Analyzing Tesco PLC's International Business Strategies Report

This report offers a detailed examination of Tesco PLC's international business operations. It begins by addressing key contemporary issues such as trade protectionism, ethical considerations for multinational companies, and the impact of foreign laws and regulations. The report then evaluates the global context within which international businesses function, including political, economic, and legal environments. It further explores alternative methods of entering foreign markets, such as licensing, strategic alliances, and joint ventures. The analysis delves into the reasons behind company internationalization and various theories supporting it. The report also discusses the impact of multinational companies on both home and host nations, including social and ethical considerations. Finally, the report analyzes and evaluates data on country markets to recommend suggestions for business expansion. The report aims to provide a comprehensive understanding of international business strategies and their implications for companies like Tesco PLC.

International Business
Contents
Introduction:....................................................................................................................................1
LO1 Debate key contemporary issues relating to organizations involved in international business.
.........................................................................................................................................................2
LO2 Identify and evaluate the global context within which international business must
function in the twenty-first century.................................................................................................5
LO3 Appraise alternative methods of entry into foreign markets...................................................7
LO4 Explain why companies may decide to internationalize and alternative theories of
internationalization..........................................................................................................................9
LO5 Discuss the impact of multinationals on both the home and host nations.............................12
LO6 Select analyze and evaluate data on country markets...........................................................14
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

Introduction:
Business isn’t now at the local market. Every industry tries to spread their product to the
international customers to get a large amount selling their produced goods. It also increases the
chance for the customers to take the advantages of their product. As a result, every business
increases their business activities outside from the local atmosphere to the worldwide to get more
advantages. The main purpose of the research project is to identify the clear object of the
international business. Here Tesco PLC will be selected to provide the right observation about
the international business implementation in a different part. The critical issues will be discussed
to prevent the obstacles that may arise in the organization internally. The global context and
other business functions will be identified and evaluate according to the twenty-first-century
background. The most attractive method will be shown as the best way to enter a foreign market.
The research project prepared according to the famous theories that are followed by the
international business. At the last stage, the impact will be evaluated and the data will be
analyzed to recommend the suggestions for the company betterment. It helps to take the action
for the long-term business expansion and implement the proper business plan.
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LO1 Debate key contemporary issues relating to organizations
involved in international business.
Tesco Plc is the largest retail company in the world. Tesco is a multinational grocery and general
merchandise retailer which was started its business in 1919. To accomplish business activities,
Tesco faces many international rules and regulation. The contemporary issue that faces by Tesco
and other multinational company are given below(International Labour Migration, 2010).
Trade protectionism
Trade protectionism is one kind of government strategy to protect the country-specific area of
industry form international influences. The main aim of the Trade protectionism is to reduce the
unfair competition among the international company. Monopoly and another kind of unfair
business policy are protected by the trader protectionism act. The Trade protectionism act make
the business environment less competitive and facilitates the international trade. Tesco needs to
care about the Trade protectionism act that is imposed by the international association. The key
contemporary elements of Trade protectionism are tariffs, imports quotas, government
regulation, and policy(Hollensen, 2014).
 Tariffs: Basically, tariffs are imposed on imported goods and services. The tax rate that
is imposed according to the tariffs acts is varied based on the goods uses and types.
Which economy has floating export tax rate can impose export tariffs to control the
international competition. The export tariffs hunting the local business organization. On
the other hand, import tariffs help the local business organization(International Labour
Migration, 2010).
 Import quotas: The import quota is imposed to reduce the import quantity and increase
the market price of specific goods and industry product. The effects of import quota are
similar to the tariffs.
 Administrative barriers: To reduce the import quantity and increase the country
product price, the government imposed some extra barrier and various rules on specific
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industry and organization. Some key acts that are imposed by government are food safety
acts, electricity security regulation, environment standard act etc.
 Anti-dumping legislation: Some multinational organization uses dumping policy which
means selling lower prices product in the foreign market than the local market sales
prices. It means import will be cheaper and that affect the local market. Local industry
has to close their business.
Also, some other kinds of trade protectionism are direct subsidies, export subsidies, international
patent system, political and social impact on business. To run business in international market
the trade protectionism act and policy should be considered.
The ethical and social issue to be considered by the multinational company
The multinational company maintains ethical and social issue in a time of international business.
To grow the international business, the company should take more responsibility regarding the
social welfare. The social responsibility is maintained based on the ethical issue practices. The
multinational company perform and honor local tradition, respect human rights and protect the
environment. Honoring local tradition is one of the main responsibility of every organization. A
multinational company runs their business activities in another nation. The protect types, features
and requirements should have matched based on the local customer requirements. For example,
Tesco offers their product in Asian country based on their tradition and reformation. Respecting
human rights is another responsibility of the company. Tesco ensures health safety, security, and
regular life well-being of both customer and workers. Tesco provides the proper benefit of their
476,000 employees. Another social and ethical responsibility is protecting the environment.
Today British and American company are more careful about environment protection of their
host country to do business. Multinational company fine if they affect the local environment. The
environment protection policy also develops the public relation. Tesco has good relation with a
global association like Trade Union, EU, and World environment protection association(Griffin
and Pustay, 2013).
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Some other key contemporary issue that must be considered by Multinational company:
Foreign laws and regulations: The international laws are exercised by MNCs that expand and
contract the business area and operation policy. EU and Trade association imposed an
international law that affects the international business. British government faces some problem
for Brexit policy in the recent year.
Universal payment methods: To protect the MNC trading payment security, global association
imposed some universal payment system. In USA credit cards, eWallets are very popular for
international payment. In Europe credit card, pan-European are popular. DineroMail and
MercadoPago are tow secured method of international payment in Latin America.
Currency rates policy: For accomplishing the regular payment currency rate is a vital issue that
should be considered. Some country maintains fixed exchange rate system, some are maintained
flexible exchange rate system. The exchange rate policy that is maintained by the host country
should be considered by the company(Collier, 2013).
Political issue: Political instability impact on the international business. There has a negative
impact on the business organization. The government decision, implement policy on trade
protectionism reduce the profitability of the multinational company. Some political problems are
civil war, terrorism, coups, riots, currency felicitation, and tariffs policy. A higher degree of
political risk reduces the business freedom in the international market.
Both macro and microenvironment have a positive and negative impact on international
business. The organization should consider the current environmental issue to run business
internationally. The political and social risk increase the financial and economic risk. That
affects the international business in the longer time(Griffin and Pustay, 2013).
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LO2 Identify and evaluate the global context within which
international business must function in the twenty-first century.
The new global markets are transformed the economic, social, political and educational
landscape in a philosophical and profound manner. The global businesses are composed by the
force of globalization, trade liberalization, and by the help of informational technology. The
business market is developed more and organized market comes in the 21st century. The global
market structures are not confined to the only economic pattern. The structure of global baseness
transferred in the social, political, educational and geographical area. The ways the sociality
lives, learn, know, invest, work together, ensure health care, exercise the social service and
communication with the other parties are varied day by day(Collier, 2013).
Perspectives on globalization and international business
Globalization is the newest concept in the business organization. It is used for international
businesses. The globalization makes the global business more easy and comfortable. The global
market comes close to the help of information technology. Tesco communicates with their retail
customer, supplier, and administer with the help of modern technology. It increases the cross-
border trade, reduces the distance between supply and finished goods. According to the
multinational company, globalization facilitates international business, reduce the barrier of
international trade and investment, uses technology changes, take transportation facilities etc.
Political, economic and legal Environments within the international business must function
in the twenty-first century.
Political systems
The political system represents the rules and regulation that are governed by the country political
parties. The political system has two diversified sectors, first one is collectivism and second is
individualism. International businesses are affected by the collectivist political system very
much. Some country follows democracy which involves a large portion of people who are
involved I decision marketing process. under the democratic government, the power of the
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political parties is coming from general people. All decisions are taken form general
welfare(Doing business, 2013).
Economic systems
The economic system is governed by the country economically. Today three styles of the
economy have such as:
 Market economy: Under the market economy the goods and services are produced and
owned privately. In this system, the government ensure and encourage free and fair
market policy and discourage the unfair monopoly system. Hong Kong is the largest
county where market economy is exercised.
 Command economy: Under the command economy, the country government has power,
rights to produce, launch and control the market system. The government is the owner of
the command economy system. North Korea and China is the largest country who
exercised this economy. Tesco faces trade restriction to run their business under this
economy(Hollensen, 2014).
 Mixed economy: Both individual and government are the owner of the organization. The
government has little control over the market and sometimes imposes trade policy to
control whole market competition. For example, UK, France, India, Sweden follow the
mixed economy.
Legal systems
A legal system characterizes specific rules and regulation that modified individual and corporate
behavior. It is implied laws that regulate the business market. Various important laws are
imposed on the business sector such as common law, civil law, religious law etc. Common law is
formulated according to the country tradition, and custom. Religious laws are imposed on the
belief of religious. Islamic laws are applied in some country. To operate an international
business, Tesco should follow different types of trade law.
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LO3 Appraise alternative methods of entry into foreign markets.
There have various ways to enter the international market. Tesco and other multinational
company can entry global market by following ways (Doing business, 2013).
Licensing:
Under Licensing has franchising, content manufacturing etc. Licensing refers to the action of
business procedures by considering a certain fee for a specific period. To use techno9logy, brand
name, or expertise organization uses Licensing. Franchising is similar to licensing. Under
franchising, the franchisee uses the franchisor brand name, concept, expertise, management help,
and marketing support for royalty or agreed commission. Management and marketing authority
is controlled by the franchisor (Thanopoulos, 2014).
International Agents and International Distributors
International Agents is one kind of international marketing channel. International Agent is an
individual who sales his client product for a commission. It is very low-cost marketing system.
Today renowned organizations like Apple, Tesco, Samsung, butterfly, Reliance etc. are exercised
by International Agents.
Strategic Alliances (SA)
Strategic Alliances is a series of the relationship between different types of companies and
industry. It facilitates the relationship between competitors. By the help of Strategic Alliances,
two or more organization share their management expertise, production plant, marketing channel
and take research and development support. They act agent one other (Wall and Minocha, 2015).
Joint Ventures (JV)
Joint Ventures are newly created company which helps to entre international market. The
company accesses their technology, core competencies, and expertise to enter the international
market. The Joint Ventures access to research and development support, marketing support, and
distribution support. For example, Honda made a close relationship with Rover.
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Overseas Manufacture or International Sales Subsidiary
A business organization can expand their operation in the global market by expanding their
business plant. Through the Foreign Direct Investment, the overseas manufacturing pant expend.
To take the tax benefits, export felicities, workers and raw material support, an organization set
manufacturing plant in the foreign market(Wall and Minocha, 2015).
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LO4 Explain why companies may decide to internationalize and
alternative theories of internationalization.
To enter into an international market there are different ways. A company can take help one of
the processes which are suitable for their business strategy. The market strategy totally depends
on the company how they operate and they apply their operation in the marketplace to motivate
their customers. The tariff rate, strategy, marketing and transportation costs, degree of adaption
needs to keep in mind to apply one of the following internationalization strategies at the
business. Some theories also help the company that describes why they will take the right
decision to internationalize (Hamilton and Webster, 2015).
A business company wants to internationalize because of some important reasons such as.
First-mover Advantage
The business always tries to take more advantage of their business. One country purchases the
product at the cheap rate from the other country because of other country has a less production
cost. As a result, both countries can be benefited from internationalization their business. This is
the topmost benefit that’s why a company tries to diversify their business strategy and
internationalize their products (Pratt, 2014).
Potential for Growth
The growth is the most common expectation for the business. The increasing demand motivates
the business to increase their production and other functions. These must increase the chance to
spread globalization process implementation in the business. When a company keeps touch with
the international customers, they can able to get a large marketplace and able to cut a good figure
profit and increase the firm growth.
Small Home Market
The local market is very small to increase their marketing and increase their sales. Finland has
only 5.5 million people but they have a large amount of production sector. They haven’t any
marketplace where they will sell their products; as a result, they need to spread their product
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internationally. They introduce the Clash of Clans and angry Birds games which is very much
popular internationally. So, international market targeting is the best option for the better
companies to get a better outcome.
More Customers
In the international market, there will be a large number of customers. The producers needn’t
think about the customer for their product. A bigger market provides the certainty and certain
profit from their earnings. They can easily target different market segment, as a result, their
production also gets diversified for motivating the customers.
Discourage Local Competitors
The US companies such as Square, Euclid Analytics and Airbnb takes a different strategy. They
produce well for the international market, as a result, the local market discourages to take
competition with them. They get flexibility and capability to take the lead(Pratt, 2014). They
apply the customer growth advantage as their potential growth. They can also use the multi-
currency merchant account to increase the customer services so that customers can easily
purchase their products and pay. The options increase the customers purchasing rate at a
different product(Hamilton and Webster, 2015).
These are the most common reason so that a company try to come in the international market.
Without the international market, they won’t get these advantages and can’t the capable large
number of profit.
Alternative theories of internationalization
Three major theories are the
1. Trade theories
2. Traditional theories
3. Further theories
An investor can use any theories among them to take it the major reason to make the company
internationalization. Absolute cost advantage, Comparative cost advantage, Gravity model of
trade, Market imperfection theory are most used theory applied in the business world.
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