International Business Operate Pdf

International Business

Table of Contents
INTRODUCTION...........................................................................................................................3
P1. Why two business operate in contrasting international market.......................................3
P2. Types of finance available to international business are..................................................4
P3. Main features of globalisation which affects the two businesses.....................................5
P4. Trading blocs in the international market........................................................................6
M1. The type of support the two companies are getting while operating internationally......7
M2. Barriers which the two companies are facing : ..............................................................7
D1. Impact of globalisation on business :..............................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International business means to trade the goods, capital, technology, knowledge, services
across the world or at global level(Hamilton and Webster, 2018). The study has explained that
why the business operates internationally, types of finance which the business can get, main
features of globalisation and its impact on business by taking example of two multinational i.e.,
Sainsbury's and BP. The study also highlights the role of trading block in the international trade.
P1. Why two business operate in contrasting international market
The reason behind operating the business in international market is that the companies
want to expand their business in order to grow. The other reasons are generating more revenue,
new investment opportunities,recruiting new talent, reducing cost and diversifying the business.
Sainsbury's's
Sainsbury's hold third position in the supermarket of UK. The company holds about
16.9% share in the supermarket sector(Aluko, and Knight, 2017). Tesco has overtook the
Sainsbury's in order to become the market leader. The holding company of Sainsbury's plc. has
been split into three divisions i.e., Sainsbury's Bank, Sainsbury's Argos and Sainsbury's Argos.
The company serves to more than 15 million consumers every week. The company has about
150,000 co workers under them. The company has about 3,500 local dealers.
As the Sainsbury's operates in multinational market the company has to face various
challenges the company is facing huge competition by the online stores, now a days consumers
are not shopping with the stores or supermarket their shopping behaviour has been changed from
traditional marketing to online marketing, the other major challenge which the company is
facing internationally is the rise of competition in the market. Changing market demand is also
one of the challenge which the company is facing(Sainsbury's Supermarket Ltd, 2019).
The advantage which the company is getting by doing business internationally is that the
company is expanding its business in developed country thus contributing to increase in
economy of the country.
BP
British petroleum company plc is a multinational company providing its services across
world(Yemen and et.al., 2017). The headquarter of BP is in London, United Kingdom. It is sixth
largest company in terms of market capitalization and twelve in terms of revenue in the world.

The company operate in various such as production, refining, marketing, power generation,
trading, distribution and exploration. According to the company they move energy around the
world. The company manufactures fuels and raw material which is used in everyday products.
Such as in mobile phones and food packaging etc.
BP is operating in about 58 countries across the world which include Europe, America,
Asia pacific etc (British petroleum company plc, 2019). Therefore the company is providing its
services and products internationally. BP is the part of emerging market therefore the company
has a huge opportunity to increase its sales.
Thus the two company expand their business internationally and was able to create a
brand awareness and generate more revenue out of it.
P2. Types of finance available to international business are
There are various sources from which the international company lie Sainsbury's and BP
can get the financial support.
Letter of credit :
It is a letter which is issued by one bank to the other bank in order to guarantee the other
bank in favour of a company assuring that the buyer payment to the seller will be received on the
given time(Arya, Abhishek, and Deepak, 2019). And in case if the buyer fails to make the
payment than the bank is responsible to cover the remaining amount.
Advantage of letter of credit :
The advantage of the letter of credit is that the buyer has to take the product and if it fails than
the company can get it payment from the bank.
Disadvantage of letter of credit :
The cost involved in process is high.
Bank loan :
Bank loans can be taken by the multinational companies. The companies credit history is
checked by the bank when applied for the loan. If the company has a bad credit history than it
may be possible that the bank will not provide loan to the company. But if the company has
good relation with the bank and has high credit history than the company can easily get the loan
from bank.
Benefits of taking loan from Banks :

As the company will pay an interest on the amount they have taken as a result the
company does not have to make the bank as their shareholders. The main advantage of taking the
loan from bank is that a company has to pay low interest rate to the bank.
Disadvantage of taking loan from banks :
The bank will give loan to company against some security and in case if the company
fails to deposit the amount on time or pay the interest on time than the bank has full authority to
take legal action against the company. As a result the company might be declared as bankrupt.
Export credit :
Export credit is the financial support given to the company who export goods to other
countries whose payment is scheduled later(Neelankavil, 2015). Export credit agencies help the
business to negotiate with their sellers and provide an insurance against the product received.
Advantage of export credit :
It allows the company to expand their business in the international market. It allows the
exporter company to reduce the financial risk. The financial risk can be a result of importer's
bankruptcy, slow payment in import and export contract, or default in import and export
contract, political sources such as war, revocation of importer licence, commercial sources. The
insurer ensures the potential of all types of losses before underwriting policy.
Disadvantage of export credit :
The export credit is not available in every situation to the business.
Prepayment of the importer :
It means that a amount as an advance have to be paid the reason behind this can be there
is a lack of trust between importer and their business. The company can take the advance
payment from the buyer in order to be on safe side. And reduce the risk of default by other party.
P3. Main features of globalisation which affects the two businesses
As both the company Sainsbury's and BP are operating in an international market.
Globalisation creates an huge impact on the working of the business. The globalisation affects
the business life, environment, economy and society in various different ways. The companies
should focus on the affects of globalisation to business(Pilbeam, 2018). The various features of
globalisation which cab affect the two companies i.e., Sainsbury's and BP are
Competition :

Globalisation has created a rise in competition. There is huge competition in the market
related to product and services, target market, quick response, technological adaptation etc. As
now a days there are wide variety of products present in the market which affects the buying
behaviour of the customers. Therefore the companies should be ready for the change in price of
its product and services.
Exchange of Technology :
The other feature of globalisation is the use of new technology. It is necessary for the
company to use the latest technology in order to maintain position in the market. As a result of
globalisation the speed of transfer of technology has been increased. The companies have to
make efficient technology management(Hirst, Thompson and Bromley, 2015).
Knowledge/ information transfer :
Information and the knowledge are the most important and valuable production factor.
Information can be easily passed to the other parties. As the technology transfer is a risk to the
company similarly knowledge and information transfer is also risk to the company. Therefore the
company should ensure quick usage of the knowledge and information.
P4. Trading blocs in the international market
Trading blocs :
Trading bloc can be defined as a group of countries in the specific region which manage
and promote the activities related to trade(Park and Park, 2016.). Trading bloc plays an positive
role in development of the international trade such as :
Economic integration : Trading block helps in bringing various independent countries together
and bring the nations close.
Increase in trade : Trading bloc help to create sustainable economic growth. It help in
encouraging its partners to purchase and sell the goods which is generated in their own
countries(Freund and Ornelas, 2016).
Benefit to customers : Trading blocs help to transfer technology across borders as a result it
improves productivity and quality of the goods and benefits the customers.
Employment opportunities : Trading blocs tend to increase the income and employment
opportunities for the member countries. As the large scale distribution and production creates an
increase in employment opportunities.

M1. The type of support the two companies are getting while operating internationally
The Sainsbury's and BP is a multinational company as a result the company enjoys various
benefits such as both the company get competitive advantage in their respective industry. As
trading internationally make companies more efficient. International trade provides financial
support to the companies. It supports the companies to complete in the market. For example
when the company trade internationally or in several markets than the company came into
contact with various trends in various different market as a result the both the companies
accordingly make changes in their strategies and remain step ahead form its competitors.
M2. Barriers which the two companies are facing :
There are various trade barriers which the two multinational companies i.e., Sainsbury's
and BP is facing.
1. Economic barriers : As different countries have different restriction imposed by
government of the particular country such as tarrifs, non- tarrifs, subsidies, trade
restriction, embargo etc. While trading internationally the company has to face such type
of barriers.
2. Ethical barriers : Despite of various efforts the multinational companies continue to face
various ethical challenges around the ethical trading practice.
3. Cultural barriers : It is difficult task for the companies to expand their business in the
foreign market. As expansion to other country needs a proper knowledge of culture of the
particular country. People who belong to different culture find it difficult to communicate
with each other as a result the performance of company is hindered.
D1. Impact of globalisation on business :
Globalisation is a process by which the world is becoming interconnected as a result there
is significant increase in trade. The companies like Sainsbury's and BP are facing the impact of
globalisation. With the increase of trade as a result of globalisation the huge number of
competitors are entering into the market. There are wide variety of substitutes present in the
market as a result the two companies performance is affected by the globalisation. As Changes in
everyday has become common. As the international trade is good idea by the two companies but
it does not assure success in every market. The reason behind this is globalisation which is
creating negative as well as positive impact on the business.

CONCLUSION
From the study it can be concluded that the companies expand its business internationally
in order to generate revenue, grow the business and find new talent in the market. The companies
can expand their business internationally by taking the financial help from the various sources
such as loans from bank, advance payment etc.
The study also helps in understanding the various features of globalisation and how they
affect the business performance. Trading blocs also plays an important role in enhancing the
performance of the business. They create various opportunities for the partner countries such as
employment opportunities and also help the countries with its economic performance.

REFERENCES
Books and Journals
Aluko, O. and Knight, H., 2017. From corner store to superstore: a historical analysis of
Sainsbury’s co-evolution. Journal of Management History, 23(4). pp.423-435.
Arya, S., Abhishek, K. and Deepak, A., 2019. Organizational Digital Footprint for Traceability,
Provenance Approach. In Emerging Research in Computing, Information,
Communication and Applications(pp. 265-275). Springer, Singapore.
Freund, C. and Ornelas, E., 2016. Regional trade agreements: Blessing or burden?.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Neelankavil, J.P., 2015. International business research. Routledge.
Park, I. and Park, S., 2016. Trade facilitation provisions in regional trade agreements:
discriminatory or non-discriminatory?.
Pilbeam, K., 2018. Finance & financial markets. Macmillan International Higher Education.
Yemen, G. and et.al., 2017. BP: Beyond Petroleum. Darden Business Publishing Cases. pp.1-16.
Online
Sainsbury's Supermarket Ltd. 2019. [Online] Available through
<https://www.bloomberg.com/profile/company/1745528Z:LN>
British petroleum company plc. 2019. [Online] Available through <https://www.bp.com/>