Extended Diploma in Business ; Unit 5 – International
Business
Learning Aim A – Explore the international context for business operations
Learning Aim B – Investigate international economic environment in which businesses operate
Introduction
In this essay I will be investigating international businesses, why companies chose to go
international, factors they must consider before choosing a specific market, how globalisation effects
businesses internationally as well as legal considerations such as trading laws and financial support .
The two businesses that I will be investigating specifically are Tesco PLC and BP PLC
Section One:
A.P1 - Explain why two businesses operate in contrasting
international markets
Intro – What is an international business ?
International business refers to the trade of goods, services, technology, capital, knowledge across
national borders and at a global scale. International business can take many different forms, these
include exporting, importing, multinational and being involved with the support for business
operating in multiple countries, through activities such as marketing or logistics
Types of Business Activities
Within a business, there are different activities which must be carried out to help bring productivity
and growth of the company. These activities can vary depending on the requirements and the
culture of the business, examples include:
- Exporting businesses
This is when businesses sell goods and services to other countries in exchange for payment. In order
for a business to export they may need things such as; an export declaration, an export licence, to
pay customs duties, to pay taxes in country where the goods are being sent
- Importing business
This is when a business brings (goods or services) into a country from abroad for scale. In order for a
country to import goods they may need things such as; an import declaration, an import licence,
commodity codes for allocated goods, custom duties to be declared and paid to HMRC, VAT to be
paid
- Multinational enterprises
These types of businesses operate in more than one country and usually operate in numerous
different markets on a global scale. Since they are operating in numerous countries, they will have to
adapt to the different laws, rules, customs, cultures regarding importing and exporting goods
- Associated enterprises
1
, These are businesses that aid other businesses that operate in the export/import market. They
mostly help with international trade and may offer specialist services such as logistics and marketing
Reasons why businesses operate internationally
There are multiple reasons why a business would want to operate internationally. Some examples
include the following :
Reasons Definition
Fiscal benefits Fiscal is anything that involves government/
public money e.g. taxes. Businesses can receive
fiscal benefits if they need support.
Diversification This involves creating a new product or service
into a new market – this can have both
advantages and disadvantages for the business
Preferential tax rates Businesses aim to reduces costs and increase
profits wherever they can. One method of
reducing costs in by reducing costs of tax by
operating in less developed/developing
countries
Growth Offering goods and services to other countries
gives potential for organisations to grow, and
growing sales should lead to growing profits in
the future
Economies of scale Companies can achieve economies of scale by
increasing production and lowering cost per
unit. This happens because costs are spread
over a larger number of goods
Comparative advantage This is an economy’s ability to produce goods/
services at a lower opportunity cost than its
trading partners – therefore allowing them to
sell these goods/services at a lower price than
its competitors
Technological dominance Being able to invest in technology is very
beneficial to a business. It allows them to
increase sales/revenue and decrease costs
Additional revenue streams Having multiple revenue streams helps business
to generate new income. The more revenue
streams a business has, the more stable it will
be
Increasing market leadership and market share All businesses try to increase market share, this
is because it means they have more sales and
are more dominant in that particular market
Brand exploitation This involves the business increasing their
awareness in multiple countries
Access to new markets If a business operates internationally, they have
2
Business
Learning Aim A – Explore the international context for business operations
Learning Aim B – Investigate international economic environment in which businesses operate
Introduction
In this essay I will be investigating international businesses, why companies chose to go
international, factors they must consider before choosing a specific market, how globalisation effects
businesses internationally as well as legal considerations such as trading laws and financial support .
The two businesses that I will be investigating specifically are Tesco PLC and BP PLC
Section One:
A.P1 - Explain why two businesses operate in contrasting
international markets
Intro – What is an international business ?
International business refers to the trade of goods, services, technology, capital, knowledge across
national borders and at a global scale. International business can take many different forms, these
include exporting, importing, multinational and being involved with the support for business
operating in multiple countries, through activities such as marketing or logistics
Types of Business Activities
Within a business, there are different activities which must be carried out to help bring productivity
and growth of the company. These activities can vary depending on the requirements and the
culture of the business, examples include:
- Exporting businesses
This is when businesses sell goods and services to other countries in exchange for payment. In order
for a business to export they may need things such as; an export declaration, an export licence, to
pay customs duties, to pay taxes in country where the goods are being sent
- Importing business
This is when a business brings (goods or services) into a country from abroad for scale. In order for a
country to import goods they may need things such as; an import declaration, an import licence,
commodity codes for allocated goods, custom duties to be declared and paid to HMRC, VAT to be
paid
- Multinational enterprises
These types of businesses operate in more than one country and usually operate in numerous
different markets on a global scale. Since they are operating in numerous countries, they will have to
adapt to the different laws, rules, customs, cultures regarding importing and exporting goods
- Associated enterprises
1
, These are businesses that aid other businesses that operate in the export/import market. They
mostly help with international trade and may offer specialist services such as logistics and marketing
Reasons why businesses operate internationally
There are multiple reasons why a business would want to operate internationally. Some examples
include the following :
Reasons Definition
Fiscal benefits Fiscal is anything that involves government/
public money e.g. taxes. Businesses can receive
fiscal benefits if they need support.
Diversification This involves creating a new product or service
into a new market – this can have both
advantages and disadvantages for the business
Preferential tax rates Businesses aim to reduces costs and increase
profits wherever they can. One method of
reducing costs in by reducing costs of tax by
operating in less developed/developing
countries
Growth Offering goods and services to other countries
gives potential for organisations to grow, and
growing sales should lead to growing profits in
the future
Economies of scale Companies can achieve economies of scale by
increasing production and lowering cost per
unit. This happens because costs are spread
over a larger number of goods
Comparative advantage This is an economy’s ability to produce goods/
services at a lower opportunity cost than its
trading partners – therefore allowing them to
sell these goods/services at a lower price than
its competitors
Technological dominance Being able to invest in technology is very
beneficial to a business. It allows them to
increase sales/revenue and decrease costs
Additional revenue streams Having multiple revenue streams helps business
to generate new income. The more revenue
streams a business has, the more stable it will
be
Increasing market leadership and market share All businesses try to increase market share, this
is because it means they have more sales and
are more dominant in that particular market
Brand exploitation This involves the business increasing their
awareness in multiple countries
Access to new markets If a business operates internationally, they have
2
