International Business Report: Tesco's Global Expansion and Challenges

This report provides an analysis of Tesco's international business operations, examining its environment, trade regulations, and the impact of cultural differences. It explores methods to increase and restrict trade, compares cultural impacts on multinational corporations, and evaluates potential problems faced by businesses entering new markets. The report also considers how the monetary environment affects international businesses, identifies reasons for international expansion, and discusses business strategies. It includes an analysis of the PESTLE factors affecting Tesco's operations in India, highlighting political, economic, social, technological, legal, and environmental considerations. The report concludes with an overview of the challenges and opportunities that Tesco faces in its global expansion efforts.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 International Business Environment in which Tesco Operates.............................................1
P2 Mechanism that Regulates International Trade.....................................................................1
P3 Effects of Environment and Culture of another country on a business operating
Internationally.............................................................................................................................2
TASK 2............................................................................................................................................3
M1 Methods to increase trade between countries and the methods to restrict trade between
countries......................................................................................................................................3
M2 Comparison of cultural differences and foreign business environments affect multi-
national corporations...................................................................................................................4
TASK 3............................................................................................................................................4
D1 Evaluate the potential problems faced by businesses that trade internationally when
entering new markets..................................................................................................................4
D2 Evaluate the impact of cultural differences on international business performance in the
international market....................................................................................................................5
TASK 4............................................................................................................................................5
P4 How the monetary environment affects businesses that operate internationally...................5
TASK 5............................................................................................................................................6
P5 Identification of reasons for businesses operating Internationally........................................6
P6 Business Strategies used by a business operating Internationally.........................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business all around the world is growing quite rapidly and thus every organisation wants
to expand its business beyond national borders, thus the role of international business has
emerged in the recent past a lot. Thus there is a need to effectively manage business and take the
same beyond international borders to capture higher market share over period of time and also to
gain consumers worldwide. There are also various aspects of international business, that shall be
effectively considered by the management of organisation to grow and prosper. Tesco is an
organisation which works in the retail industry and is having diverse operations around the
world. The current report will discuss the difficulties and opportunities that the company faces
for achieving a foothold on a global level (Andersson, Forsgren and Holm, 2015).
TASK 1
P1 International Business Environment in which Tesco Operates
Tesco is a multinational company and operates in various countries around the world. In
the recent past, the management of the company has been consistently focusing on various
aspects of business to take it on international level. UK Economy gets affected by business
policies that are being framed by big international companies operating in UK, For example, if
Tesco decides to operate outside UK, then it will lead to an increase in the Export numbers for
United Kingdom. The company is having shops and retail outlets in around 7 countries of UK as
well as Europe. Tesco is having around 6500 outlets around the world. The various political as
well as legal policies of various countries in which it operates has a direct effect on the workings
of the company. If there is an increase in the international trade, it generates various benefits to
businesses as well as economy as it generates employment for domestic people and at the same
time increases overall tax collection for the country in general. There has been a transformation
in the global economies, they are opening up market for outside companies and thus this has
created opportunities for companies like Tesco to work reach out to these countries in an
efficient manner (Charter ed., 2017).
P2 Mechanism that Regulates International Trade
There is a mechanism that regulates the international trade within the economy. United
Kingdom is among the top ten economies of the world. United Kingdom is planning to
effectively frame certain policies that will not only encourage international trade within the
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economy, but will also be beneficial for current business and will also contribute in generation of
employment in the longer run. The various factors that encourages or restricts international trade
are laid down as follows:
Economic Development: The level of economic development that a country has will directly
impact its international trade policies. Some of the countries like Japan US and also UK are
developed economy and thus their import as well as export contribution in the economy is quite
huge and thus is a vital factor for economy.
Political Factors: The political people and the policies that are being framed by them directly
impacts the international trade policies of the country. For example, UK Government follows the
policy of free market and thus allows free trade mechanism in export and imports, which is
beneficial for businesses (Crane and Matten, 2016).
There has a considerable impact of leaving EU for United Kingdom. This has created
many issues for the international trade of the economy. The tax rebates and benefits that used to
be there is waived by the EU countries as it is not a member of EU. As a member of EU, UK has
been able to do international trade quite easily, which has lead to higher level of growth for the
country over period of time. But, by not being a member of EU, There can be a considerable
impact on the economy of UK and which will further impact the business growth of various
companies operating in UK including Tesco (Deasy and et. al., 2017).
P3 Effects of Environment and Culture of another country on a business operating
Internationally.
Tesco is a company that operates on a global level and thus it gets affected by the
environment and culture that operates in a particular country, Tesco, For Example, is planning to
open new stores in India, which will increase it foothold within the Asian Market. it is necessary
to conduct a PESTLE Analysis of the particular country in which it operates or going to operate.
PESTLE Analysis of India can be laid down as follows:
Political: The political establishments in India, is quite liberal when it comes to framing policies
for businesses. The country is a growing economy and allows external businesses to come and
operate within the country. But the political rivalry, sometimes hampers the business sentiments
and thus lead to various problems for business communities.
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Economical: India is the 9th biggest country in terms of GDP and is growing at a rapid pace of
around 8%. Thus, the opportunities are plenty for Tesco as there is a large customer base with
increasing disposable income of individuals and families that resides within it.
Social: India is a country of diverse culture, and thus the consumption pattern changes as one
moves within the country. The social structure of the country is quite unique and is a land of all
the various sorts of religions.
Technological: India is growing fast and thus technological advancement is taking place within
it effectively. But the same is not as advanced as other developed countries around the world.
Thus, for establishing itself, Tesco will either have to import technology from UK or will
completely have to rely on the level of technology that India posses.
Legal: The legal environment of the country is quite stringent and the parliament of the country
do frame certain policies which is more popular in nature and may not be in favour of business
houses in general.
Environmental: The country has strict norms for damaging the environment and various
clearance as well as approvals are necessary to establish a proper business. Thus management of
Tesco shall consider the same before operating in India (Gilboy, 2016).
TASK 2
M1 Methods to increase trade between countries and the methods to restrict trade between
countries.
For the purpose of increasing as well as decreasing trade within countries, various
policies are framed by nations, these are discussed as follows:
Methods to Increase Trade Tariff: The country may decide to reduce the tariffs of certain commodities or trade,
which would mean that there will be more export or import of the same thus will result in
higher trade. Taxation: A country may also reduce the level of taxation on conducting business within
the country, which will boost the foreign inflows within the nation.
Methods to decrease Trade
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 Quotas: Under this, an economy would restrict the quantity of goods that can be sold or
purchased out of the border of the nation and thus will have a limit on certain goods as
well as services that can be exported or imported
 Taxation: The country may decide to impose higher level of taxation and frame stringent
policies that will restrict flow of international trade (Hamilton and Webster, 2015).
M2 Comparison of cultural differences and foreign business environments affect multi-national
corporations.
The macro economic environment of India will going to have a direct impact on the
workings of Tesco and its business environment, thus it is essential to make sure that right kind
of strategies are followed by Tesco for improving the chances of growth. The impact of various
factors are discussed as follows:
Political: Tesco can get various kind of benefit from the government of India, because of its
policies to encourage foreign investment within the nation.
Economical: India is a developing economy with higher growth rate and thus can turn out to be
beneficial for Tesco in the longer run because of a large customer base which is present there.
Social: The varied culture of the people of India can help Tesco in diversifying its business
portfolio and making growth in all of its business segments.
Technology: The company can effectively manage its technological aspects as there is low cost
technology which is available within the nation.
Legal: The company can also manage its legal issues in an effective manner. The legal
framework of India allows company to trade freely with some genuine restrictions.
Environmental: It is necessary for Tesco to consider the environmental issues appropriately
before entering in India as the laws regarding environment is quite stringent (Huang-Horowitz ,
2015).
TASK 3
D1 Evaluate the potential problems faced by businesses that trade internationally when entering
new markets.
There are various issues that may be faced by Tesco, if it decides to operate in country
like India. The country is having a very big size of population which is not literate and is very
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poor as well as, the middle class of the country do have a growing disposable income but the
same can not be the sole factor to operate in a difficult country like India. The various problems
that may be faced by Tesco in India are lack of skilled labour, lack of advanced technology. Less
use of digital money and runs on cash.
D2 Evaluate the impact of cultural differences on international business performance in the
international market.
Tesco is a UK based company which is having a different culture then India. It differs
from India in various aspects like the language spoken, environment along with the economic
development. These factors do have a direct impact on the business of Tesco and thus it is crucial
considers these factors efficiently (Hillary ed., 2017).
TASK 4
P4 How the monetary environment affects businesses that operate internationally.
There are various kinds of risks that involves while operating on a global level, primarily
monetary risks such as currency Fluctuations and interest rate environment. For example if a
country would be having high inflation then it means it will be having a high rate of interest as
well which will further increase the overall risk of less consumption and hence the demand also
gets affected badly. The business shall be established by making proper strategy and then
approaching the market like whether to enter into franchising, partnership or joint venture etc.
The business which is setup in a foreign country is also usually financed by the same currency in
which it operates, this way the risk of currency fluctuation can be reduced to an extent.
The banks also offered various services to support international business like Project
Financing, Foreign Exchange Management and various other services that facilitates effective
functioning of business.
Central Government of various country also offers different kind of assistance to
businesses for the purpose of growth of those business. This includes tax rebate, export
assistances etc. (Kew and Stredwick, 2017)
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TASK 5
P5 Identification of reasons for businesses operating Internationally
Every Small and medium enterprise would want to grow and develop its business over
period of time thus it is obvious that at one point of time it will decide to take the business
forward. Through international exposure a small and medium size firm can increase its business
reach and thus a higher growth can be achieved in the initial period. It also gives company and
its employees a framework to operate on an international level. The company also enjoys cross
cultural benefits that can help firm in becoming more mature with time. For example, A small
company of UK like Travelodge Walthamstow has decided to grow its business in various other
countries as well.
P6 Business Strategies used by a business operating Internationally
There are various strategies that needs to be followed by an SME company for effectively
operating on international level. The ultimate aim being to improve the overall functionalities of
the business. For this, company shall analyse the various macro factors and its direct impact on
the business like international policy, taxation policies, cultural differences, economic demand of
consumers and its impact etc. The various business strategies that can be followed by the
company are Joint Venture, Franchisee, Partnership, Acquisition, Licensing etc. The company
choose the best possible strategy based on the possibility for company (Moutinho and Vargas-
Sanchez eds., 2018).
CONCLUSION
Thus from the above it can be said that most of the business of current economies tries to
go global and for this purpose it is essential to make a proper and effective study of all the
aspects to operate on international level like the macro and micro factors. Thus it is essential to
make sure that adequate analysis is done of all the financial and non financial aspects before
poring money into international business.
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REFERENCES
Books and Journals
Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the
federative MNC: A business network view. InKnowledge, Networks and Power(pp.
393-420). Palgrave Macmillan, London.
Charter, M. ed., 2017.Greener marketing: A responsible approach to business. Routledge.
Crane, A. and Matten, D., 2016.Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dawson, C. J. and et. al., International Business Machines Corp, 2015.Dynamic provisioning of
resources within a cloud computing environment. U.S. Patent 9,009,294.
Deasy, S. and et. al., 2017.User interface for controlling use of a business environment on a
mobile device. U.S. Patent 9,544,274.
Gilboy, G. J., 2016. The myth behind China's miracle. InSEEKING CHANGES: The Economic
Development in Contemporary China(pp. 1-16).
Hamilton, L. and Webster, P., 2015.The international business environment. Oxford University
Press, USA.
Hillary, R. ed., 2017.Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Huang-Horowitz, N. C., 2015. Public relations in the small business environment: Creating
identity and building reputation.Public Relations Review.41(3). pp.345-353.
Kew, J. and Stredwick, J., 2017.Business environment: managing in a strategic context. Kogan
Page Publishers.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018.Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
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