International Businesses Why Trade Internationally

Introduction

International business is effective for all the multinational corporate firms to run their operational activities across the international nations as well as improve their global presence (Meyer, and Peng, 2016). The international trade and global business activities are beneficial for the firms to gain high competitive advantage and market share to secure future sustainable development. Through this study, it is possible to discuss two different businesses as well as identify their international presence and acknowledge the reasons of conducting their businesses internationally. The study also aims to evaluate the impacts of trading blocs as well as the globalisation on the international trade and businesses respectively through which it is easy to evaluate the effects of globalisation on a particular business. In this study, two organisational activities will be discussed which are Aldi and Tesco, where both the firms focus on international expansion in order to run their activities globally and improve their global presence.

Operations of each business

The operational activities are important for the firms to run their business internationally, where the firms try to develop effective strategic planning for securing future sustainable development in the global market. In this regard, the organisation Tesco and Aldi, both are operating in the international retail industry, where both the firms are effective to serve their customers and strengthen their customer base for future. Tesco is the British multinational groceries and general merchandise retailer, which is efficient to serve the products including the hypermarket, super market and discounted store products and services. In this regard, the products and services that the firm provides to the customers are such as clothing, electronics, books and toys, furniture and home ware appliances, software and financial services, telecom and internet services (Tesco, 2019a). The company has expanded the business and it has over 6800 shops as well as the firm is also efficient to serve the customer through their online activities which in turn provides a scope to Tesco to improve their global presence. Total numbers of employees in the company is more than 450000 and the company is efficient to generate the revenue £63,911 million in this year. Hereby, the operational activities and product line of the company are effective to satisfy the customers and it is efficient to serve huge number of customers across the globe (Tesco, 2019b). The company focuses on international expansion, where in Europe; the company expanded their operations in Poland, Hungary, France, Slovakia, Ireland, and in Asian region, it has its presence over China, India, Hong Kong, Japan, Malaysia, Thailand, Pakistan, South Korea Turkey and it has also expanded its operation in USA.

Hereby, the company is efficient to expand their business across the Asian nations as well as Europe and Asia. On the other hand, Aldi is another retail chain with over 10000 stores in 20 countries. Aldi has the capability to generate yearly turnover more than €50 billion where the company provides the product such as grocery, households and essentials (Aldi, 2019). The company enters in China at the end of 2017 which is effective strategy or the firm to improve their global presence and grab the market share in China, which is one of the efficient emerging markets across the globe. The operational efficiency and products variety of the company influence the firm to expand their business operations in China. Additionally, Aldi also has their operations across UK and USA as well as Germany, Ireland, Italy, Poland, Portugal, Australia, Belgium, Denmark, France and Hungary. Hereby, both the firms have effective global presence and the company have the intention to expand their operations in the emerging market in order to grab the market share in the global retail industry. As compared to the product line of Aldi, Tesco has efficient product line with a huge variety of products and services which are efficient for the firm Tesco to strengthen their position in the international retail china and retain long term customers by satisfy them properly through delivering quality products and efficient services at affordable price.

Reasons of conducting businesses internationally

Tesco focuses on global expansion and the objectives of expanding their businesses across the international nations are such as,

• To improve global presence
• To gain high competitive advantage and enhance their market share
• To maximise profitability and sales volume in every year
• To strengthen their customers base
• To serve a huge numbers of customers with quality products and efficient services.

On the other hand, the reasons for which Aldi expands their operations across the international countries are such as,

• To maximise their profitability
• To enhance sales volume
• To attract the audiences for their products
• To improve their global presence
• To gain competitive advantage as compared to other firms in the retail industry such as Morison, Sainsbury’s, Tesco and Walmart.

In this regard, it can stated that, both the firm recently focus on expanding their operational activities across the emerging market, Tesco has already expanded in china and gain 50% of market share in the retail market of China which is one of the effective emerging county across the globe. After that, Tesco also expanded their operations in India, which is also a string market with huge numbers of customers. Tesco aims to serve the customers in India and grab the market share with the latest innovative products and creative services to increase their presence in the Indian market, which is also another emerging market with strong customer base. On the other hand, Aldi also focuses on global expansion and it decided to expand the operations in China to grab the Chinese market with variety of products and services, so that they can gain market share in the global retail industry.

Types of finance available

There are different financing options, available in the international trade which are helping exporters win contracts, helping exporters fulfil contracts and helping exporters get paid. In this regard, it is necessary the exporters to be ensured to get proper payment from the buyers in the international countries (Crane et al., 2019). The international countries and the baking institutions are contributing positively to take the payments o the exporters within effective time with proper terms and condition. Without any delay and proper management of transparency and accountability, he exporters are getting payment from the buyers as well as the exporter also ensure the buyers that for any disputes of the products and services, they can return their payment to the buyers. Natural understanding and trust as well as consumer protection laws are effective to develop the win contracts where the companies Tesco and Aldi are ensured to get proper payment in the international countries.

Role of trading blocs on international trade

World Trade organisation (WTO) is one of the effective trading blocs which have crucial impacts on the business operations. WTO is efficient to promote the international trade system pace full with smooth transaction of the products and services across the globe. The organisation is efficient to handle the dispute across the international nations and mitigate the existing issues while transacting the products and services across the international borders (Peng, 2016). It enhances easy movement of goods and services where both the firms Tesco and Aldi are beneficial to transact their products and services internationally. In addition to this, it raises national income as well as provides a scope to conduct the international trade smoothly for raisings revenue ad sales volume of the firms. International trade stimulates economic growth and social development where efficient activities are beneficial or the organisation to support the multinational corporate firms to conduct their international retail chain successfully (Meyer, and Peng, 2016). Moreover, WTO facilitates implements, administration and smooth operations of trade agreements between the countries and the WTO is a fair platform, where the international businesses can conduct their operations successfully. Hereby, WTO is important to promote and protect the practice of international trade by managing the transaction of the products and services as well as handling the dispute while trading. Under the WTO agreement, the counties are under proper rules ad legislations where there is no discrimination among the trade partners and it enhances fair treatment and smooth operational activities successfully.

Role of globalisation on the businesses

In the recent era of globalisation, the multinational corporate firms have the benefits of utilising the global market for expansion of the business, so that they can secure future sustainable development (Cramer, 2017). In this regard, both the firms Tesco and Aldi utilise the era of globalisation, where enhancement of the digital technology and communication are important for the companies to improve international operations successfully. The digital enhancement and technological advancement are effective for improving communication with the international nations, where the organisations try to grab more market opportunities successfully. Enhancing communication further helps the firms to understand the market condition and develop proper contact and agreement with the businesses in the foreign countries for direct investment. These are the activities, where both the retail firms Aldi and Tesco have the opportunity to grab the market opportunity in the emerging economies where they aim to expand their international operations to enhance their performance. In addition to this, international mobility of labour and capital is another major contribution in the international business, where efficient employees and skilled workforce are there to run the business activities successfully. Both the firms have the scope to hire the skilled labourers in the international market and utilise this skill and knowledge to run the operational activities strategically.

Apart from that, capital investment a transfer of capital through foreign investment is also effective, where the companies can utilise for successful expansion of the brand sin the new international market. International payment system and management of exchange rate are also contributing factors, where the organisations can handle their transaction of money from one county to another by considering the global exchange rate, and this further provides a scope to the customers to take effective purchase decision both online and offline (Meyer, and Peng, 2016). The communication technology and digitalisation of the business are other factor which is contributing factors the business to achieve future success, where he companies try to utilise latest technology to promote the brand internationally and grab the customer’s base in the market through online activities. The social media activities and promotional campaign are effective to attract the customers across the international countries. In the recent era of globalisation, the companies also try to share their information globally where the customers can manage the company’s personal application and website or making effective purchase decision. Hereby, globalisation enhances the migration of labourers and capital movement, as well as increasing connectivity of the people and businesses for further investment and joint venture and rising numbers of global brands and multinational corporate firm by ensuring expansion of financial capital flows across the international nations.

Barriers of the businesses to operate internationally

There are certain barriers, for which the company Aldi and Tesco may face difficulties in managing the global presence and international expansion. In the recent era of globalisation, both the firms focus on expanding their business activities in the emerging markets like India and China where they develops effective strategic planning for successful expansion. However, there are some barriers such as operational risks, legal and regulatory system, financial requirements and exchange rate volatility. In order to conduct the business activities in India, the firm Tesco has the risk of exchange rate volatility where the Indian currency may be devalued due to economic downturn. Hereby, it is difficult for the firm to assess the exchange rate and predict the share market in order to set effective price of the products. It is difficult for the organisation to make the pricing of the product fairly which can attract the Indian customers successfully. On the other hand, Aldi has also some barrier to expand their business in chain, where financial crisis is one of the major issues in expanding their business successfully. Expansion needs proper investment to develop the retail chain efficiently in chain and Aldi as a retail firm may face problems in foreign investment in China due to inadequate maximisation of profitability and sales volume. In addition to this, the organisation would face the risk of acknowledging the market trend and latest fashion at China which may hamper the business profitability due to mismatch between the organisational products and customer’s requirements. These are the major barriers of expanding the businesses of Tesco and Aldi in the emerging nations like India and China respectively.

Evaluation of the impacts of globalisation on the business over last 10 years

In the recent era of globalisation and digitalisation, Tesco is one of the efficient brand in accelerating their growth and sustainability in the international retail chain. The company has been an innovator over the last 100 years and it is efficient to meet the customer’s needs and preferences. The company is working with more than 358 suppliers to deliver 1800 products to a wide range of customers (Tesco, 2019c). The company is passionate to serve the customers with little better every day in the stores and online where the group sales is over £56883 million and the company has 6800 stores around 450000 colleagues where the employees and the management team are efficient to deliver quality services and products to all the customers at affordable price. Hereby, globalisation provides a scope to the company to expand their retail chain and develop green supply chain (Tesco, 2019d). In this regard, globalisation enhances the telecommunication, where the company is successful to develop communication with other businesses and social communities. This in turn helps to develop mutual beneficial relationship with their suppliers and partners across the globe and it is the best way to source the best possible products and anticipate the customer’s needs. additionally, the online channels are upgraded well through which the company can interact with the customers across the globe and it is one of the great achievement due to such globalisation where the company is successful to manage the social communities by maintaining its sustainability of the business. Globalisation has positive impacts on the operational activities of Tesco, where in 2019; total market share of the company is 27%, where Aldi has only 8.1%. Hereby, Tesco is efficient to maintain sustainability and utilise the pace of globalisation fruitfully to enhance innovation and creativity for serving the customers in a better way every day (Statista, 2019).

Conclusion

It can be concluded that, the company Tesco and Aldi, both are operating in the global retail industry and they try to expand their business in the emerging economies like India and China, so that it is possible for them to grab the market opportunities and strengthen their customer’s base for maximisation its profitability and sales volume. Globalisation in this regard has positive impacts on the operational activities of Tesco to expand their business and gain high market share and competitive advantage by delivering quality products to all the customers at affordable price.

Reference List

• Aldi, 2019. Corporate responsibility. [online] Available at: https://www.aldi.co.uk/corporate-responsibility [Accessed 28 November 2019].
• Cramer, J., 2017. Corporate Social Responsibility and Globalisation: an action plan for business. London: Routledge.
• Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. London: Oxford University Press.
• Meyer, K. and Peng, M.W., 2016. International business. Boston: Cengage Learning.
• Peng, M.W., 2016. Global business. Boston: Cengage Learning.
• Statista, 2019. Market share of grocery stores in Great Britain from August 2012 to August 2019. [online] Available at: https://www.statista.com/statistics/300656/grocery-market-share-in-great-britain-year-on-year-comparison/ [Accessed 28 November 2019].
• Tesco, 2019a. About us. [online] Available at: https://www.tescoplc.com/about/ [Accessed 28 November 2019].
• Tesco, 2019b. Our business. [online] Available at: https://www.tescoplc.com/about/our-businesses/ [Accessed 28 November 2019].