Globalization and International Business

This assignment provides a comprehensive overview of globalization and its effects on international business. It includes summaries of various academic papers and research articles that discuss the benefits and challenges of globalization, such as its impact on economic development, trade agreements, corporate social responsibility, and environmental sustainability.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
M3 Situational analysis on two countries a selected business may consider trading in.............6
D2 Recommending one country for international trade along with justification........................8
P7 Explore the cultural differences affecting international businesses.......................................8
D3 Impact of cultural differences on international business.....................................................10
M4 Analyse how cultural differences affect international businesses......................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International business refers to the act of country to trade in global markets other than the
home country. It can be seen as a lucrative opportunity for organisations to facilitate business
growth and expansion, thereby, expanding the share in marketplace (Meyer and Peng, 2016).
The present report is based on Tesla which is one of the leading automobile companies across the
global market.
P5. Explain the external factors that influence a selected business considering trading
internationally
For everything a business organisation, it has been analysed that external factors plays a
crucial role which mainly influence upon its operations or strategies developed in order to gain
competitive advantages. Without proper analysis of the external environment it can be said that a
company cannot sustain for a longer period of time frame just because there are many business
organisations within a sector that are performing well considering all the changes. In the same
way, it is also required for Tesla to examine the external environment in order to to graph
competitive advantages or to enhance profit margins (Cravino and Levchenko, 2017). This may
also help in trading internationally through enhancing the number of stores of Tesla in all over
the world. In order to identify the the influence of the external factors on test last performance
while trading internationally, pestle analysis has been done underneath:
PEST Analysis
Political Factors: One of the crucial part linked to external environment that is political
which mainly involves influence of governmental policies related to taxes and others that might
impact upon of business organisations operations. This mainly identifies governmental impacts
on businesses and their remote or macro-environment. Governmental entities are among the
main societal forces that affect businesses and industries. For example, policies on trade can limit
industry performance and the company’s revenues. In this external analysis case, the following
political external factors are significant to Tesla and the automotive and energy solutions
industries: Governmental incentives for electric automobiles (opportunity), New global trade
agreements (opportunity) and Political stability in the majority of major markets (opportunity).
Since the business organisation that is Tesla performing its operations and manufacturing
electronic cars through using renewable resources, government has offered range of benefits for
this organisation in order to trade at global level which involves low Interest rates (Zander,
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McDougall-Covin and Rose, 2015). Therefore it can be said that while performing business at
international level trading among borders, Tesla would definitely get support from governments
because of the products that they have made for their customers.
Economic Factors: Another crucial factor which basically relies upon financial sources
regarding a company or regarding a country where an organisation is looking forward to expand
its business all performing in the same Nation. If it is talk about Tesla then, conditions might
include anything from market growth, trade levels, currencies, and other variables that influence
the automotive business. For example, the solar energy market’s growth rate determines the
growth opportunities of the company’s solar panel business. Tesla needs to address the following
economic external factors that influence the automotive market: Decreasing battery costs
(opportunity), Decreasing renewable energy costs (opportunity) and Economic stability issues
(threat). Considering this, Tesla could easily Grab a good position within the automotive market
at international level. Since Tesla is directly focusing upon electronic cars, it will be required for
the organisation to to reduce the cost of renewable energy that they are using under their
products.
Social Factors: This is another factor which mainly impacts upon International trading
of a business organisation because it involves arrange of elements like human mentality,
perception and many other thoughts of an individual regarding a company or regarding the acts
which organisations has made. If it is talked about Tesla Inc. it has considered that how the
business aligns with the social trends in its target markets. It is much required for Tesla's
managers to ensure that strategies are applied to maximize the business benefits of such external
factors. The socio-cultural external factors important in Tesla’s business are as follows:
Increasingly popularity of low-carbon lifestyles (opportunity), Increasing preference for
renewable energy (opportunity), Improving wealth distribution in developing markets
(opportunity). Considering these factors it can easily be said that Tesla could easily enter a
whole new market in specified time frame (Lenzen and et. al., 2012). Change the organisation is
looking forward to enter new markets like Sweden or Singapore, it will be required for Tesla to
look into to the social cultures which has been followed by both of these countries.
Technological factors: If it is talk about this factor, it can be considered as one of the
crucial factor that plays a vital role for Tesla. This element mainly determines how technologies
influence the company’s remote or macro-environment. The advancement of Tesla’s automotive
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and energy solutions business depends on available technologies. This could be understood with
a good example where, engineering technology determines the efficiency and cost-effectiveness
of the company’s batteries. It is been found that there are many external factors under
Technology that plays a significant role in Tesla Inc. and these are, High rate of technological
change which could be considered as both opportunity and threat, Increasing automation in
business this might be taken as an opportunity by Tesla and lastly, Increasing popularity of
online mobile systems which can also be taken as an opportunity by Tesla (Mak, Lumbers and
Eves, 2012). It has been analysed that high rate of technological change is an opportunity and
threat in this business, where if Tesla develops its products considering all the updates that are
coming in the market regarding the technology then it would also require for them to invest a
good money that will directly impact upon their profit margins voluntary new market. The high
rate presents opportunity for Tesla to enhance its products’ technologies.
P6. Explain how business support systems enable a selected business to trade internationally
Business support system can be defined as the system which helps an organisation in
trading at international or at domestic level. Since it has become easier to to communicate with
customers, many business organisations has developed themselves digitalize themselves in order
to directly communicate with the customers. Here, internet can be considered as one of the
crucial factor which has held companies like Tesla to look into all the queries of the customers,
offering all the details that organisation is offering in their products and many more other
information can also be offered. Along with this, it has been analysed that since the internet took
place trading across the border has become really very easy because the payment modes became
much more faster than ever before (Frenk, Gómez-Dantés and Moon, 2014) Therefore, it can
easily be said that there are two major concepts which has held business in becoming much more
influential regarding customer base for the organisation like Tesla. Here, two main factors that
are involved and these are internet and payment method described underneath:
Influence of the internet: Performing operations or trading across the borders has now
become really very easy just because off the internet. In previous decades, there were many
business organisations that look forward to expand their business among inaccessible business
countries but they were unable to do so just because there were no options to to reach to those
countries. Now this scenario has changed where internet has basically helped the organisations
like Tesla to reach to their target customers among different nations. This could be understood
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with very good example of Singapore where Tesla is going to expanded business, with the help
of internet many transactions communication across the offices from the headquarter to the
Singapore can easily be done. In previous times, it was not that easy to do so. Here, social
media and official websites has become one of the crucial tractor that directly e delivers all the
information to the targeted customers in all over the world. This has improvised the economy as
well of all the countries which focuses on internet and believes in trading online. In the same
way, Tesla has kept its focus on grabbing the attention of customers with the help of social media
and its on official websites which directly raised the customer base of it due to the unique
products that is Electronic cars considering renewable resources are being developed and
offered by them. Using this type of business support system, Tesla can work 24/7 and sell its
products across the nation.
Payment methods: In this world full of digitalization, transactions or transferring of
money from one place to another has become really very easy due to the internet of things.
Traditional approach was not that effective for the same just because it used to take time to
transfer the money from one place to another through banking services. Due to digitalization, it
has become really very easy for customers to buy or purchase products just while sitting at their
home with the help of online banking services all the applications provided by banks. Tesla has
managed to develop themselves in this era and offers customers with a range of services through
which they can communicate or transfer the money e regarding their purchase of cars. In
Modern era, there are many e options for payment it came in front from e – payment, mobile
payments to credit cards and many other tools through which payment can be done of any
purchase.
M3 Situational analysis on two countries a selected business may consider trading in
In today’s modern world, companies are now able to explore a number of countries
which were not accessible to them earlier, with a view to carry out business expansion. In this
regard, Tesla is a worldwide recognised automobile company which is considering to trade
internationally by facilitating business expansion in the form of opening a manufacturing plant.
For this, the management has done the selection of two potential countries, namely, Sweden and
Switzerland (Lingard, 2013). The top management of Tesla is carrying out situational analysis on
both the countries so as to recognise the most feasible country for expanding the operations of
entity, as follows:-
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SWOT Analysis
(a)SWOT ANALYSIS OF SWEDEN
Strengths Weaknesses
 Widespread IT usage
 Informal systems, no hierarchical
orders
 Strong and effective R&D base for
production facilities
 Large presence of older population
 Low birth rates which imply lesser
new talent and creativity
Opportunities Threats
 Utilisation of infrastructure
 Pragmatic and lucrative
environment for R&D
 International competition
 Small home marketplace
On the basis of above analysis, it can be said that Sweden is an excellent business
location that provides opportunities for an organisation like Tesla to invest in this location and
subsequently enhance the existing share in market place.
(b) SWOT ANALYSIS OF SINGAPORE
Strengths Weaknesses
 Diversity in workforce allows
innovation and creativity
 Declining exports
Opportunities Threats
 Excellent opportunities for
international companies looking to
expand or grow
 High probability of cyber security
breaches and radical terrorism
From the above assessment of internal environment of Singapore, it can be stated that
there is a lot of diversity at this location which strives to provide diverse set of ideas to business
to effectively execute the corporate activities and processes in a timely manner.
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D2 Recommending one country for international trade along with justification
It is imperative for companies to select a potential and lucrative market for facilitating
expansion so as to increase the chances of success. In this regard, on the basis of above
conducted situational analysis, it has been recommended that Tesla should open the
manufacturing plant in Sweden as this is an excellent location for carrying out Research &
Development (Lingard, 2013). R&D would allow business to gain knowledge about the new
trends and technologies prevailing within the electric vehicle industry. Further, the nation offers
exceptional business growth opportunities for companies to enter this strategic location and
flourish to enhance the sales as well as profitability. This can serve as an excellent business
opportunity for Tesla to invest in this country and consequently enhance the share in market
place as well as the revenues and profits. Through this place, the position of organisation will
enhance thereny strengthening the loyal base of customers.
P7 Explore the cultural differences affecting international businesses
Culture can be said to be a composite of ideologies, practices, beliefs, values and
traditions. In this regard, every nation tends to have its own set of cultural values and related
aspects which need to be taken into due consideration by international businesses. Tesla is
looking forward to open a manufacturing plant in Sweden. Thus, it becomes imperative for the
organisation to gain knowledge of all the cultural elements of Sweden in order to make sure that
none of the activities carried out by Tesla hurts the sentiments of local people of Sweden.
Various factors that come under culture and need to be explored by the company in this regard
are explained below:-
Language: It is often noticed that different words tend to have different meanings in
various parts of the world. In this regard, Tesla has to ensure that the translation of the brand
name along with the tag line in various languages used and spoken in Sweden is appropriate.
This is necessary to ensure that such kind of translations does not result in unintended meanings
to the local people of country and consequently, hurt their sentiments. The languages that are
spoken by people within Sweden are Saami and Swedish (Sweden - Language, Culture, Customs,
Etiquette & Business Protocol, 2019). Some of the most common examples of misleading
translations in context of different countries are devised with the aid of the following table:-
(Source: Different Cultural Meanings of Colours and Numbers, 2019)
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Cultural values: All across the globe, people having diverse national and cultural
backgrounds tend to possess varying cultural values (Lingard, 2013). This has to be taken into
account by Tesla in order to ensure that they do not engage in an activity which is against the
cultural values of Sweden. If this factor of culture is not taken into due consideration by Tesla, it
might become a challenge for the entity to ensure its sustainability for a long duration of time in
future. In this regard, it is often noticed that Swedes are egalitarian in nature and are generally
found to be humble and soft spoken. Excess of flashiness as well as boasting are restrained in
Sweden. This is to be considered by Tesla while opening the manufacturing unit.
Religion: This is yet another factor that has to be taken into consideration by companies
while trading internationally. In this regard, within Sweden, 87% of the population is Lutheran
while the other 13% is composed of Baptist, Roman Catholic, Buddhist, Muslim, Orthodox and
Jewish (Sweden - Language, Culture, Customs, Etiquette & Business Protocol, 2019). Thus,
Tesla should ensure that the manufacturing activities carried out by the organisation do not
offend any religion or their religious values.
Ethnic make-up of populations: This is another crucial part of culture which describes
the composition of people of a nation. In this regard, the indigenous population of Sweden is
composed up of Swedes with Finnish and Sami minorities. Further, foreign-born or first-
generation immigrants are made up of Danish, Finnish, Greek, Norwegian, Turkish and Iranian
ethnicity (Sweden - Language, Culture, Customs, Etiquette & Business Protocol, 2019). Tesla
must ensure that the processes carried out by company to manufacture cars do not affect the
ethnic make-up of population negatively in any way.
Attitudes to business: A significant part of the culture of a nation is the attitude of
people towards business. In this regard, Sweden is an infrastructure equipped country which
offers lucrative opportunities for investors to gain entry into this nation and facilitate business
growth. However, owing to the strong alignment of population of Sweden towards
egalitarianism, it is noticed that rivalry is not encouraged within the nation and thus, the attitude
towards business is not much effective. Tesla can tap advantage of this to significantly enhance
its market share within the new country in near future.
Attitudes to work: The attitude that people possess towards work is also an important
component of culture of a country. In this relation, Sweden is a country where the concept of
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working hard is not really common. It is witnessed that people of this nation work hard yet not
too hard, it is seen that they go out and totally enjoy themselves. This reflects that their attitude
towards work is quite casual (Milana, 2012). Tesla has to take all this into consideration while
conducting training sessions for workers.
Communication: This is said to be the key to growth and success of an organisation. In
this regard, where are entity aims at gaining access into international market places, this serves
as one of the most crucial factors which must be taken into account by the companies. While
gaining entry into Sweden, Tesla has to ensure that it renders effective training sessions to its
workplace so that they do not face any issues while carrying out interactions within the new
international market (Frenk, Gómez-Dantés and Moon, 2014). By properly taking this into
account, Tesla will be able to ensure that it does not face any negative consequences while
conducting marketing activities within the new location.
D3 Impact of cultural differences on international business
The impacts of cultural differences upon the international businesses such as Tesla are
described below:-
Composition of workforce: The composition of workforce should be diverse so as to
encourage the integration of a number of mindsets in order to come up with innovative and
creative ideas. This will help the organisation to gain a strategic edge over competitors in
international market, thereby, enhancing the market share as well as profits (Mak, Lumbers and
Eves, 2012).
Marketing strategies/brand names and advertising: The brand name should not imply
unintended meanings in Swedish or Saami. Further, the marketing strategies are also to be
adapted as per the demographics of this nation. It is seen that a large proportion of Swedes are
active on social media and thus this will act as an effective marketing strategy for the company.
Organizational hierarchy: Organizational hierarchy and attitudes towards management
roles can also vary widely between cultures. Whether or not those in junior or middle-
management positions feel comfortable speaking up in meetings, questioning senior decisions, or
expressing a differing opinion can be dictated by cultural norms.
M4 Analyse how cultural differences affect international businesses
The cultural differences among the host country and the domestic country tend to have a
significant influence upon the operations of business. In this regard, these differences cause a
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shift in the management styles, composition of workforce, contract negotiations, organisational
culture and marketing strategies as all these aspects have to be in accordance with the culture of
the new country and the demographic trends of population (Lenzen and et. al., 2012). Along with
this, it can easily be said that shift among cultural differences, would required to be understood
by companies that are looking forward to expand their business at international level. With the
help of this, sustainability and profit margins will automatically improve.
CONCLUSION
From the above discussion, it can be concluded that international business is a lucrative
opportunity for growing businesses to facilitate rapid growth. Also, it is analysed that it is
essential for an organisation to take into account the culture, technology, legal and other aspects
of new country so as to feasibly facilitate expansion.
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REFERENCES
Books and Journals
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Cravino, J. and Levchenko, A.A., 2017. Multinational firms and international business cycle
transmission. The Quarterly Journal of Economics, 132(2), pp.921-962.
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.
Cohn, T. H., 2016. Global political economy: Theory and practice. Routledge.
Intriligator, M., 2017. Globalisation of the World Economy: Potential Benefits and Costs and a
Net Assessment. In Economics of Globalisation (pp. 85-94). Routledge.
Lim, A. and Tsutsui, K., 2012. Globalization and commitment in corporate social responsibility:
Cross-national analyses of institutional and political-economy effects. American
Sociological Review. 77(1). pp.69-98.
Lenzen, M., and et. al., 2012. International trade drives biodiversity threats in developing
nations. Nature. 486(7401). p.109.
Mak, A. H., Lumbers, M. and Eves, A., 2012. Globalisation and food consumption in
tourism. Annals of tourism research. 39(1). pp.171-196.
Crystal, D., 2013. A global language. In English in the World(pp. 163-208). Routledge.
Milana, M., 2012. Globalisation, transnational policies and adult education. International Review
of Education. 58(6). pp.777-797.
Frenk, J., Gómez-Dantés, O. and Moon, S., 2014. From sovereignty to solidarity: a renewed
concept of global health for an era of complex interdependence. The Lancet. 383(9911).
pp.94-97.
Lingard, B., 2013. It is and it isn’t: Vernacular globalization, educational policy, and
restructuring. In Politics, Policies and Pedagogies in Education (pp. 100-118).
Routledge.
Asongu, S., 2014. Globalization (fighting), corruption and development: How are these
phenomena linearly and nonlinearly related in wealth effects?. Journal of Economic
Studies. 41(3). pp.346-369.
Baier, S. L., Bergstrand, J. H. and Mariutto, R., 2014. Economic determinants of free trade
agreements revisited: Distinguishing sources of interdependence. Review of
International Economics. 22(1). pp.31-58.
Online
Sweden - Language, Culture, Customs, Etiquette & Business Protocol. 2019. [Online]. Available
Through:<https://www.commisceo-global.com/resources/country-guides/sweden-
guide>.
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