International Business and Globalisation

This report discusses the importance and impact of global trade and globalisation in the context of international business. It focuses on Trading Scents Ltd., a growing suppliers and wholesale manufacturer of cosmetics and perfumes. The report explores the effectiveness and impacts of globalisation on the company, including the benefits of global sourcing, inward investment flows, access to larger markets, and the application of comparative advantage. It also discusses the company's plans for international expansion, including entry strategies such as franchising.

International Business and
Globalisation

Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
Appraise the importance and impact of global trade and globalisation.......................................1
LO4..................................................................................................................................................2
Relating to your company contrast at least two relevant markets in two countries – compare
them going into detail using PESTLE and Porters Five forces and apply them to the market
(the countries you want to expand to)..........................................................................................2
LO5..................................................................................................................................................6
Internationalisation – how are they making businesses international what entry strategies are
they applying...............................................................................................................................6
LO6..................................................................................................................................................9
Based on LO4 & LO5 – what are the findings, what strategies suit, what are the practical
issues and solutions......................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
International business is considered as the trade of products, services, technology, capital
and understanding across national border as well as at international or transactional scale. This
incorporates cross border transactions of products or services among two or more countries. It is
also undertaken as the globalisation. Moreover, globalisation is shift towards a much integrated
world economy where culture, thoughts and beliefs are exchanged additionally to products,
resource and services (Begum, 2020). As per the scenario, the undertaken company for this
report is Trading Scents Ltd., which is a growing suppliers and wholesale manufacturer of
cosmetics and perfumes. It is registered in year 2011 within United Kingdom. It deals with
perfumes, cosmetics and many others. The topics which are going to be discussed in this report
are effectiveness and impact of global trade and globalisation. Moreover, PESTEL analysis,
Porter’s five forces analysis, entry strategies, Ansoff matrix and Porter generic strategies are
described. Apart from this, internationalism drivers and current issues are also discussed in this
report.
LO1
Appraise the importance and impact of global trade and globalisation
Globalisation is regarded as the procedures through which the world is becoming
enhancing interconnected as an outcome of massively enhanced trade as well as cultural
exchange. Globalisation has enhanced the production of product and services. Moreover, this is
also undertaken as the market integration within international economy, leading towards
enhanced interconnectedness of national economies (Burgmann, 2020). As Trading scents Ltd.
planning to expand their business internationally so it has various effectiveness as well as
impacts. Some of them are discussed below:
Importance of globalisation
The globalisation to have numerous importance to global business and national economies.
Some of them are described underneath:
 Globalisation allows worldwide access for sourcing of cheap raw material as well as it
enables entity to become cost competitive into its own market place as well as into overseas
market area. Also, seeking out less cost material from across the world is known as
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international sourcing. Also, due to reduction into cost and revenue maximisation,
globalisation may produce enhanced profitability for shareholders.
 Globalisation has led to enhanced inward investment flows among nations that have
developed advantages for recipient countries. These benefits incorporate the knowledge as
well as technology sharing among nations.
 This is also helpful in access to huge marketplace means that entity can able to experience
higher demands for its goods and advantages from economies of scale, that drives towards
minimisation into average cost of manufacturing.
 It also facilitates a kind of incentives for nations to expertise as well as advantage from the
application of comparative advantage principle.
Impact of globalisation:
Globalisations also have impacts upon countries and business as well (Cherunilam, 2020).
Some of them are as follows:
 Prices: Enhanced competition is likely to minimise the level of price for traded
manufacturers. Due to United Kingdom entities may source from around the world cost can
be minimised as well as it may be passed upon in context of minimised domestic as well as
export costs.
 Trade: The volume of exports as well as imports both is likely to enhance, with trade
representing an enhancing proportion of GDP. The impact upon balance of payment is
uncertain as well as also based upon relative development rates, inflation, competitiveness
and rate of exchange.
Therefore, Trading scents Ltd. have to consider all the above mentioned impacts and
effectiveness before planning to expand their business internationally. As, this helps them to
understand the benefits of having business into other nation or country.
LO4
Relating to your company contrast at least two relevant markets in two countries – compare them
going into detail using PESTLE and Porters Five forces and apply them to the market (the
countries you want to expand to)
The international business is undertaking essential places within world as well as various
aspects are associated to global business (Cuadro and Ordóñez, 2020). Although analysis of
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external environment is much crucial entity like Trading Scents Ltd. before a business initiated
into specific country.
PESTLE analysis
This is a framework that is utilised through marketers for analysing as well as monitoring
the macro factors which have an affects upon firm.
PESTLE Analysis of USA
USA is considered as third most famous country into world. Moreover, it is generally known
as US and contribute immensely towards establishing and developing institutions like World
bank, international monetary fund’s and others. Also, this highly developed country along with
great reputation for their infrastructural as well as technological brilliance.
 Political factor: USA has a stronger democratic country as well as appropriate rule of law
along with elections which are undertaken fairly ad transparently. Respective country
enjoys massive economical and political influence upon both domestic and international
policy making. Also, it is renowned as growing superpower within world. However,
country goes through global criticism for their interventionist guidelines related to War
on terror that is souring international relationship.
 Economical factors: US are considered a largest economy into world due to higher GDP.
The economic system is effectively established and accumulates their strength from their
industries such as manufacturing and others. Moreover, it faces great recession at
previous times but various firms collaborated and rate of unemployment enhanced at an
alarming point.
 Social factor: Similar to other countries, US also goes through issues of aging population
that may drives towards a huge workforce shortage as well as raising tax rates into future.
Also, the education as well as health care system is considered as an effective within
world. Moreover, most of population has liberal mindset but raising racial intolerance in
key concern.
 Technological factors: The technology as well as innovation is considered to be
cornerstones of US economy. Since, country has been growing in respect of adopting and
using technology. as they faces stronger competition from enhancing economies, this is
anticipated that, they will continue for retaining technology supremacy over their rivals
(PEST Analysis of USA, the Largest Economy of the World, 2020).
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 Legal factor: Within USA, every state have their own government structure as well as
legal scheme. Business that relies within regulatory environment of the state where they
perform. Moreover, the country also upholds equal treatment of global and national
person.
 Environmental factors: USA has an extreme diverse climate, geography and other. This
coupled with another aspects have been undertaking as driving force for gaining attention
of huge tourist towards country. Moreover, it also faces some toughest weather condition
within world. Along with monetary damages, some disasters may cause disruption to
everyday life into much technologically developed country across world.
PESTLE analysis of South Africa:
South Africa is considered as one of the powerful country in Africa as well as plays
crucial role into international economy and politics:
 Political factors: South Africa is considered as parliamentary republic along with
president being both state as well as government head. Its political atmosphere is often
clouded through violence, corruption mismanagement and others. These issues reduce
progress and growth of economy. So, gaining the general people support and confidence
is a undertaken as one of the crucial challenge of their government.
 Economical factor: South Africa has mixed economy system. Also, it is known to be one
of the five BRICKS economic giants. BRICKS is known as Brazil, Russia, India, China
and South Africa. Some of their top imports are machinery, chemical and others. Also,
small firm have to pay lower tax rate.
 Social factor: Respective country is also considered to as Rainbow nation. As there are
11 official languages as well as Islam, Christianity and indigenous beliefs are key
religions. The biggest challenge that South Africa faces are higher unemployment and
public health system is ailing.
 Technological factors: It is moss technologically advanced country in Africa. This has
developed an enormous development into mobile software, e- banking and security
software. So, this is an opportunity for new international business.
 Environmental factor: Respective country is known to be one of the famous tourism
destinations within world. So, he various places, areas and others are contributes towards
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their development. Moreover, they also have to goes through some challenges such as air
pollution, solid waste pollution, deforestation and others.
 Legal factors: South Africa motivates foreign direct investment within whole sector if
economy. However, there are few restrictions upon international shareholders into few
industries such as banking, insurance and others. Also, herein, staffs get fundamental
protection (PESTEL analysis of South Africa, 2025).
From the above PESTEL analysis of two countries, it has been determined that USA is
effective for Trading Scents Ltd. which is a medium firm, in order to expand the business into
international market. As, respective chosen country have fair and transparent norms regulations,
higher GDP, equal treatment of global and national person, adoption of advance technology and
others.
Five Forces model
This is considered as a tool that is utilised to determine firm’s competitive atmosphere.
Moreover, this is utilised by Trading Scents Ltd. which are dealing into cosmetic industry to
understand the forces which shape competition into sector. It incorporates five forces. All of
them are discussed below:
Figure 1. Porter’s five force analysis
(Source: Porter’s five force analysis. 2020)
 Threats of new entry (High): As cosmetics are competitive industries and thus grab the
attention of new entrants striving to obtain market share. It drives to reduction into profit
of existent firm. There are various entry barriers within respective sector. Also, have
higher economies of scale through existent players. The capital is needed for establishing
business into respective sector. There is stronger brand identity.
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 Threats of substitutes (Low): There are basically tow substitutes of cosmetics that are
home remedies, and other items which are formulate at home with natural ingredient like
oils, herbs etc. for protecting and rejuvenate skin. Such items are much utilised at rural
places (Dhiraj, Joshi and Kumar, 2020). Few women of USA also consider that these all
traditional and inefficient as respective country are developed and modern one. So, in this
the switching costs as well as purchaser propensity for substitutes are low.
 Competitive rivalry (High): Competition among competitors within industry in USA is
higher are also operating in same country. Rivals involves brand such as Origins, Bumble
and Bumble, Ojon, Lab Series and some other local firms. The various spas are limited
as well as some have their own products. Therefore, supply is more than demand. Also,
differentiation degree is medium. There are unimportant differentiations amongst goods
of other brands. So, the exit barriers are high.
 Supplier Power (Low): The respective industry in USA has huge number of suppliers.
There are various producers of products that are need through sector. There is lower
inputs differentiation. Also, the switching cost as well as threat of forward integration
also exists. The substitute’s inputs presence and impacts upon cost is lower. So, within
these suppliers bargaining power is low.
 Buyer Power (High): The enhanced competitions as well as products availability has
been provided of respective industry have higher buyer power. They are not in position
for influencing product price. It develops it tough for entities for maintaining longer term
profit. Moreover, this also force firm performing into USA to minimise price of goods as
purchaser may simply switch to other brands.
LO5
Internationalisation – how are they making businesses international what entry strategies are they
applying.
As the firms of any size and nature has to utilise some strategies for entering into
international business. So, Trading Scents Ltd. expanding their business internationally so some
of entry strategies which can be apply by them is discussed below:
 Franchising: It is regarded as an agreement that is developed among two or above
individuals within which franchiser is one who enable franchisee to utilise goods,
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services, brand name and many more thereafter sell them to gain profit. So, respective
strategies bound both people who are included into agreement (Ifeakachukwu, 2020).
Also, firms like Trading Scents Ltd. can apply this strategy as it helps them to enter into
international business along with their increasing brand image.
 Joint venture: this is also considered as business contract where more than two person
agree to pool its resources for intent of attaining a particular activities. It can be anything
like new project or any another business practices. So, Trading Scents Ltd. can also apply
this entry strategy as this provides an opportunity for growth and enhance profitability
margins and others.
Therefore, among the above franchising is effective option for Trading Scents Ltd. as this is
affordable strategy and it does not have to invest many funds. Also the risk is moderate.
ANSOFF matrix
This is considered as a model that is established through Igor Ansoff in year 1957. This
aids firms like Trading Scents Ltd. to determine their growth opportunities. It includes four
strategies such as:
Figure 2. Ansoff Matrix.
(Source: Ansoff Matrix, 2020)
 Market penetration: Herein, entity introduces existent goods into existent marketplace.
Entity assures respective strategy for enhancing market share. It could be performed by
entity by decreasing their cost that new audiences could be obtained (Kandil Battaïa and
Hammami, 2020)..
 Product development: Herein, entity would be formulating new offers that would be sold
into existent marketplace. This is needed that firm have to indulge in appropriate market
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investigation and exploration of its range of goods. Entity could adapt it by investing into
their research& development practices within new product formulation for existent
market.
 Market development: Herein, entity sells their existent goods within new marketplace. in
respect of Trading Scents Ltd., this would consider as expanding their business outside
United Kingdom. However, their growth is depends on in case firm have access to
proprietary technology that could increase their competitiveness into marketplace. Also,
other aspect is that market consumers are effectually profitable. It could be attained
through entering in international market area.
 Diversification: It is undertaken as riskiest strategy. Herein, entity needed to enter in new
marketplace with new products. This is effective mixture of market as well as product
development. In respect of Trading Scents Ltd. they could opt related this strategy, which
is linked with determining potential synergies among existent business and new
marketplace.
Therefore, from the above, market development strategy is effective for Trading Scents Ltd.
as this assist them to expand their business internationally with existent products.
Porter’s generic strategies
This is considered as framework that is developed by Michael Porter’s in year 1985. This
assists firm such Trading Scents Ltd. to determine a potential niche where they may obtain
competitive advantage in any sector.
 Cost Leadership: It is regarded as effective strategy for entity. As in this they would be
competing into marketplace based upon cost by being a lower cost manufacturer
(Macdonald, Johnson and Lingard, 2020). This is advantageous for company like Trading
Scents Ltd. in respect to overcome the market situation presently common into country.
 Differentiation: With it, entity would be manufacturing distinguished products which
would be developing new demands into market area because of their exclusive as well as
innovative nature. The company could determine as well as opt many dimensions which
are highly values through audiences. Their key benefits for firm are that they could
provide its goods at premium price because of exclusivity into same. However, this
would needs entity like Trading Scents Ltd. to involve in few repeated market evaluation
for identifying gaps into marketplace to manufacture much distinguished products.
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 Focus: Respective strategy drives entity to concentrates upon competitive scope into
sector and opting one specific target marketplace upon that their tactics would be
subjected as well. This is categorised in two such as:
o Cost focus: In this, entity seeks benefits into target segment by cost.
o Differentiation Focus: In this, product differentiations are subjected towards
firm’s target market.
From above, cost leadership is effective for Trading Scents Ltd. as it would aids them to
attract more audience by low cost in new market also.
Internationalisation Drivers
Internationalisation is stated as designing goods in such manner which they can be
readily consumed across various firms (Nwofia and Aworinde, 2020). This procedure is utilised
by firm seeking to explore its international foot print beside its own market. Some of
internationalisation drivers that may impact Trading scents ltd. is:
 Cost drivers: In this, the entity mainly facilitates more importance for two practices that
are level of income and cost. Also it is an opportunity for international scale, experiences
impacts and other effectiveness that reflects differentials into costs among nations.
 Competitive drivers: this is described by actions of competing entity like extent to which
competitors from various continents enter fray, internationalise its tactics and corporate
abilities and develop interdependence among geographic market areas.
LO6
Based on LO4 & LO5 – what are the findings, what strategies suit, what are the practical issues
and solutions
Based upon the above analysis, this has been found that Trading Scents Ltd. can expand their
business into USA country. As it have fair and transparent norms regulations, higher GDP, equal
treatment of global and national person, adoption of advance technology and others (Tang, Wang
and Yu, 2020). Moreover, some strategies such as franchising, market development, cost
leadership and many more that can be opted through respective firm within USA. Along with
this, they would face some issues while expansion such as Language barriers, cultural barriers
and many more. So, Trading Scents can resolve this through recruiting more local people as they
can easily able to understand USA individuals desires and serve accordingly. Also, they have to
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keep on researching upon their culture, interest and other so that they can easily fulfil their
demands in effective and efficient way. (Ye and et. al., 2020).
CONCLUSION
As per the above report, it has been concluded that international business is crucial for firm
as it aids them to enhance market share, profitability and etc. Moreover, globalisations have
various importance and it also have an impact upon business. Along with this, two countries
PESTEL analysis is performed to choose best one. Also, some strategies such as franchising,
market development, cost leadership and others are helpful for entity to enter into international
market in effective and efficient way.
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REFERENCES
Books and Journal
Begum, A., 2020. Corruption in business: A critical appraisal of the Australian regulatory regime
in the light of the UK Bribery Act 2010.
Burgmann, V., 2020. Power, profit and protest: Australian social movements and globalisation.
Routledge.
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Cuadros, A. and Ordóñez, J., 2020. Globalisation: Recent traits and challenges. The World
Economy, 43(3), pp.530-533.
Dabic, M., Maley, J. and Novak, I., 2020. An analysis of globalisation in international business
research 1993–2018: rise of the sceptics. critical perspectives on international business.
Della Posta, P., 2020. The economic and social costs of globalisation: A target zone analysis. The
World Economy.
Dhiraj, A., Joshi, M. and Kumar, A., 2020. Human resource management and character building:
route to business sustainability. International Journal of Business and
Globalisation, 25(3), pp.332-348.
Ifeakachukwu, N.P., 2020. Globalisation, Economic Growth and Income Inequality in
Nigeria. Indian Journal of Human Development, 14(2), pp.202-212.
Kandil, N., Battaïa, O. and Hammami, R., 2020. Globalisation vs. Slowbalisation: a literature
review of analytical models for sourcing decisions in supply chain management. Annual
Reviews in Control.
Macdonald, D., Johnson, R. and Lingard, B., 2020. Globalisation, neoliberalisation, and network
governance: an international study of outsourcing in health and physical
education. Discourse: Studies in the Cultural Politics of Education, pp.1-18.
Nwofia, C.C. and Aworinde, O., 2020. Economic Globalisation and Economic Growth
Dynamics in Nigeria. Journal of Economics, Management and Trade, pp.1-15.
Tang, J., Wang, W. and Yu, Z., 2020. Globalisation, ICT Investment and Firm
Dynamism. Transnational Corporations Review, pp.1-10.
Ye and et. al., 2020. Corporate social responsibility “glocalisation”: Evidence from the
international construction business. Corporate Social Responsibility and Environmental
Management, 27(2), pp.655-669.
Online
PEST Analysis of USA, the Largest Economy of the World. 2020. [Online]. Available through:<
< https://pestleanalysis.com/pest-analysis-of-usa/ >.
PESTEL analysis of South Africa. 2025. [Online]. Available through:<
https://howandwhat.net/pestel-analysis-south-africa/>.
Porter’s five force analysis. 2020. [Online]. Available through:<
https://studiousguy.com/porters-five-forces-model-analysis-template-examples/>.
Ansoff Matrix. 2020. [Online]. Available through:<
https://www.calltheone.com/en/consultants/ansoff-matrix>.
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