Comparative Study of Business Development Strategies

The research report delves into the process of developing an organization's international business. It discusses two main components: (1) understanding key factors that influence organizational growth beyond their initial markets, and (2) employing a PESTLE analysis to comprehend external environments. The study highlights how these elements aid organizations in making strategic decisions for global expansion and competitive advantage. It outlines the importance of analyzing political, economic, social, technological, legal, and environmental aspects through PESTLE to navigate international markets effectively. Additionally, it examines organizational growth drivers such as market demand and cost efficiency. Finally, a comparative analysis is presented on how different organizations apply these strategies in various countries.

International Business

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK ..............................................................................................................................................1
P2 Describe the mechanisms that regulate international trade....................................................2
P3 Describe how the environment and culture of another country affects a business operating
internationally.............................................................................................................................3
P4 Describe how the monetary environment affects businesses that operate internationally.....4
P6 Explain the business strategies used by a business operating internationally.......................6
CONCLUSION...........................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Today, business is acknowledged to be international and there is a general expectation
that this will continue for the foreseeable future. International business may be defined simply as
business transactions that take place across national borders. This broad definition includes the
very small firm that exports (or imports) a small quantity to only one country, as well as the very
large global firm with integrated operations and strategic alliances around the world (Wild,Wild
and Han, 2014). Within this broad array, distinctions are often made among different types of
international firms, and these distinctions are helpful in understanding a firm's strategy,
organization, and functional decisions (for example, its financial, administrative, marketing,
human resource, or operations decisions). A multinational enterprise (MNE) is a company that
has a worldwide approach to markets and production or with operations in several countries.
Well-known MNEs include fast-food companies such as McDonald's and Yum Brands, vehicle
manufacturers such as General Motors.
TASK
P1 Explain the international business environment in which a selected organisation operates
Globalisation is the process that that enables economic, social and cultural activities to be
carried out across national borders; it therefore enables businesses to trade and operate on an
international level (Poulis, Poulis and Plakoyiannaki, 2013).
In the recent years it is the actions of businesses that have speeded up the development of
globalization. Two factors that have led to the development and growth of globalization are:. -
The barriers to international business have become much lower, making it much easier for
businesses to expand abroad, i.e. European Union - Lower transport costs: costs of shipping have
come down due to bulk shipping and due to transport becoming more efficient.
My chosen MNE is McDonald’s – it is the world’s largest chain of fast food restaurants and is
found in 119 countries, serving 58 million different customers daily.
The success of a multinational enterprise such as McDonald highly depends on international
business, making it the most important factor needed not only for success but also day to day
running of the business on an international level (Kollmann, 2013). In order for McDonald's to
succeed on an international level, the company has to consider many aspects that require a lot of
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knowledge in when operating globally,some of which are; understanding the culture, the
economy, religion, labour standards, legal systems and the needs and lifestyle of the people.
Advantages -Globalisation creates a larger market, therefore a business can sell more good and
increase profit, and it can also help provide jobs in less economically developed countries and
therefore help develop economy. - A product or a service becomes available on an international
level and can be found in many places e.g. Coca-cola, McDonald.
Disadvantages -Globalization can cause unemployment in developed countries as businesses are
likely to move their factories to places where they can get cheaper employees (Jenkins, 2013). -
Businesses face a much higher competition, which makes it harder for smaller businesses to
establish themselves as they don’t have the resources to compete at a global scale.
P2 Describe the mechanisms that regulate international trade
Free trade: Free trade is the economic policy of not discriminating against imports from
and exports to foreign jurisdictions. Buyers and sellers from separate economies may voluntarily
trade without the domestic government applying tariffs, subsidies or prohibitions on their goods
and services. Free trade is the opposite of trade protectionism or economic isolationism.
According to the law of comparative advantage, the policy permits trading partners mutual gains
from trade of goods and services.
World trade organization: According to the law of comparative advantage, the policy
permits trading partners mutual gains from trade of goods and services. The concept of free trade
is an interrelated factor to the aspect of globalization. Therefore, quite obviously, it is also one of
the most controversial topics of 20th and 21st centuries focusing on economical, societal and
moral issues and its impact in upcoming times both in positive and negative frameworks.
Economics of scales: The increase in efficiency of production as the number of goods
being produced increases (Hovhannisyan and Keller, 2015).
Barriers to trade: Trade barriers are government-induced restrictions on international
trade. The barriers can take many forms, including the following:
 Tariffs
 Non-tariff barriers to trade
 Import licenses
 Export licenses
 Import quotas
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 Subsidies
 Voluntary Export Restraints
 Local content requirements
 Embargo
 Currency devaluation
Advantages of the European Union: A united economic front benefits European
member states on the globalized stage rather than dealing by themselves with rival superpowers.
It's the basic philosophy of fascism. Combining the powers with many sticks, versus just being
one stick. The bundled sticks will be stronger than the single brittle stick alone.
Various consumer regulations in the European Union protect the consumers than allow
the corporations to pull the wool over consumers' eyes.
P3 Describe how the environment and culture of another country affects a business operating
internationally
International business deals not only cross borders, they also cross cultures. Culture
profoundly influences how people think, communicate, and behave (Hood and Birkinshaw,
2016). It also affects the kinds of transactions they make and the way they negotiate them.
McDonald is an international company and will use PESTLE analysis to identify any
factors which could cause them issues. This analysis focuses on political, economic, social and
technological factors.
McDonald’s revenues and long-term growth prospects are affected by a number of political
factors such as levels of bureaucracy and corruption, government stability and the freedom of
press. Moreover, activities of trade unions and home market lobby groups can be referred to as
noteworthy political factors that may affect multinational corporations.
Although, in general businesses are not in the position of influencing external political factors, a
corporation of a size of McDonald’s usually attempts to affect political factors via lobbying and
other means. In June 2015, McDonald’s hired the former White House Press Secretary Robert
Gibbs as its head of global communications. This move was rightly perceived by many as an
attempt to establish a connection with Washington D.C. taking into account the absence of
Gibb’s experience in food industry (Ferreira and et. al., 2014). Moreover, it has been noted that
“known for effectively putting down the rumour that Obama was a Muslim, Gibbs will be a
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useful tool in fighting any smear campaigns that face McDonald’s during his time there, be it
accusations of unfair labour practices or another pink slime debacle”.[1]
In an international stage, McDonald’s experiences in Russia is a stark illustration of the
impact of political factors on the business. Specifically, as a result of tensions between Moscow
and Washington over the war in Ukraine, the government of Russia announced its support to a
new local chain “Let’s Eat at Home!” Government-related founders publicly acknowledged that
“the aim of the project is to promote import substitution and create alternatives to Western fast-
food chains”.[2]
P4 Describe how the monetary environment affects businesses that operate internationally
There are two different types of banking that is High Street/Retail banking and
Commercial banking. High street banking offers savings accounts, consumer loans, credit cards,
pensions, ISA’s and insurance (Enderwick, 2013). A commercial bank is a privately owned
financial institution. It offers international banking and trading services such as letters of credit
and bill of landing. It also offers investment portfolios which helps businesses when they use
reserves effectively. As well as this it offers current or reserve accounts for businesses and loan
or hire purchases.
The type of banking services they provide are a current account, overdraft and loans or
hire purchases. A current account is a bank account that allows no interest. It allows businesses
to withdraw money when needed via counter or check transactions. An overdraft is a loan
arrangement from the bank when they extend the overdraft limit against the businesses current
account. Banks provide their customers with this to help them out when managing daily
operations. Loans and hire purchases are also given to commercial banking customers to
purchase equipment. A hire purchase will allow the customer to pay regular instalments for what
they hired.
The type of banking facilities the commercial bank provides is bill of lading, factoring
and letter of credit. Bill of lading is a delivery note that shows the items being transported, their
weight and value etc. Ford would use this when transporting their car parts internationally to
their other manufacturers (Dunning, 2013). Factoring is when part of the total amount of the
invoice is released before the invoice is given. Businesses like ford use factoring when they sell
their cars on finance. Many ask for a large upfront price then let their customers pay the rest of
the amount off monthly. Letter of credit is given by the buyer for the seller.
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P5 Identify why businesses operate internationally
The global economy has become more competitive as companies of all sizes seek to
expand beyond domestic borders. The Internet and information technology are among factors
that have made it possible for smaller firms to venture into foreign markets (Clarke, Tamaschke
and Liesch, 2013). Before making an international move, though, it is helpful to understand
common reasons companies enter the international business arena. To Expand Sales: The first and foremost reason is that western multinationals would like
to expand their sales and acquire newer markets so that they can record impressive
growth rates. Considering the fact that the developing countries are peopled with
consumers who have aspirations to western lifestyles, it is, but natural that the western
companies would like to target this need and hence, expand into these markets. Acquire Resources:This is one of the most important reasons for companies to expand
internationally. Because the developing and emerging countries have large deposits of
minerals, metals and land for agricultural production, the western multinationals eye
these markets in order to get access to the resources. Minimize Risk: Often, businesses expand internationally to offset the risk of stagnating
growth in their home country as well as in other countries where they are operating. For
instance, ever since the Western countries saw their growth rates slip to below 3% (in
cases recording negative growth i.e. depression), the Western multinationals have made a
beeline to the emerging markets that are growing in excess of 5%. Since firms exist to
make profits and grow their bottom lines, it is but natural for them to expand
internationally into countries that have better growth rates than their home country
(Cavusgil and et. al., 2014).
 Competitive Parity: "Everyone is doing it" is a simple but real motive for many
companies that go global. If your competitors enter foreign markets, it seems logical that
your business should do so as well, conditions permitting. If you have a competitive
rivalry in the U.S., your competitor could gain increased brand exposure and recognition
by entering markets where you don't have a presence.
P6 Explain the business strategies used by a business operating internationally
International marketing is when a company makes one or more marketing mix decisions
across borders I.e France-England. Sometimes a business will set up a overseas office instead of
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operating from the original country, this is so that the business may start marketing strategies
across the world with ease. Decisions are made at the headquarters and these choices will affect
the business marketing campaign internationally (Beamish, 2013). Sometimes Each head office
in the country where they do trade will market their own campaigns. This means there are
different campaigns in different countries this is done because the language id different, and the
culture in each of the country's. It’s not always one marketing campaign for all countries.
A basic marketing strategy is made up of the four “P’s”. These are:
 The product - what product to pick.
 Place - where is best to set up.
 Price - how much you will charge and promotion.
 Promotion - how you will sell your item.
All 4 P's work hand in hand. I mean the place will affect the price and the price will affect the
product and the product will affect the promotion. So they all link together!
CONCLUSION
In above mentioned report can be concluded that each and every kind of organisation can
develop their business internationally as it assist them to improve their profits and reputation at
marketplace. It is essential for them to conduct PESTLE analysis, so that they can easily examine
their external environment and develop strategies according to this in an effective and efficient
manner.
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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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