International Business: Micro and Macro Factors

The assignment provides an in-depth analysis of international business, focusing on micro and macro factors that contribute to a company's success. The report examines Pizza Hut's reputation for serving tasty pizzas globally, while also discussing the importance of standardization, product differentiation, and brand image in maintaining high standards across all stores.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
P1International business environment in which Pizza hut operates.......................................1
P2 Mechanisms that regulate international trade....................................................................2
P3 Environment and culture of another country affects a business operating internationally3
P4 Monetary environment affects businesses that operate internationally............................4
P5 Why businesses operate internationally............................................................................4
P6 Business strategies used by a business operating internationally.....................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The exchange of goods and services among individuals and businesses in multiple
countries. A specific entity, such as a multinational corporation or international business
company that engages in business among multiple countries. This assignment is going to explain
the international business environment in which Pizza hut will operate in. Secondly it will be
describing the mechanisms that regulate international trade. Thirdly it also assessing the methods
to increase trade between countries and the methods to restrict trade between countries
(Beamish, 2013). Last but not the least it shows the evaluating the potential problems faced by
businesses that trade internationally when entering new markets.
P1International business environment in which Pizza hut operates
International business which operates globally in different markets. The international
business which doing is Pizza Hut. Pizza Hut as it is well known in the UK, in addition to this
it’s an international business, operating in more than 94 countries and covering a wide variety
market; Asia, Europe, Australasia, North America and South America. The main nature of the
business Pizza hut is food and drink. Pizza hut is known for selling wide range of pizza ranging
from sizes of 9inches to 16inches. The business is known for delicious pizza, therefore pizza hut
specialise in Pizza, and the company sells pizza more often than any other products. Other than
pizza they also sell sides, desserts and drinks. The products Pizza hut uses are Italian – American
cuisine, pizza, pasta and Buffalo wings. Pizza hut provide good service to their customers by
excellent employees and the Food compliments the service of pizza hut which makes them the
best Pizza restaurant in the world (Cavusgil and et. al., 2014). Pizza Hut headquarters are based
in Plano, Texas, USA. Pizza Hut operates in more than 94 countries internationally.
Pizza Restaurant was opened by two brothers Dan and Frank Carney in 1958 in
Wichita,Kansas. Dan and Carney borrowed 600 Dollar from their mother to open Pizza Hut
Restaurant. After borrowing 600 Dollar from their mother, they purchased second-hand
equipment and rented small building in their home town. In 1959, the 3rd Pizza Hut restaurant
was set up as a Franchise which they open in Topeka, Kansas. Their vision is to develop
Franchise System which became a world wide successful marketing model. Pizza Hut was first
mover towards international market and set up first Pizza Hut outlets in Canada in 1968. Almost
ten years later, Pizza Hut serving one million customers in a week in their 310 locations. In 1970,
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Pizza Hut was put on the New York Stock Exchange under ticker symbol PIZ. International
Pizza Hut restaurant became 100 in number while the total number of Pizza Hut reached 2000 in
1976 (Clarke, Tamaschke and Liesch, 2013). In 1986, Pizza Hut introduced delivery service,
something no other restaurant was doing. Pizza Hut opened its 5000 unit in Dallas, Texas. Pizza
Hut celebrated its 30th anniversary with more than 6000 units in 1988. In 19thMay 1982, Pizza
Hut began its operations in Malaysia with the opening of its first outlet. In 1996, Pizza Hut sales
in the United States were over $5 million. However, Pizza Hut‟s market share has slowly
matured because of intense competition from their rivals which is Dominos, Little Caesar‟s and
Papa John's
P2 Mechanisms that regulate international trade
In this task there is a comparison between mechanisms and the methods used to increase
and promote trade and the methods used to restrict and control trade between countries. It
describe why it is important to regulate international trade in the UK and other countries.
The exchange of goods or services along international borders. This type of trade allows
for a greater competition and more competitive pricing in the market. The competition results in
more affordable products for the consumer (Dunning, 2013). It is important to regulate
international trade due to the exchange of goods affects the economy of the world as dictated by
supply and demand, making goods and services obtainable which may not otherwise be available
to consumers globally.
Four methods that countries use to regulate international trade.
1. Trade blocs: A trade bloc is a type of intergovernmental agreement, often part of a
regional intergovernmental organization, where regional barriers to trade, (tariffs and
non-tariff barriers) are reduced or eliminated among the participating states.
2. Free trade: international trade left to its natural course without tariffs, quotas, or other
restrictions
3. Quotas: A quota is a government-imposed trade restriction that limits the number, or
monetary value, of goods that can be imported or exported during a particular time
period. Quotas are used in international trade to help regulate the volume of trade
between countries (Enderwick, 2013).
4. Embargoes: An embargo is a government order that restricts commerce or exchange of
specific goods.
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International trade is the exchange of goods and services between countries. This type of
trade gives rise to a world economy, in which prices, or supply and demand, affect and are
affected by global events. The World Trade Organization (WTO) is the only international
organization that deals with the global rules of trade between nations. The WTO is built on WTO
agreements signed by the majority of the world's trading nations; its main function is to help
producers of goods and services, exporters and importers better protect and manage their
businesses. Trading blocs are usually groups of countries in specific regions that manage and
promote trade activities. Trading blocs lead to trade liberalisation (the freeing of trade from
protectionist measures) and trade creation between members (Ferreira and et. al., 2014).
P3 Environment and culture of another country affects a business operating internationally
Political
Factor 1- Tax policy and tariff controls:-
This means Pizza Hut would have to pay the government 39.1% of any profits they make
in the US; this is bad for them because they could have been spending this money on new
technology or investing into new branches or projects (Hovhannisyan, and Keller, 2015). Tariffs
vary depending on a company’s imports and exports, as Pizza Hut operates internationally they
would need to import products, tariffs will therefore apply to them which could cause problems.
Factor 2- Employment legislation
. Another example of employment legislation is equal pay, this ensures that everybody on
the same level, doing the same job must be paid the same, no matter of their gender, ethnicity or
whether they have a disability or not (Jenkins, 2013). The final example I will give is minimum
wage, the government set a new minimum regularly of the amount an employer must pay their
workers, this variates depending on age. Pizza Hut must ensure they abide to all of these laws, if
not they could face legal action.
Factor 3- rule of law, corruption, democracy and freedom
The most influential political factor I have discussed is tax and tariff control (Kollmann,
2013). This would affect Pizza Hut because they would have to give a percentage of their profits
to the government and would have to pay a charge on any imports they receive from other
businesses in different countries. Both of these factors will help a business determine whether
they want to operate in certain countries, businesses may choose to open branches in countries
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with low tax and tariff controls. This is due to the fact, in countries with high tax the company
will have to end up giving the govern
P4 Monetary environment affects businesses that operate internationally
Pizza hut is located in different parts of the world; it is an international business with
stores in Asia and Europe. It needs to think about the business as one, even though they have
shops in different parts of the world, they still make plans for pizza hut as one. Pizza hut
established and promoted- Pizza hut first started in the UK then the business expanded and they
decided to open stores in different countries, they have branches in China, India and Turkey etc.
they first plan out and decide where they should locate the store, the find a busy place where
people shop, then they start the work on the place (Poulis, Poulis and Plakoyiannaki, 2013).
Pizza hut have to look at the countries business law and follow the law. Every business
should know the business law in the country where they want to operate. Pizza hut has a legal
structure in all countries, Pizza hut is a public limited business in all countries, and people can
buy shares.
Pizza hut finance international:-
There are lots of financial issues for businesses like Pizza hut who are exporting to other
countries; there are some of issues listed below:
 Language and cultural differences
 Currency and payment problems
 Political instability
These are some of the problems that businesses like Pizza hut face when exporting
internationally, however the UK government provides a range of support services to UK
businesses exporting to other countries to help them overcome these risks and problems which
they might face (Wild, Wild and Han, 2014). Currency is a major problem for business like
Pizza hut, because every country has different currencies so they have to know the currency for
all the countries that they operate in and all the countries that they trade with or get their goods
from. Currency can go up or down so they need to be up to date.
P5 Why businesses operate internationally
It covers why business chooses to operate internationally including the benefits and
challenges of doing so.
Benefits
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New Markets :- When businesses like Pizza Hut expand into new countries it gives them
access to new markets where they can offer their products to new ranges of people, which would
lead to an increase in profits. The factors which make each market different include different
buying powers, culture, population, wealth, location and GDP (Rose, 2015).
Cheaper manufacturing:- Cheap manufacturing locations include Brazil, Taiwan, India,
Pakistan, Philippines and Mexico, these are countries where residents receive low income, this is
a positive for large businesses because they can use these people for cheap labour and sell their
products at a higher price to the richer population of the countries to make a larger profit. In the
great scheme of things it could be more beneficial to locate branches in these types of countries
compared to richer countries (UK and US) because staff wages are much lower (McDougall-
Covin, 2015).
Economies of scale:- economies of scale is an economics term that describes a
competitive advantage that large entities have over smaller entities. It means that the larger the
business, non-profit or government, the lower its costs. For example, the cost of producing one
unit is less when many units are produced at once.
P6 Business strategies used by a business operating internationally
Numerous of schemes used by pizza hut while operating organization at international
level by considering relevant and essential factors which plays a very eminent role in success of
an enterprise is mentioned below :-
Marketing :-
The definition of marketing is an action or business of promoting and selling products or
services, including market research and advertising. Pizza hut have to market in different ways
depending on their location. It would have to market differently in somewhere they are based
internationally like china. Due to cultural differences things would have to be done in a different
way (Zander, 2015). In addition it’s a whole new audience that will have to be dealt with, luckily
for pizza hut the Chinese market are open and they are always switching where they shop. As
part of a marketing strategy it was hoped the card also known as the Clubcard would give the
management of shops and marketing staff invaluable information about the elusive Chinese
shoppers. The card would reveal their tastes, preferences, shopping habit and much more; it
would hold the key to understanding the most demanding, price-conscious but quality-obsessed
consumers in the world. This would basically build a personal experience around them so they
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will feel as if they have some loyalty as well as a relationship with the company. However it’s
going to take more than a loyalty card to maintain their customers due to the fact that a lot of
people within that country are part of more than one company.
Production and distribution:
Pizza hut trying to maintain high standards throughout all stores, standardisation of
products, customer service and other things that operate in restaurants should always be kept
high and things should be done in the right way. Product differentiation is one of the best ways to
market a product this would mean that the product would be established a strong brand image for
a good or service.
CONCLUSION
From the above report it can be summarized that international business plays a very
eminent role in profit maximization by considering micro and macro factors which influence
success of an enterprise. This report highlighted position of pizza hut which is famous for its
qualitative and tasty pizza in various nations. Apart from this, assignment throw lights on micro
and macro factors which is key elements while expanding business across national borders.
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REFERENCES
Books and Journals
Beamish, P., 2013. Multinational joint ventures in developing countries (RLE International
Business). Routledge.
Cavusgil and et. al., 2014. International business. Pearson Australia.
Clarke, J.E., Tamaschke, R. and Liesch, P.W., 2013. International experience in international
business research: A conceptualization and exploration of key themes. International
Journal of Management Reviews. 15(3). pp.265-279.
Dunning, J.H., 2013. Multinationals, Technology & Competitiveness (RLE International
Business) (Vol. 13). Routledge.
Enderwick, P. ed., 2013. Multinational Service Firms (RLE International Business). Routledge.
Ferreira and et. al., 2014. Mergers & acquisitions research: A bibliometric study of top strategy
and international business journals, 1980–2010. Journal of Business Research. 67(12).
pp.2550-2558.
Hood, N. and Birkinshaw, J. eds., 2016. Multinational corporate evolution and subsidiary
development. Springer.
Hovhannisyan, N. and Keller, W., 2015. International business travel: an engine of innovation?.
Journal of Economic Growth. 20(1). pp.75-104.
Jenkins, R., 2013. Transnational Corporations and Uneven Development (RLE International
Business): The Internationalization of Capital and the Third World. Routledge.
Kollmann, R., 2013. Global banks, financial shocks, and international business cycles: Evidence
from an estimated model. Journal of Money, Credit and Banking. 45(s2). pp.159-195.
Poulis, K., Poulis, E. and Plakoyiannaki, E., 2013. The role of context in case study selection: An
international business perspective. International Business Review. 22(1). pp.304-314.
Wild, J.J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Zander, I., McDougall-Covin, P. and Rose, E.L., 2015. Born globals and international business:
Evolution of a field of research. Journal of International Business Studies. 46(1). pp.27-
35.
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