The External Factors That Influence Tesco When Considering Trading Internationally

Introduction

The two businesses this report would be focused on are, Rolls Royce and Burberry. Explain why two businesses operate in contrasting international markets

Burberry growth

Burberry has 498 stores worldwide. In the UK alone there are 23 stores, meaning they rely heavily on international sales and trade to contribute to UK sales revenues. Burberry is recognized as a luxury and desirable brand and there are not many stores in England so they trade their products and have branches all over the world. Burberry has a growth in Asian markets even though it has undergone a management reshuffle. There is an opportunity for growth as Asia has a higher population, 4. 6 billion more than Europe. By making the product or service available to worldwide buyers, Burberry instantly creates another lifeline for the business by being in less competition and also increase the possibility of standing out. This will in turn boost sales potential and allow Burberry to thrive.

Burberry diversification

In the past decade, Burberry has reinvented itself from being a manufacturer of outerwear attire into a luxurious and stylish lifestyle brand. The company starpositioning, Burberry underwent expansion through the opening of new stores in the current markets as well as international expansion.

Burberry exploitation

Every strong brand has celebrity endorsement. Burberry have a pack of models and influencers who are tightly bound with the brand and no doubt helped to contribute to the success of it. Kate Moss, Cara Delevingne, Naomi Campbell and Sienn their big international income.

Rolls Royce mitigating risk

By Rolls Royce selling internationally they can avoid inflation. The UK has recently exited the european union making things more expensive.

Rolls Royce exploitation

Rolls Royce use celebrities to gain potential customers. They sell their cars to celebrities in exchange for a promotion or exposure to the business. When their fans and followers see their ‘role models’ doing something or having something it makes it more desirable to them. Rolls Royce is a desirable car to have all around the globe.

Explain the types of finance available for international business

Prepayment by the importer

Prepayment is when a buyer sends payment in the agreed currency and through agreed method to a seller before the product is manufactured and/or shipped. By the business doing this it ensures that they won’t be in any dept, and it creates a sense of trust between the importer and the business which is a benefit for any future trades.

Letters of credit

A letter issued by a bank to another bank (especially one in a different country) to serve as a guarantee for payments made to a specified person under specified conditions. This is a promise from one bank to another and a verified way of ensuring the finance is available for the business.

Export credits

Export credits are government financial support, direct financing, guarantees, insurance or interest rate support provided to foreign` buyers to assist in the financing of the purchase of goods from national exporters. This is insurance for the business, it is needed if there happens to be any fault with shipped goods.

Bank Loans

Where you borrow a sum of money from a lender, and agree to pay it back over a set time period in fixed monthly repayments. It’s a fixed repayment, as long as the business has the cash flow and can repay it then it is a good way to get quick money for a business to use when trading.

International investment groups

International investing is an investing strategy that involves selecting global investment instruments as part of an investment portfolio. People often invest internationally to broaden diversification and spread investment risk among foreign markets and companies.

Franchising

An authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, for example acting as an agent for a company's products. Explain the main features of globalisation that affect two contrasting businesses. Globalisation Globalization refers to the changes in the world where we are moving away from self-contained countries and toward a more integrated world. Globalization of business is the change in a business from a company associated with a single country to one that operates in multiple countries. When Rolls Royce make international sales, they have to consider transport, especially since their main products are cars. Improving transport has made global sales happen with more ease. The rapid growth in the area of technology has allowed there to be a greater movement of people and or goods across the globe, making it easier for Rolls Royce to deliver their cars and products internationally. Over time technology has improved significantly, making communication easier.

Due to the advancements made, costs are not as high as you’re able to communicate for free with apps such as Skype. Doing video conferences via Skype is an advantage to the company as they do not have to spend money on representatives don’t have to travel to where the suppliers are, and can reinvest the money they save into the business. Rolls Royce has been affected by the development of technology. With the internet being available it allows potential customers to go on Rolls Royce’s website and view their cars and products. This is beneficial for their international customers as there might not be Rolls Royce showroom near them or even in their country hindering potential customers, this is where the internet becomes beneficial for both parties.

Financial support

Financial support are financial resources which to make various types of projects possible. These can be methods such as prepayments, credit, loans and export credits.

Technological support

Technological support is user assistance that can provided for individuals that have technical issues with electronic devices. the specific support team with individuals which are familiar with the in and out of a device, with their knowledge they can troubleshoot most problems individuals come across when it comes to technology. Technical support can be provided in many ways such as through email, live-chat interface or over the phone. The cost of this support can usually be include of the overall cost of the product or service however sometimes it can be a additional fee. Large companies usually have an frequent technical support to their staff for problems related to computers,laptops and phones. The internet can also be seen a good tool for tech support which is free. Technology service/support can includes many types of things such as information technology, it support, hosting, email and social networking. Legal supportLegal advice is the giving of a professional or formal opinion regarding the substance or procedure of the law in relation to a particular factual situation.

As well, some companies offer answers to legal questions directly through their web services.

Logistical support

Procurement and distribution of equipment, facilities, spares, technical information, and trained personnel, essential to the proper operation of a campaign, plan, or project.

Business support

Support business function: Support business functions (ancillary activities) are carried out in order to permit or facilitate production of goods or services intended for the market/for third parties by the enterprise. Distribution and logistics. Marketing, sales and after sales services. ICT services. Technology has allowed rolls royce to create a website where people can scroll through their items online and view their stock without hassle of going to the actual stores, or if they don’t have a showroom around them. This has helped Rolls Royce to globally expand.

Technology has also helped Burberry as their website allows people to order and return without the hassle of going into stores. If potential customers don’t have a burberry store in their area, they are able to view their products and get a wider range online then they would in stores. P4How do trading blocs e. g. the World Trade Organisation (WTO), E. U, North American Free Trade Area (NAFTA) affect international trade?

World trade organisation

The world trade organisation’s primary goal is to take the conflict out of global commerce, ensuring that trade among nations can flow across borders in a predictable manner. The World trade organisation has the responsibility of promoting trade between nations ensuring that nations stick to the rules and regulations governing trade at the international level. The World trade organisation is devoted to the handling of disputes that may arise as a result of countries conducting trade among themselves and ensuring that all disputes are resolved in a peaceful manner. It is dedicated to ensuring that every country produces goods and services that they are capable in thus enabling consumers to have a choice in all goods and services.

Although there are quite a few pros there are also contradicting cons such as, there is no security between nations so that is a risk. The world trade organisation cuts out developing nations from meaningful trade deals meaning it hinders these nations from developing. The world trade organisation only deals and cares about big well known corporations and countries, they do not show interest about the small and medium companies that are coming up, this hinders opportunities for the smaller businesses.