International Business: External Factors and Business Support Systems

This report discusses the external factors that influence international business, such as political, economic, social, and technological factors. It also explores how business support systems, like the internet and payment methods, enable international trade. Additionally, the report includes a situational analysis of two potential countries for international trade, Sweden and Switzerland, and recommends Sweden as the preferred location for Tesla's manufacturing plant. Lastly, it examines the cultural differences that can affect international businesses, including language, cultural values, religion, and ethnic make-up of populations.

INTERNATIONAL
BUSINESS

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. 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. 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 Factor:
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. Therefore it can be said that while
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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 Factor:
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 Factor:
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
sociocultural 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. 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 factor:
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If it is talk about this factor ok, 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 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. 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. 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
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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 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.
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For this, the management has done the selection of two potential countries, namely, Sweden and
Switzerland. 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:-
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
(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
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 &
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Development. 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.
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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Illustration 1: Different Cultural Meanings of Colours and Numbers

Cultural values: All across the globe, people having diverse national and cultural
backgrounds tend to possess varying cultural values. 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
working hard is not really common. It is witnessed that people of this nation work hard yet not
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too hard, it is seen that they go out and totally enjoy themselves. This reflects that their attitude
towards work is quite casual. Tesla has to take all this into consideration while conducting
training sessions for workers.
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.
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.
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
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.
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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