International Business and Expansion

This document discusses the concept of international business and expansion. It covers topics such as the main features of globalization, the role of trading blocs on international trade, and cultural differences affecting international businesses. It also explores the internal factors influencing Virgin while trading internationally and how business support systems enable a selected business to trade globally. Additionally, it examines how products and processes need to be adopted for the international market.

International
Business and
Expansion

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Discuss why two businesses operate in contrasting international markets......................1
The requirement of the assessment criterion is to explain why two businesses operate in
contrasting international markets and not to conduct a PESTEL analysis.............................3
P2 and M1) Discuss the kind of finance available for international business........................3
Analyse the available finance to contrasting businesses which operates internationally. .....3
P3) Explain the main features of globalization which affect two contrasting businesses......4
P4, M2 and D1) Discuss the role of trading blocs on international trade. ............................4
Analyse the barriers of operating internationally for two contrasting businesses. ................5
Evaluate the impact of globalization on a business. ..............................................................5
TASK 2............................................................................................................................................5
P5) Discuss internal factors which influence Virgin while trading internationally...............5
P6, M3 and D2) Illustrate how business support systems enable a selected business to trade
globally...................................................................................................................................6
Conduct situational analysis on two countries a selected business may consider trading in.6
Suggest one country which select business to target international trade. ..............................7
P7, M4 and D3) Highlight cultural differences affecting international businesses. ..............7
Examine how cultural differences affect international businesses.........................................7
TASK 3............................................................................................................................................8
P8, M5 & D4) How products and processes have to be adopted for international market – This
should be presented in PowerPoint Slides and should include explanation of international
demands and differences, culture and environment, societal needs, ……………….............8
Examine the strategies and resources effectiveness as well as success that are used by an
organization............................................................................................................................9

CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
International business plays a essential role in growth and development of the nation’s
economy. Here, transactions of product and services take place among two or more countries
(Ang and Hooi, 2018). There are numerous benefits of international business which are, raises
revenue, better risk management, easier cash flow statement, disposal of surplus goods,
benefiting from currency exchange and so on. In order to complete the project Virgin is
undertaken. This mail order record business came into existence in the year 1970 and later into
private company in music publishing and retailing. The assignment covers types of finance
available for international trade. Focus is done on features of globalization which affect two
businesses. How cultural differences affecting international businesses is studies for better
results. Additionally, role of trading blocs on international trade is examined.
TASK 1
P1) Discuss why two businesses operate in contrasting international markets.
In the year 1970 Virgin was introduced in the open market place. It is a mail order record
business and developed as private company in music publishing and retailing.
Plan International UK original name is Foster Parents Scheme for children in Spain.
They are providing food, shelter and education to the children who become victim in Spanish
Civil War.
Bell Canada is a Canadian telecommunication company which is located in Montreal,
Canada. It is operating in this nation because it provide numerous advantages to the customers
such as, disability insurance, dental insurance, private health plan, vision insurance, extended
health care etc. There are many other scope to expand their business of telecommunication in this
market as people are more interested in such kind of companies who are are offering benefits
along with services. Along with this it provides nominal discount to most of the Bell services sue
to which loyal customers are builds fr longer time period.
Virgin is located in UK and is expanding its business in UK because the political
condition of UK is stable and are economically strong. The hovering bodies of the nation
supports the Virgin business to a large extent as well as supports them to come up with new
venture in the market. Additionally, this nation is technology strong and adopts modern tools and
techniques to meet the emerging needs of the customers.
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P2 and M1) Discuss the kind of finance available for international business
The various fiancé available for international business are:
Incorporation: This the best way which both the organization can acquire funds for
international trade. Share of the company can be issued in the market either to the public or to
select group and funds can be gathered easily without any risk factor and expansion of business
can be done smoothly.
Debenture: Another way of accumulating cash amount is through debenture because
they do not loss control and require less interest rate. By gathering funds from this available
resource business can be easily expanded to international market effectively and set goals can be
achieved.
Conventional Loans: Banks and other conventional financial institution offers business
loans to companies so that they can easily expand business in the international market. Low rate
of interest is charged but in-turn collateral security is charged (Buckley and Benischke, 2017).
Analyse the available finance to contrasting businesses which operates internationally.
Conventional loans are the sources through which finance can be accumulated easily and
business can be operated easily. As low interest is charged it is convenient for the business
associates to repay back. As well as collateral security is charged it motivates the form
supervisors to repay the amount in the set time frame.
P3) Explain the main features of globalization which affect two contrasting businesses.
Globalization refers to as integration of world economy, businesses, people on one single
platform. The two main features of globalization that affect contrasting businesses are illustrated
as under:
Raising standards: Globalization is not responsible in raising the standards of living.
The global trend is accountable for the change in people across the globe. Both the organization
are scanning the external environment in order to cope up with other nation trends as people are
demanding all this because it is become easy to access across the boundaries.
World market: Through globalization it is become possible to gain quality products and
services easily. It has aid in developing local markets at a tremendous scale. This leads in raising
high living standards of the people. As well as competitive advantages against rivalry is gained
by both the companies.
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Global product standardization: Both the companies are working day and night to meet
the emerging needs of the customers (Deng and Sinkovics, 2018). Continuous research and
development work is conducted so that innovative and quality goods can be offered in the the
global market as well as the both the firm's product are able to achieve the expectation level of
the international market (Oh and Oetzel, 2017).
P4, M2 and D1) Discuss the role of trading blocs on international trade.
The role of trading blocs on international trade is that it aids in abolishing tariff and non-
tariff (embargoes, import quotes and so on) barriers and ensure smooth and free transfer of
resources across worldwide of members countries. Also, effectively resources are utilized for
best outcomes.
The different trading blocs are explained as under:
 Free trade area: This work when two country in a region consent to get rid of barriers on
trade on all products importing from other area.
 Preferential trade area: It is applicable when nation within geographical region agreed to
reduce tariff restrictions on goods imported from distinguish area.
The role of trading blocs on international trade is to permit more human resource, labour forces
and efficient tools and techniques and so on so as to minimize transaction costs related to
finance, administrative and legal differences. Along with this allow to trade freely among close
and geographical nation.
Analyse the barriers of operating internationally for two contrasting businesses.
The barriers of operating internationally for two contrasting businesses are, taxes on
imported goods, tariff barriers and non-tariff barriers. This barrier greatly affects the business
sales ratio and revenue generation. The non-traffic barriers include embargoes, buy-national
regulations, import quotes and so on. By this restriction the exchange of goods and services
become difficult and emerging needs of customers are not meet in the set time duration.
Evaluate the impact of globalization on a business.
Globalization has created positive impact on the business as through this trading of
business has become easily across the globe as well as more innovation are taking place on
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regular basis due to which living standards of people are raising and economy of the nation are
growing (Gulanowski and Plante, 2018).
TASK 2
P5) Discuss internal factors which influence Virgin while trading internationally.
External factors are those forces which directly or indirectly affect the business day to
day working at a large scale. They are uncontrollability in nature but policies can be framed to
overcome them for better results. Some of the external factors are, technological changes, legal
changes, political changes etc. It is a part of external factor and it affect Virgin while trading
internationally in negative way. This because it is very difficulty to cope with frequent changes
in the political conditions. This leads to downfall of sales and profit margin.
Political changes: The frequent changes in the nation affect Virgin in both positive and
negative way. The changes in political condition frequently reduces the business expansion. And
well as affect country's economic conditions.
Legal changes: This external factor affect the business which is trading internationally to
a large extent. Every nation governing body frame trade policies as per their conditions. So
changes in them directly affect the Virgin while trading internationally as they need to be
modified accordingly. The ways of marketing goods and services nee to be changes if it dies not
match with their legal terms and conditions.
Some of the internal factors affecting Virgin while trading globally are discussed as beneath:
Target audience: The changes in internal working environment affect business trading.
As employees of Virgin are unsatisfied with the terms and conditions then effective results can
be attained and target passengers needs can not be full-filled accordingly. By this market value
decreases (Liuhto, 2019).
Employees: If potential staff members turn out raises in Virgin set goals and objectives
can be attained in the set deadline. It also affect the international trading as all the business
activities are not organized properly and conflict arises among the teammates.
Funding: Lack of funding affect globally trading because without this innovation can not
be and Virgin will not be able to compete with competitors prevailing in the global market. In
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order to pay to creditors monetary amount is needed as well as sufficient funding is needed to
run the business.
P6, M3 and D2) Illustrate how business support systems enable a selected business to trade
globally
Business support system enables Virgin to grow the business of four-airline from Europe
to Australia. BSS is a component which is used by telecommunication service so as to operate
the business effectively. By this best telephone services can be offered so that effective outcomes
can be attained. However, BSS has their own data and service responsibilities which help the
airline business to run smoothly. Busies support system supports communication, transportation
and payment as it uplift business services in proper manner. It is adopted by all service providers
like, mobile , fixed and cable networks It makes the task easily and aid in trading internationally.
With the help of this system payment can be done easily from any corner of the nation. As well
as make the communication and transportation more smooth as it brings clarity.
Conduct situational analysis on two countries a selected business may consider trading in.
As Pestle analysis is conducted for both the companies that is Virgin and Plan
International UK. Through it has clear that Virgin may consider trading in as best airline services
are offered to the customers. Situational analysis guide to examine both internal and external
factors of any business. By this management of both the firm are able to frame effective tactics
for better outcomes (Hamilton and Webster, 2018).
Suggest one country which select business to target international trade.
Virgin is coming up with four-airline from Europe to Australia by this easily passenger
can travel from one place to another. The travellers of Australia and Europe are the targets client
and accordingly services are offered to them so that they can be bind for longer time duration.
P7, M4 and D3) Highlight cultural differences affecting international businesses.
Humane Orientation, assertiveness, uncertainty avoidance etc. are some of cultural
differences that influence international business. They are greatly affecting the business
working . Language barriers are affect the smooth working of global business as mis-
undersatanding take place and unproductive results are attained. Workplace etiquette is another
cultural differences impacting international business due to which excepted level of global
market are not achieved.
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Examine how cultural differences affect international businesses.
In an organization cultural differences are affecting international bushinesses as they
come across may issues such as, language , policies, taste and demand of the customers, market
scenario etc. All this are affecting international trade as they create barriers while dealing with
the customers in order to full-fill the customers expectation level tactics need to framed in order
to overcome this cultural differences in international trading (Hamilton and Webster, 2018).
Political and demand of the customers are the cultural differences which are faced by Virgin.
The frequent changes in the political conditions affect the business day to day business activities
to a large extent. While, due to globalisation consumers needs and preferences are changing and
it very difficult for Virgin to cope up with them.
Plan International UK is facing language related cultural differences because they are
helping the Spanish affected children in the war due to which it is difficult to understand their
language. Another problem is that they are children so they can able to express their feeling and
though clearly. Plan international UK is training their teammates in Spanish language as well as
sign language are taught to the employees so that they can easily understand children's indication
and can examine what they are trying to say.
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TASK 3
P8, M5 & D4) How products and processes have to be adopted for international market
International demand and differences: It is explained as amount of funds spend on product
and services at various sizes of the income. The demand of the customers varies according to
their disposable income.
International culture and environment: The is illustrated as culture which is exchanged across
the globe freely. National culture indicates beliefs and practices exchanged by people of the
same country
Societal needs: This is described as those needs for which people work day and night to full-fill
them. Company build healthy relation with each other in order to better unders6tand the
emerging needs and wants of the customers.
There are several ways through which a company can enter into a foreign market as well
as the company must identify the market opportunities and internal capabilities in order to
determine the best approach. Virgin starts their business at a global level along with a low risk
strategy and involve additional investment in opportunities after they proven their initial success
in UK. There are several processes and strategies that are to be considered by Virgin in order to
expands their business operation at international level. Exporting: It is define as a transfer of goods from one country to other for the motive of
selling at a low risk (Tenzer, H., Terjesen, S. and Harzing, A. W., 2017). Exporting
considered as a low risk strategy which businesses insight attractive for numerous
reasons. As matured products and services in a local market might discover several
growth opportunities and some thinks that it is less risky as it is more profitable to export
their existing commodity instead of developing new. Also, it will helps in balancing the
seasonal demand of local nation and growth in revenue sector as well as the company
face less competition in exporting their goods in international market. Licensing: In this kind of strategy a business supplies its products to a foreign company
by granting that they have right to adopts the licensor’s brand name, manufacturing
procedures, patents as well as sales report and payment. This will beneficial for licensee
to obtain a competitive edge while licensor finds inexpensive access into a new market
area. Virgin company can market their offerings internationally because of scarce capital
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as well as the governmental restrictions on imports but this process does some kind of
risks in it.
 Joint ventures: It define as a partnership between local and foreign businesses as both
firm invest capital, equally liable to control the activities, share ownership and bear all
profits and loss equally. In this global partner gives expertise towards the networks,
business contacts, new market conditions as well as access to another in-country
components of company such as legal compliances, real estate’s etc. This strategy needs
a high commitment from businesses as compared to other methods as they are less
flexible and more riskier process. Joint venture may yield a tax benefits in several
countries as the foreign established business are higher tax rated in comparison of locally
formed businesses (Xu and Chen, 2018).
Examine the strategies and resources effectiveness as well as success that are used by an
organization.
In order to measure the strategy and resource effectiveness a company i.e. Virgin have to
evaluate their objectives link with the plan which are formulated to achieve their targets. If all
resources are used properly as per the plan results in successful implementation and deliver
effective outcomes. So a company needs to examine the use of resources as well as performance
in order to check if strategies hits the target. To gt a high success a company can formulate and
develop measurable strategies and variables while it will implemented. Also, evaluate the
performances and review the objectives effectiveness.
CONCLUSION
From the above it can be ended that international trade plays a significant role in growth
and development of the economy. Through this many job opportunities has been created as well
as living standard of the people has raised. Globalization has opened the platform to integrate
with people, business etc. easily. Business support system directly aid in running the business
smoothly so that set standards can be achieved. Various available resources are examined in
order to eliminate the deficiency of funds while operating the business in the international
market.
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REFERENCES
Books and Journals
Ang, S. H., Benischke, M. H. and Hooi, A. W. L., 2018. Frequency of international expansion
through high control market expansion modes and interlocked directorships. Journal of
World Business. 53(4). pp.493-503.
Arensberg, M. B., 2018. Population aging: opportunity for business expansion, an invitational
paper presented at the Asia-Pacific Economic Cooperation (APEC) International
Workshop on Adaptation to Population Aging Issues, July 17, 2017, Ha Noi, Viet
Nam. Journal of Health, Population and nutrition. 37(1). p.7.
Brannen, M. Y., Piekkari, R. and Tietze, S., 2017. The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical
challenge to MNC theory and performance. In Language in international business (pp.
139-162). Palgrave Macmillan, Cham.
Buckley, P. J., Doh, J. P. and Benischke, M. H., 2017. Towards a renaissance in international
business research? Big questions, grand challenges, and the future of IB
scholarship. Journal of International Business Studies. 48(9). pp.1045-1064.
Deng, Z. and Sinkovics, R. R., 2018. Rapid expansion of international new ventures across
institutional distance. Journal of International Business Studies. 49(8).pp.1010-1032.
Gulanowski, D., Papadopoulos, N. and Plante, L., 2018. The role of knowledge in international
expansion: Toward an integration of competing models of internationalization. Review
of International Business and Strategy, 28(1), pp.35-60.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Liuhto, K., 2019. Expansion or exodus: Why do Russian corporations invest abroad?.
Routledge.
Mohr, A. and Batsakis, G., 2017. Internationalization speed and firm performance: A study of
the market-seeking expansion of retail MNEs. Management International Review.
57(2). pp.153-177.
Oh, C. H. and Oetzel, J., 2017. Once bitten twice shy? E xperience managing violent conflict risk
and MNC subsidiary‐level investment and expansion. Strategic Management Journal.
38(3). pp.714-731.
Tenzer, H., Terjesen, S. and Harzing, A. W., 2017. Language in international business: A review
and agenda for future research. Management International Review. 57(6). pp.815-854.
Xu, X., Zeng, S. and Chen, H., 2018. Signaling good by doing good: How does environmental
corporate social responsibility affect international expansion?. Business Strategy and
the Environment. 27(7). pp.946-959.
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