International Business: Globalisation and Economic Integration

This report discusses globalisation and economic integration in international business, with a case study of Tesco. It covers the key factors considered for internationalisation, including culture, ethics, global marketing, modes of international entry, and competitive strategies.

INTERNATIONAL
BUSINESS

Table of Contents
OVERVIEW OF THE COMPANY................................................................................................3
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION .........................................................................................................................4
Globalisation...............................................................................................................................4
Economic Integration..................................................................................................................4
Important factors that consider for internationalization..............................................................5
CONCLUSION .............................................................................................................................10
RECOMMENDATIONS...............................................................................................................10
REFERENCES..............................................................................................................................12

OVERVIEW OF THE COMPANY
The multinational business organisation Tesco is a UK based retail firm that operates in
sale of different variety of products having its presence across the globe. The organisation is
holding a third largest place in terms of market competition and highest revenue generation firm.
The organisation Tesco offers its products and services into different segment such as
supermarket, bank, mobile, family dining ltd. and many others. Organisation have 423,092
employee who can work willingly for achieving business targets. It have several stores across
nation which can enhance reach of customer and also increasing number of purchase for engage
with huge customer traffic.
EXECUTIVE SUMMARY
International business refers to an element which includes exchange of goods and
services, capital , technology between two parties across national borders. It needs to comprise
separate national markets into global areas . There are two macro scale factors which which
underline globalisation trends. First one is reducing barrier in boarders such as free flows of
goods and services and second one is improvement in technological changes like developing
communication, transportation etc. There are various contemporary forces that attract business to
compete internationally such as political, technological, economical, socio cultural. They create
competitive advantage in terms of price, quality, selection , service etc. This report involve
globalisation, it is a procedure which can used by individuals for move goods and services easily
across boarders. It involves trade integration and flows of items between nations. Economic
integration define certain limits that can imposed by national frontiers, it can derive benefits also
in decreasing cost, improve availability of goods and services and improving purchasing power
of consumer. And it includes key factors on internationalisation which can define impact on
cultural difference , competitive strategy and international entry. In this repost chosen company
is Tesco, and these factors are based on this certain points that can be discussed in following
report.

INTRODUCTION
The concept of international business refers to a presence of company beyond the
boundaries of home country. Internationalisation or globalisation is a common term that is being
used at the time when any company within the home country looks for an opportunity in
overseas market. The main aim behind this internationalisation is to have better availability of
resources, higher profit generation, enhancement in sales as well as the achievement of
sustainable competitive advantage. A business from any sector could lead to internationalisation
such as of goods & services, capital & technology, labour, etc (Asakawa AND ET.AL., 2018)
The present report focuses upon discussion over globalisation and economic integration. The
report also talks about the key factors that are considered for the internationalization which
includes culture, ethics, global marketing, modes of international entry and competitive strategies
in respect to Tesco. Internationalization leads business to achieve its objectives as well as
attaining higher market growth. Though a conduct of international business is not an easy step
but there are some drivers that fosters and motivates company to go internationally and conduct
its business operations.
Globalisation
The concept of globalisation refers to an entry of businesses into another country with an
aim of sale and purchase of different kinds of goods or services(Chandler, 2017). This helps
companies as well as countries in order to enhance their economic condition, population, trade
and commerce as well as cultures. The globalisation has a greater positive impact upon the
businesses as it provides an opportunity of enhancing company's sales and revenue.
The main benefit which the globalisation provides in respect to international trade is of
generating higher employment as well as better availability of technical and capital resources.
Through the use of globalisation method Tesco is able to lower down its costs as well as
producing its manufacturings with higher quality of required resources. On the other hand the
globalisation impacts international trade by increasing the level of market competition which
provides an opportunity of variety of products at different prices to the customers.
Economic Integration
The concept of economic integration refers to the arrangement between different
countries that generally includes elimination or reduction within the tough policies or rules or

trade barriers. The economic integration also includes a mutual coordination between the fiscal
and monetary policies of agreed countries.
The main contribution of economic integration in international trade is the reduction of
trade costs along with an improvement in the availability of products or services through
enhancing the customer's purchasing power (Delgado, 2018). This on the other hand enhances
the trade relationships among different nations that can be beneficial for the companies
especially like Tesco as well as can develop the living standards of country people too.
Important factors that consider for internationalization.
Internationalisation define a product design in that way by which it can easily consumed
across multiple nations. This procedure is used by various business to exapand footprint in
domestic as well as international markets through taste and preference of different6 customers.
Following are the basic elements of internationalisation on Tesco.
 Cultural consideration : This is first and basic factor that can use by Tesco for
delivering goods and services on internationalisation basis (Falkner, 2017). IN general it
define degree to understand role of cultural awareness in particular cultural teams.
Following are points that define this term clearly in context of respective company.
◦ Power Distance: It define that how inequality in social group accept various culture.
It involves high power distance that indicate culture accept inequity which can give
extreme respect for authority and bank. In case of Tesco, company has loose
hierarchical structure which create implication on power and authority between
superior and subordinates. Both of them suppose that they have equal rights.
◦ Individualism and collectivism: This dimension defines society degree which
involves certain groups on their dependence and obligation (Guercini and Milanesi,
2017). Individualism derive grater importance for accomplish personal target and
collectivism define importance for placing goals in group for well-being. IN context
of Tesco, employees have similar feature that they expect self-reliant, they also have
powerful work ethics that help to highlight person achievements. In short this
organisation use skewed in terms of individualism rather than collectivity, workers
think that they are more independent.

◦ Uncertainty avoidance: It considers ambiguity and uncertainty. A high
unpredictability shows low tolerance that help to minimise rules and regulation. And
low uncertainty indicate high tolerance of taking risk through accepted of certain
laws. Tesco displays new ideas and opinions for processing new business activities.
This creativity is highly welcome by organisation.
◦ Masculinity -femininity: These factor define different gender, roles and wealth
building etc (Ismail and Aman, 2018) In case of masculine and feminism is concerned
about quality of life which involve fluid gender nurturing and modest. In Tesco, staff
focus on making social standards and celebrate monetary rewards, employee are
highly competitive and inspired. This helps to drive a business success .
 Ethical Considerations: It refers to collections of certain rules and principles that can
followed when accomplish social issues. Tesco involves some ethics such as climate
change, pollutions , human rights, worker's right etc. below is detailed description on
these issues in each category.
◦ People: Tesco focus on handling working of men and women. The supermarket chain
said that employees is being exploit anf they are aslo awre about mistreatment after
connect with journalist.
◦ Environment: business can receive bad rating on ethical customers in terms of its
policies, company have zero discharge on chemicals but it did not include electronics,
textile , leather etc. after some time, Tesco stating a statement that committed to
enforce exiting bans on Phthalates. This is risky chemicals which crate a harm on
surrounding on business.
 Global Marketing Considerations: It refers to a business that develop globally and start
operating on international basis (Jameel and Ahmad, 2019). This is basic ethics that can
used by company for promoting business products. Tesco comprise 4P's of marketing
mix for this consideration.
◦ Product: It refers to an item which can made by company for give customer
satisfaction. This can made according to taste, nature and preference of consumer. In
context of Tesco, this company provides wide variety of products and services to its
potential clients. It includes apparel, food, electronics cosmetics and financial
services .This wide range product line derive to fulfil needs of customer. It can sell

their product on grate brand level. Thus this help in increasing value for business in
terms of growth and success. Organisation consist their own brands that create a
availability on high range products on several store where customers can easily visit.
◦ Price: This term define monetary value that derive high benefits for business in term
of revenue generation (Laurell AND ET.AL., 2019). Tesco can adopt cost leadership
pricing strategy as it help in gaining high competitive advantage. Company can set
low process without compromise with quality. IT defines economy of scale that aids
to do continuous work along with reducing price. Tesco facing tough competition in
UK. With other organisation such as Sainsbury, Marks & Spencer and so forth. This
leadership pricing create positive impact of business because they can attract high
audience in respect of their prices.
◦ Place: It defines area where a company can promote or produces their product and
services. This field can set according to ease of customers. In case of Tesco, it
comprises two channels for producing their products in markets which namely is
offline and online. There are several stores of Tesco around world such as Tesco
Extra, Home plus, Compact, Superstore , Metro and Express. And it also use online
media which is called as Tesco direct. Thus , this several channels create an
availability to reach customers on stores and purchase according to their needs and
desires.
◦ Promotion: It refers to a advertising tool which can use by organisation for
increasing brand awareness in mindset of customers (Lembke AND ET.AL., 2018).
Tesco positioned in market with a strong brand image and this aids in promotional
activities respectively. Company use modern and traditional marketing for promotion.
It use television , newspaper , print media for promoting items as most of senior
citizen are highly attract over this modem. It also use social media where they post
sponsored add of products which can highly influence youth and adults because in
this technology world they are highly active on media. Thus this is a way for
increasing customer reach and highlighting their demands. It also use other forms of
promotion, as it offer club card system and loyalty card as well for getting high points
while purchasing and redeem discounts.

 International Entry: It is a strategy which is planned distribution for entering in market
and provide methods related to goods and services in entire new target market(Lindh and
Nordman, 2017). Basically it is a creation and establishment of contract with outsider
country. Following are methods of entering in international marketplace.
◦ Exporting: It define a process to direct sales of company items and services in
another nation. It is well known method for entering in another country market as it is
cost effective and consume low risk. In this element organisation does not have any
need for investing in production facilities in other nation . Thus , cost of
transportation tends to increase with exporting cost in near future. It mainly involve
four parties which highly involve in this procedure such as importer , transport
provider, government and organisation.
◦ Licensing: This is a important term which plays an effective role for entering in
foreign market as it allow to other organisation to use certain property of another
nation. This property is in tangible form such as patent, trademark, copyright,
techniques of production. This can define a correct use of such property in proper
manner. Basically it is very small investment which can give high return for business
and enhance company market share in other country.
◦ Foreign Direct Investment : It define transferring of technologies in form of new
varieties and capital inputs(Mandhachitara and Allapach, 2017). Basically it is a
ownership that can control by company in entity of business for another nation. It can
attain new variety through fiscal investment and trade in goods and services. It also
advertise fierce domestic input market competition. FDI can require high capital cost
for staff and technologies.
◦ Joint Venture : It is a term which comprise two different companies that can
establish for owning business. Basically it works jointly and provide new organisation
opportunities for management team so that they can share of control joint venture.
This can create various advantage for business such as gaining knowledge of local
markets, sharing costs. It also face problems while they have decide to invest and
spread profit.
Hence, in context of Tesco, it use FDI method for entering into foreign markets because it gives
high benefits for organisation as it include serving of capital source, generating employment,

increasing access of foreign markets and creating technological efficiency in local firms. This
helps in generating profit and improving company reputation.
 Competitive Strategy: This define an area of business where they can face competition
(Mukherjee, Makarius and Stevens, 2018). It refers that how a firms can maintain or
create competitive benefits for company as compare to other competitors. For clearly
defining this following model is being use;
Porter's Diamond Framework
◦ Firm's Strategy: It refers that how company can mange business activities. It
involves competitors and objectives. Rivalry is very important as they provoke
company to innovate new thing and ideas before enter in international market. IN
case of Tesco, enterprise FDI and joint venture for enter into foreign markets with
aim of become a market leader in upcoming years.
◦ Factor conditions: It define nature which comprise unskilled workers , natural
resources. This determine advance factor in terms of specialise knowledge which is
more significant to gain competitive advantage. In case of Tesco, it improve low price
with high quality and provide experience service to customer that can help to give
competitive benefits and generating profit growth.
◦ Demand conditions: This element derives various demand level in domestic market
(Wonglimpiyarat, 2018). This generate competition , innovation etc. to improving
demand condition in respect to market size. In Tesco, this factors influence specific
conditions which create affect on innovation with regard to shaping product
enhancement procedure. The clear demanding trends towards local suppliers and
foreign rivalries providing a result in bringing national competitive benefits in
industry.
◦ Related and supporting industries: This term refers to most largest successful
organisation as it is totally depend on maintain good relationships with cost saving of
suppliers that can deliver to customers (Wood, 2017). It require high concentration
for innovating business which derive competitive benefits. In this term, Tesco
generally take benefits in respect to innovation and providing inputs related to
effective cost specially when they are supporting fierce competitiveness.

CONCLUSION
From the above report it can be concluded that international business is a wider concept
that involves trade between two or more countries. The conducts of international business helps
companies in increasing their revenue & sales target along with an achievement of higher market
growth. Internationalization is a concept that fosters the economic development of various
countries and provides them an opportunity of raising their living standards. Globalisation is a
process through which the companies enters into foreign market and performs their operations.
This globalisation helps countries as well as companies in having a sound economic integration
between different nations. There are certain factors that are considered by business organisations
in order to have internationalization of their businesses. The factors are highly essential as well
as beneficial such as culture, ethics, marketing of products and services at global level,
competitive strategies for international business and the modes of international entry. These
factors are highly essential to understand and consider because every country is having its own
ethics and culture which are different from other and for every company it is important to know
the most prominent marketing strategy prevailing within that market so that can promote their
products accordingly.
RECOMMENDATIONS
By the thorough discussion from the above report there are some recommendations which
are made for Tesco in order to have a successful international business. The recommendations
are mentioned below:
 Tesco should develop its business strategies in a way that can be suitable to the
international market after the proper analysis so that can execute the business expansion
plan effectively. Also, while going to the international market the company should hire
local employees or managers with high skills so that can run the business operations in a
way that is families to those employees.
 A company can adopt best pricing policy into its offerings with a good quality products at
the time when entering into international market as it has to cater large customer

segment. The customer's can only be attracted through providing them better quality
products at cheaper rate.
 Tesco should identify and understand the ethics as well as culture of such country where
it is planning to have its operations so that a company can develop its organisational
culture and offer those products only which suits the culture of such country. This would
help Tesco in developing its higher brand image and attain a successful business for long
term.
 The international business organisation Tesco is highly recommend to consider best
suitable entry mode for its business because this has a direct impact upon the
sustainability of business. Also, Tesco is recommended to market its products with such
marketing method which has a potential to cater international market. This can be done
through the development of effective competitive strategies by the management team of
Tesco.

REFERENCES
Books and Journals
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