products in an international market, there are many things that
have to be considered. Even though production can be relatively cheap in some countries comparing
to others, not every company can afford to set their prices to a very low level in order to sell more as
the value of the product and the brand image would simply fall. Since every countries economy is
different a business, must ensure that the prices are set reasonably and match the economic
standards of the market, however if the production and distribution costs too much, a business
might simply decide to stop exporting goods to that country due to the very low prices not covering
the production/distribution costs. When adapting a strategy, international businesses must also
consider the infrastructure of the specific country because of imports and exports. If the transport
network is poor and undeveloped, the company will have to spend more on regular delivery of
goods: therefore the company could start producing the goods in the country by setting up a factory
in the local community and avoiding imports. When adapting a specific strategy, the international
company should consider the; use of local materials and must ensure that it gives back to the
community and does not leave them lacking certain essentials i.e. water and is an ethical company in
its production and distribution operations. Taxation may also vary, therefore the business must
ensure that it is aware of the taxation regime of the foreign market and bills are paid regularly to
avoid any penalties and fines.
Human Resource Management
It is not always possible for international businesses to transfer their existing employees into a new
country for business operations. However when recruiting locals, there are many things that have to
be considered by the company. When recruiting the company must ensure that it is aware of the
local employment laws. They must ensure that staff is provided with the right training that gives
them the right skills to carry out daily business operations and certain tasks. Although, if it is
possible for a company to hire expatriate personnel, they would not have to provide them with
training as they are well familiar with the company operations, however the transferred employees
would have to learn the local language, adapt to the culture and the living standards. Sometimes
businesses could have no other choice but to transfer existing staff due to the lack of skills in the
new international market. Whatever recruitment process the company chooses will be very
expensive therefore the business must ensure that it has good reasons for adapting a specific
strategy.
Technology
Technology is a very important aspect of most international operations and needs a strategy just like
any other part of international business activities. The quality and the development of each country
vary, however the use of modern technology is less time and cost consuming. A business can
communicate to different departments and franchises all over the world for free just by the use of
the Internet, making decisions and passing on important information. Technology can also be
transferred by the use of international business as global companies introduce new technology in
the countries they operate in, therefore making the country more advanced. In some countries
technology is highly undeveloped, so a company would have to make a plan on how they are going
to operate using locally available technology without it slowing down their operations and
decreasing the amount of units produced and profit made.
Page 2 of 3
830216 Unit 39: International Business
(P6) Explain the business strategies used by a business operating internationally.
Introduction
All businesses are required to come up with strategies for the operations of their business; however
it is much more important for international businesses to adopt many different strategies essential
for the running of the business in different, international markets. Strategies have to be designed for
each operational aspect of the business and have to be made specifically for each market. In this
assignment I will look at how a business operating internationally approaches the task and makes
arrangements using a range of techniques to work successfully in an international market.
Reasons why businesses go international:
There are many reasons why businesses expand into new international markets: growth,
diversification, emerging markets, economies of scale, cost reduction taxation regime and legal and
regulatory regime. All of the reasons mentioned can encourage businesses to go international in
order to give its company and product a value, to sell as much products as possible and become
globally known. Going international will automatically create different streams of income for the
business. Entering emerging markets can make it easier for the business to become popular as
competition is low and establishing the business can be relatively cheap. Taxation and legal regimes
can be less of a limitation in international markets comparing to the domestic market. Cost
reduction is yet another reason as every business wants to save as much money as possible on the
production of its products, including: raw material, transportation and water and electricity costs.
Marketing
International businesses always try to find new markets for their products/services, however before
marketing their product they always carry out market research and analyse the data collected in
order to identify the market, customer needs and potential product success – and base their
decision on such information collected. The next step in marketing for international businesses is
advertising. International companies do not simply use one advertising method for all markets, but
they come up with advertising that is very likely to interest one specific market. As every country is
different in culture, the company has to make sure that it has a lot of knowledge about the culture
of the country it operates in to be able and bring the message across as clearly as possible through
their advertising techniques. International businesses also have to ensure that their advertising
methods do not offend the local customers in any way. The products must also be labelled in a local
language so local customers know exactly what it is they are purchasing. Company Management
should also monitor their marketing information system to be able and keep track of ongoing
changes in data collected by internal and external research sources and current market trends,
competitors and customers. The business must also ensure that their product has a patent to
protect it from being copied and sold by local competitors.
Production and Distribution
Page 1 of 3
, BTEC L3 Extended Dip In Business Yr2 Gp1
830216 Unit 39: International Business
When producing and distributing products in an international market, there are many things that
have to be considered. Even though production can be relatively cheap in some countries comparing
to others, not every company can afford to set their prices to a very low level in order to sell more as
the value of the product and the brand image would simply fall. Since every countries economy is
different a business, must ensure that the prices are set reasonably and match the economic
standards of the market, however if the production and distribution costs too much, a business
might simply decide to stop exporting goods to that country due to the very low prices not covering
the production/distribution costs. When adapting a strategy, international businesses must also
consider the infrastructure of the specific country because of imports and exports. If the transport
network is poor and undeveloped, the company will have to spend more on regular delivery of
goods: therefore the company could start producing the goods in the country by setting up a factory
in the local community and avoiding imports. When adapting a specific strategy, the international
company should consider the; use of local materials and must ensure that it gives back to the
community and does not leave them lacking certain essentials i.e. water and is an ethical company in
its production and distribution operations. Taxation may also vary, therefore the business must
ensure that it is aware of the taxation regime of the foreign market and bills are paid regularly to
avoid any penalties and fines.
Human Resource Management
It is not always possible for international businesses to transfer their existing employees into a new
country for business operations. However when recruiting locals, there are many things that have to
be considered by the company. When recruiting the company must ensure that it is aware of the
local employment laws. They must ensure that staff is provided with the right training that gives
them the right skills to carry out daily business operations and certain tasks. Although, if it is
possible for a company to hire expatriate personnel, they would not have to provide them with
training as they are well familiar with the company operations, however the transferred employees
would have to learn the local language, adapt to the culture and the living standards. Sometimes
businesses could have no other choice but to transfer existing staff due to the lack of skills in the
new international market. Whatever recruitment process the company chooses will be very
expensive therefore the business must ensure that it has good reasons for adapting a specific
strategy.
Technology
Technology is a very important aspect of most international operations and needs a strategy just like
any other part of international business activities. The quality and the development of each country
vary, however the use of modern technology is less time and cost consuming. A business can
communicate to different departments and franchises all over the world for free just by the use of
the Internet, making decisions and passing on important information. Technology can also be
transferred by the use of international business as global companies introduce new technology in
the countries they operate in, therefore making the country more advanced. In some countries
technology is highly undeveloped, so a company would have to make a plan on how they are going
to operate using locally available technology without it slowing down their operations and
decreasing the amount of units produced and profit made.
Page 2 of 3
