UNIT 5 – INTERNATIONAL
BUSINESS
Learning Aim A
,Unit 5: International business
Exploring the international context for business operations
In this assignment, I will go over the context of the two international businesses that are currently in
operation. I will explain how each of the various business trading systems works. In the following
sections of this report, I will examine the external factors that influence these organisations'
international trading activities. The two contrasting businesses that I have chosen are River Island and
Samsung.
History
Samsung
Samsung is a South Korean multinational company that an internationally large producer of electronic
devices. Samsung specialize in producing a wide variety of consumer and industry electronics. It has
become one of the most-recognizable names in technology and produces about a fifth of South Korea’s
total exports.1
Samsung was founded as a grocery trading store on March 1, 1938, by Lee Byung-Chull. Lee Byung-Chull
started his business in Taegu, Korea, trading noodles and other goods produced in and around the city
and exporting them to China and its provinces. When the Korean War had ended, Lee decided to expand
his business into textiles and opened the largest woollen mill in Korea. Lee Byung-Chull focused heavily
on industrialization with the goal of helping his country redevelop itself after the war. During that period
Lee Byung-Chull’s business benefited from the new protective policies adopted by the Korean
government, their aim was to help large domestic corporations by protecting them from competition
and providing them easy financing. To better compete in the textile market, the corporation expanded
its textile-manufacturing techniques in the 1970s to span the entire line of manufacture, from raw
materials to finished items. Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision
Company are examples of new ventures. During the same time, the company began to invest in the
heavy, chemical, and petrochemical industries, indicating a promising growth route for the company. 2
The rapid rise of Samsung's technological businesses in the late 1970s and early 1980s was witnessed.
Separate semiconductor and electronics divisions were formed, and an aircraft division was formed in
1978. Samsung Data Systems (now Samsung SDS) was founded in 1985 to meet the growing need for
system development among organisations. Samsung was able to position itself as a leader in the
information technology services industry quite fast. Samsung also established two research and
development institutes in electronics, semiconductors, high-polymer chemicals, genetic engineering
tools, telecommunications, aerospace, and nanotechnology, expanding the company's technology line.
Samsung's push into the worldwide electronics markets continued in the 1990s. Despite its success, the
corporation was plagued by corporate scandals throughout those years, which included many bribery
charges and patent-infringement lawsuits. Despite this, the corporation continued to make
technological and product-quality breakthroughs, with several its technology products—ranging from
semiconductors to computer monitors and LCD screens—climbing into the top-five global market share
positions. Samsung's Galaxy smartphone series debuted in the 2000s, swiftly becoming not just the
company's most praised product but also routinely topping annual lists of the world's best-selling
1
https://www.britannica.com/topic/Samsung-Electronics#:~:text=Samsung%2C%20South%20Korean%20company%20that,memory%20chips
%2C%20and%20integrated%20systems.
2
https://r2.community.samsung.com/t5/Galaxy-A/Samsung-Started-from-which-years-IT-S-JUST-AMAZING/td-p/9239065
1|Page
,Unit 5: International business
smartphones. Since 2006, the firm has been the world's best-selling television manufacturer. With the
debut of the Galaxy Tab in 2010, the Galaxy series extended to include tablet PCs.
River Island
River Island is a high-street fashion brand based in London that operates in a variety of international
countries. Bernard Lewis and his brothers founded the company in London in 1948. The Lewis family
owns River Island, which is a private enterprise. Bernard Lewis began selling fruit and vegetables in
1948, then moved on to knitting wool from a bombed-out premises in London's East End. 3 With the help
of his three brothers, the Lewis Separates business grew to nine locations. Lewis Separates had grown to
70 stores in the UK by 1965, and it was decided that the company needed a fresh image. Lewis
Separates was renamed Chelsea Girl because the King's Road in Chelsea was the epicentres of fashion,
music, and popular culture at the time. Chelsea Girl was the first fashion boutique chain in the United
Kingdom.
Two of the brothers left the business in the late 1970s, leaving Bernard, David, and their families in
charge. They founded the Lewis Trust Group, with David in charge of the other businesses, such as
hotels, real estate, and investments, and Bernard in charge of the retail division. This allowed the
company to branch out into menswear in 1982 with the opening of Concept Man stores, before merging
with Chelsea Girl in 1988 to form River Island, a single retail brand. The brand's first store debuted in
Ireland in 1993. Since then, it has grown into a dozen more areas, including Russia, Poland, and several
Middle Eastern countries. River Island debuted its Kids wear line in 2010. Chelsea Girl was relaunched as
a capsule collection in River Island stores in 2011. River Island expanded its Kids wear range in 2018 with
the debut of RI Baby. Will Kernan was named CEO in September 2019, succeeding Ben Lewis, who had
served as CEO for the previous ten years. He is the first non-family member to hold this position. 4
Types of business activities
Exporting businesses
An exporting business is a business that wants to sell and send products outside of the United Kingdom.
A business may decide to start exporting goods because they can increase their customer sales revenue
which will increase their market share. If a business decides to export outside of the UK, then they will
need to sign an export declaration form, they may need to pay customs license, an export license and
they may need to pay taxes in the country they are going to send goods to. However, to encourage the
trade between countries a free-trade deal was implemented to make exporting to other countries
cheaper. It is cheaper because they have reduced or eliminated tariffs. 5
Samsung
Exporting business is when a business such as Samsung make the decision to send their products to
countries outside of the country that they originate from. Samsung will also be exporting their products
to many different countries which means they will also need to complete the export declaration form as
they will be sending goods out of the UK. This means that Samsung will also need an exporting license
3
https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8392014/Ben-Lewis-interview-River-Island-chief-on-reviving-80s-
style-Chelsea-Girl.html
4
https://www.drapersonline.com/news/river-island-appoints-new-ceo
5
https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
2|Page
, Unit 5: International business
which is needed before signing the export of declaration form. 6 This will cost a small fee, but it is better
for Samsung to abide by the law rather than getting a large fine and potentially ruining their brand
reputation for not paying taxes in the countries where the goods are being sent. Samsung may also have
to pay VAT when exporting goods outside of the UK into other countries which means Samsung will have
to pay for tax which is decided by the government of the country. If Samsung do not pay the tax, then
HMRC can take enforcement action to recover any tax they owe. 7
River Island
River Island is an exporting business as they sell products to many different countries to increase the
amount of customers they can get, but this may cost extra for the customers as they are shipping fees
will be higher. This means that having a higher amount of customers will increase their market share
and they will be able to negotiate better deals with their suppliers. But first an export declaration form
must be completed by the exporter, which includes information such as the trade data as well as serving
as an export control document. This is one of the particularly important things a business such as River
Island need to trade in other countries, this is because this declaration is proof that a business is eligible
to export and import goods from a certain country. This means without this declaration they will have
no right to trade within certain countries outside of the UK and if they do, they will face a fine of up to
£25,000 as a civil penalty for contraventions of customs law. 8
Importing businesses
An importing business is a business that imports goods into the UK from another country, which usually
means that the business will not need a license or to pay import duties, but they will have to pay VAT
(Value Added Tax) and the business will need to have commodity code attached to the products they are
going to import so that the right amount of VAT can be paid. Commodities are codes that are used to
give extra guidelines or to show how much VAT will need to be paid by the business. The amount of VAT
that a business must pay is calculated by the code that is given to the commodity. 9
Samsung
Samsung imports many raw materials and machinery from China which they use to manufacture their
products.10 Due to Samsung importing materials from China there are costs and fees that they will have
to pay for such as VAT, custom duties, import declaration and an import license, as well as having
commodity codes to the allocated goods. Before Samsung can import any goods to the UK, they will
need a license and commodity code or they will not be able to sign their import declaration form, if they
do not sign this, they will face a heavy fine by HMRC. 11 This is because businesses that do not sign the
import declaration form are suspicious in the eyes of the law as they do not state what they are
6
https://www.gov.uk/guidance/standard-individual-export-licences
7
https://www.kirks.co.uk/faqs/company-liquidation/what-happens-if-my-business-cannot-pay-its-corporation-tax/#:~:text=Never%20pay
%20your%20Corporation%20Tax,the%20tax%20debt%20is%20large.
8
https://www.gov.uk/government/publications/excise-notice-301-civil-penalties-for-contraventions-of-customs-law/excise-notice-301-civil-
penalties-for-contraventions-of-customs-law
9
https://www.startuploans.co.uk/business-advice/how-to-calculate-vat/#:~:text=Calculating%20how%20much%20VAT%20to,goods%20and
%20services%20it%20buys.
10
https://www.ukessays.com/essays/economics/international-trade-of-samsung-electronics-economics-essay.php
11
https://www.gov.uk/government/publications/uk-trade-tariff-imports-and-community-transport-inwards/uk-trade-tariff-imports-and-
community-transport-inwards
3|Page
BUSINESS
Learning Aim A
,Unit 5: International business
Exploring the international context for business operations
In this assignment, I will go over the context of the two international businesses that are currently in
operation. I will explain how each of the various business trading systems works. In the following
sections of this report, I will examine the external factors that influence these organisations'
international trading activities. The two contrasting businesses that I have chosen are River Island and
Samsung.
History
Samsung
Samsung is a South Korean multinational company that an internationally large producer of electronic
devices. Samsung specialize in producing a wide variety of consumer and industry electronics. It has
become one of the most-recognizable names in technology and produces about a fifth of South Korea’s
total exports.1
Samsung was founded as a grocery trading store on March 1, 1938, by Lee Byung-Chull. Lee Byung-Chull
started his business in Taegu, Korea, trading noodles and other goods produced in and around the city
and exporting them to China and its provinces. When the Korean War had ended, Lee decided to expand
his business into textiles and opened the largest woollen mill in Korea. Lee Byung-Chull focused heavily
on industrialization with the goal of helping his country redevelop itself after the war. During that period
Lee Byung-Chull’s business benefited from the new protective policies adopted by the Korean
government, their aim was to help large domestic corporations by protecting them from competition
and providing them easy financing. To better compete in the textile market, the corporation expanded
its textile-manufacturing techniques in the 1970s to span the entire line of manufacture, from raw
materials to finished items. Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision
Company are examples of new ventures. During the same time, the company began to invest in the
heavy, chemical, and petrochemical industries, indicating a promising growth route for the company. 2
The rapid rise of Samsung's technological businesses in the late 1970s and early 1980s was witnessed.
Separate semiconductor and electronics divisions were formed, and an aircraft division was formed in
1978. Samsung Data Systems (now Samsung SDS) was founded in 1985 to meet the growing need for
system development among organisations. Samsung was able to position itself as a leader in the
information technology services industry quite fast. Samsung also established two research and
development institutes in electronics, semiconductors, high-polymer chemicals, genetic engineering
tools, telecommunications, aerospace, and nanotechnology, expanding the company's technology line.
Samsung's push into the worldwide electronics markets continued in the 1990s. Despite its success, the
corporation was plagued by corporate scandals throughout those years, which included many bribery
charges and patent-infringement lawsuits. Despite this, the corporation continued to make
technological and product-quality breakthroughs, with several its technology products—ranging from
semiconductors to computer monitors and LCD screens—climbing into the top-five global market share
positions. Samsung's Galaxy smartphone series debuted in the 2000s, swiftly becoming not just the
company's most praised product but also routinely topping annual lists of the world's best-selling
1
https://www.britannica.com/topic/Samsung-Electronics#:~:text=Samsung%2C%20South%20Korean%20company%20that,memory%20chips
%2C%20and%20integrated%20systems.
2
https://r2.community.samsung.com/t5/Galaxy-A/Samsung-Started-from-which-years-IT-S-JUST-AMAZING/td-p/9239065
1|Page
,Unit 5: International business
smartphones. Since 2006, the firm has been the world's best-selling television manufacturer. With the
debut of the Galaxy Tab in 2010, the Galaxy series extended to include tablet PCs.
River Island
River Island is a high-street fashion brand based in London that operates in a variety of international
countries. Bernard Lewis and his brothers founded the company in London in 1948. The Lewis family
owns River Island, which is a private enterprise. Bernard Lewis began selling fruit and vegetables in
1948, then moved on to knitting wool from a bombed-out premises in London's East End. 3 With the help
of his three brothers, the Lewis Separates business grew to nine locations. Lewis Separates had grown to
70 stores in the UK by 1965, and it was decided that the company needed a fresh image. Lewis
Separates was renamed Chelsea Girl because the King's Road in Chelsea was the epicentres of fashion,
music, and popular culture at the time. Chelsea Girl was the first fashion boutique chain in the United
Kingdom.
Two of the brothers left the business in the late 1970s, leaving Bernard, David, and their families in
charge. They founded the Lewis Trust Group, with David in charge of the other businesses, such as
hotels, real estate, and investments, and Bernard in charge of the retail division. This allowed the
company to branch out into menswear in 1982 with the opening of Concept Man stores, before merging
with Chelsea Girl in 1988 to form River Island, a single retail brand. The brand's first store debuted in
Ireland in 1993. Since then, it has grown into a dozen more areas, including Russia, Poland, and several
Middle Eastern countries. River Island debuted its Kids wear line in 2010. Chelsea Girl was relaunched as
a capsule collection in River Island stores in 2011. River Island expanded its Kids wear range in 2018 with
the debut of RI Baby. Will Kernan was named CEO in September 2019, succeeding Ben Lewis, who had
served as CEO for the previous ten years. He is the first non-family member to hold this position. 4
Types of business activities
Exporting businesses
An exporting business is a business that wants to sell and send products outside of the United Kingdom.
A business may decide to start exporting goods because they can increase their customer sales revenue
which will increase their market share. If a business decides to export outside of the UK, then they will
need to sign an export declaration form, they may need to pay customs license, an export license and
they may need to pay taxes in the country they are going to send goods to. However, to encourage the
trade between countries a free-trade deal was implemented to make exporting to other countries
cheaper. It is cheaper because they have reduced or eliminated tariffs. 5
Samsung
Exporting business is when a business such as Samsung make the decision to send their products to
countries outside of the country that they originate from. Samsung will also be exporting their products
to many different countries which means they will also need to complete the export declaration form as
they will be sending goods out of the UK. This means that Samsung will also need an exporting license
3
https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8392014/Ben-Lewis-interview-River-Island-chief-on-reviving-80s-
style-Chelsea-Girl.html
4
https://www.drapersonline.com/news/river-island-appoints-new-ceo
5
https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
2|Page
, Unit 5: International business
which is needed before signing the export of declaration form. 6 This will cost a small fee, but it is better
for Samsung to abide by the law rather than getting a large fine and potentially ruining their brand
reputation for not paying taxes in the countries where the goods are being sent. Samsung may also have
to pay VAT when exporting goods outside of the UK into other countries which means Samsung will have
to pay for tax which is decided by the government of the country. If Samsung do not pay the tax, then
HMRC can take enforcement action to recover any tax they owe. 7
River Island
River Island is an exporting business as they sell products to many different countries to increase the
amount of customers they can get, but this may cost extra for the customers as they are shipping fees
will be higher. This means that having a higher amount of customers will increase their market share
and they will be able to negotiate better deals with their suppliers. But first an export declaration form
must be completed by the exporter, which includes information such as the trade data as well as serving
as an export control document. This is one of the particularly important things a business such as River
Island need to trade in other countries, this is because this declaration is proof that a business is eligible
to export and import goods from a certain country. This means without this declaration they will have
no right to trade within certain countries outside of the UK and if they do, they will face a fine of up to
£25,000 as a civil penalty for contraventions of customs law. 8
Importing businesses
An importing business is a business that imports goods into the UK from another country, which usually
means that the business will not need a license or to pay import duties, but they will have to pay VAT
(Value Added Tax) and the business will need to have commodity code attached to the products they are
going to import so that the right amount of VAT can be paid. Commodities are codes that are used to
give extra guidelines or to show how much VAT will need to be paid by the business. The amount of VAT
that a business must pay is calculated by the code that is given to the commodity. 9
Samsung
Samsung imports many raw materials and machinery from China which they use to manufacture their
products.10 Due to Samsung importing materials from China there are costs and fees that they will have
to pay for such as VAT, custom duties, import declaration and an import license, as well as having
commodity codes to the allocated goods. Before Samsung can import any goods to the UK, they will
need a license and commodity code or they will not be able to sign their import declaration form, if they
do not sign this, they will face a heavy fine by HMRC. 11 This is because businesses that do not sign the
import declaration form are suspicious in the eyes of the law as they do not state what they are
6
https://www.gov.uk/guidance/standard-individual-export-licences
7
https://www.kirks.co.uk/faqs/company-liquidation/what-happens-if-my-business-cannot-pay-its-corporation-tax/#:~:text=Never%20pay
%20your%20Corporation%20Tax,the%20tax%20debt%20is%20large.
8
https://www.gov.uk/government/publications/excise-notice-301-civil-penalties-for-contraventions-of-customs-law/excise-notice-301-civil-
penalties-for-contraventions-of-customs-law
9
https://www.startuploans.co.uk/business-advice/how-to-calculate-vat/#:~:text=Calculating%20how%20much%20VAT%20to,goods%20and
%20services%20it%20buys.
10
https://www.ukessays.com/essays/economics/international-trade-of-samsung-electronics-economics-essay.php
11
https://www.gov.uk/government/publications/uk-trade-tariff-imports-and-community-transport-inwards/uk-trade-tariff-imports-and-
community-transport-inwards
3|Page
