International Business Report: Tesco's Global Strategy and Impact

This report provides a comprehensive analysis of Tesco's international business operations. It begins with an overview of the international business environment, discussing factors like political risks, cultural differences, and legal issues. The report then explores the mechanisms that control international trade, including tariffs, non-tariffs, trade agreements, and licensing. It examines the impact of culture and environment on international business, highlighting both positive and negative influences. Furthermore, the report delves into the financial environment, analyzing the roles of financial institutions, investors, and exchange rates on Tesco's global activities. It also outlines the reasons behind international business expansion, such as exploring new markets, improving sales, achieving economies of scale, and gaining a competitive advantage. Finally, the report details the strategies used by companies like Tesco to operate at an international level, including joint ventures and partnerships, providing insights into how Tesco navigates the complexities of the global market.

INTERNATIONAL ASPECTS OF
BUSINESS

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
1.1 About International Business Environment..........................................................................3
1.2 Mechanism that controls international Trading....................................................................4
2.1 The impact of culture and environment on international business.......................................4
3.1 Impact of financial environment on international business..................................................5
4.1 The reasons behind international business............................................................................6
4.2 Strategies used by companies to operate at International level.............................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
International Business refers to trading in products or services, capital across the borders
of the country. It involves the transactions between two or more than two countries. There are
various factors that has promoted the international business these are free trading in goods and
services of the companies, advancement in technology of production and transportation,
communication etc. The Report will be based on Tesco. Tesco belongs to Retail Industry of UK.
The company operates various convenience shops, supermarkets, superstores etc. It has various
subsidiaries like Tesco Bank, Tesco Stores Ltd, Booker Group etc. The Report will provide
details of international environment, the impact of culture and environment on international
business, affect of financial environment on business, The Report will also outline the reason
behind operating business at international level and strategies to operate international business
(Morschett, Schramm-Klein and Zentes, 2015).
MAIN BODY
1.1 About International Business Environment.
International business environment is a combination of several factors and issues such as
political risks, exchange risks, cultural differences & legal issues. It generally refers the trade and
operations of services, goods, technologies across national borders. On in other words it involves
cross borders transactions of services & goods between 2 or more countries. Those companies
who have a worldwide approach to markets are called multinational enterprises. In this type,
manager of companies has to face intense challenges which requires enough training and
understanding of the foreign environment (Lasch, 2018).
1.2 Mechanism that controls international Trading.
There are various mechanisms developed by Government of UK that controls
international trade of companies. These are as follows -
Tariffs –
Integrated tariffs in UK is also known as The Tariff. The Department for International
Trade in UK is responsible for developing policies in respect of International Trade and it also
governs the imports of goods in the country. International Trade by Tesco will be govern by the
trade system developed by European Union (Kolk and Rivera-Santos, 2018).

Non- Tariffs -
Government of UK has developed the mechanism of non-tariffs for regulating the
international trade of various goods and services that are offered by companies in UK. It is
applicable on items like foods, textiles etc. These non-tariffs are also regulating the international
trade of Tesco.
Trade Agreements-
Trade Agreements also helps to regulate International Trading in UK. UK is one of
member of WTO. It has to entered into Trade Agreement with other countries like Mexico,
South Korea etc. These agreements help to promote international trade of the companies of UK
such as Tesco etc.
Licensing-
There are various requirements that companies in UK have to fulfil for performing international
trade in other countries. For example- If Tesco is exporting goods to countries outside European
Union in that case it has to comply rules of licensing (Beamish and Lupton, 2016).
2.1 The impact of culture and environment on international business.
Culture and environment is gives impact on the business and its environment. It give positive and
negative impact on the business and its growth factors. Impact of culture and environment are as
follows:
Cultural factor:
Culture of international business is totally different form the local area. This gives impact
on the business and its growth factor. For example: if Tesco is entered into international market.
The other place have different culture in this case manager of Tesco have to assess the needs and
wants of customers as per their taste. Other wiser it is impact to business and its growth factors
(Kourula, Pisani and Kolk, 2017).
Environment factor:
Environment is also impact to the international business. In context of Tesco company is
environment changes can impact to business. For example: company is faced problem by their
decrease in sales of products and services in the rainy season. In that case company have
provided the foods as per seasons. Other hand, environment of other place is different form the
current location of Tesco. In that case company have to use all aspects of the environmental

changes. Both factor are impact to the business and its growth factor in negative and positive
manner.
3.1 Impact of financial environment on international business.
Financial Environment -
Financial Environment is one of the major part of the economy of the country. There are
various players in financial environment such as investors, financial markets etc. that impacts the
operations of the firms. The impact of financial environment on the business of Tesco are as
follows-
Financial Institutions –
These are the institutions that play a major role in dealing with transactions such as
currency exchange, loans etc. Operations of Tesco in International Market are affected by the
availability of funds to conduct the business in foreign countries. For example- Commercial
Banks plays a major role in providing international finance to companies that are involved in
International business in foreign countries (Deresky, 2017). The rate at which financial
institutions provides credit to firms also impacts the cost of production and profitability of the
company. Financial Institutions of foreign country will affect the operations of Tesco in the
country.
Investors -
The perception of different types of investors also impacts the operations of company in
International market. The investment of funds by private equity firms, small investors etc will
support the business of Tesco in foreign countries (Buckley, 2017).
Exchange Rate-
The operations of the firms in foreign countries are also affected by foreign exchange rate
of the currency. It can affect the business of Tesco in positive and negative way.
4.1 The reasons behind international business.
There are various reasons due to which companies operate their business at international
level. These are as follows -
New market-
One of the major reason behind entering of the company in international market is that it
helps to explore new markets for existing as well as new products of the organization. It helps to
offer the products or services in different countries other than domestic countries. For example –

Tesco has entered in International market and it is currently operating approximately 6966 stores
in different countries such as Thailand, Poland etc. for offering its various products like home
appliances, food and beverage etc.
Improvement in sales-
Entering an international market for offering the products or services of the business
helps the firms to improve their sales and profits. If, the company is offering a unique product or
service in countries as compared to other firms in international market it will help to attract the
customers to buy the products of the company (Cook and et.al., 2018).
Economies of scale-
To export the goods of the firm in another countries firms have to develop their products
at a large scale that helps to reduce the cost of production. As a result, the profits of the business
improves. Therefore, companies operate their business at international level for getting the
advantage of economies of scale. Example – Tesco is getting benefits of economies of scale due
to production of goods at large scale in different countries.
Competitive advantage-
International business helps the companies to gain competitive advantage over other
companies. Before entering in international markets, companies should analyse the market trends
and on the basis of this it should develop strategy regarding price of products. This will help to
gain competitive advantage over competitors (Meyer and Peng, 2016).
4.2 Strategies used by companies to operate at International level.
International Strategy-
It refers to the strategy developed by an organization for entering into an international
market. It requires developing the goals, analysis of resources, understanding the demands of
customers etc. Organizations can enter an International market by using different strategies these
are as follows -
Joint Venture-
Firms can enter into joint venture for entering the market of another country for offering
its products and services to the buyers. It involves cooperation between different organizations.
Joint Venture are disbanded when the project for which companies have entered in venture has
been competed.
For example-

Tesco has adopted strategy of Joint Venture for entering in foreign countries. This has
help Tesco to gain success in Asian markets. It has entered in Joint Venture with Tata to offer its
products and services in Indian Market (Arnold, 2018).
Partnerships-
It is also one of the strategy that firms can adopt for operating its business in foreign
country. Company that wants to enter in international market can enter into partnership with
other local firms. For example- Tesco can enter an agreement with other companies for
marketing of products or services.
CONCLUSION
From the above study it has been summarized that international business and operate
across worldwide helped the selected company in accomplishing their goals. It has several
mechanisms that controlled international trade and created barriers for an organization. It has
also shown positive and negative impacts of culture on trading international market. Financial
environment also have impacted on the operations and performance level of selected company in
positive and in a negative manner. Further it has also summarized and shown reasons of
international business and trading as it increased sales of an organization, increased em,
employees skills. Lastly this report shown some strategies and ways on entering the international
market in order to attract wider range of customers and increasing sales.

REFERENCES
Books and Journals
Arnold, M., 2018. Culture & anarchy. E-artnow.
Beamish, P. W. and Lupton, N. C., 2016. Cooperative strategies in international business and
management: Reflections on the past 50 years and future directions. Journal of World
Business.51(1). pp.163-175.
Buckley, P., 2017. International business. Routledge.
Cook, G. and et.al., 2018. The routledge companion to the geography of international business.
Routledge.
Deresky, H., 2017. International management: Managing across borders and cultures. Pearson
Education India.
Kolk, A. and Rivera-Santos, M., 2018. The state of research on Africa in business and
management: Insights from a systematic review of key international journals. Business &
Society.57(3). pp.415-436.
Kourula, A., Pisani, N. and Kolk, A., 2017. Corporate sustainability and inclusive development:
highlights from international business and management research. Current opinion in
environmental sustainability. 24. pp.14-18.
Lasch, C., 2018. The culture of narcissism: American life in an age of diminishing expectations.
WW Norton & Company.
Meyer, K. and Peng, M. W., 2016. International business. Cengage Learning.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp.
978-3658078836). Springer.