Factors Influencing Businesses Considering International Trading
In this report we will be examining factors influencing businesses considering international trade. The two businesses this report will focus on are Vodafone and Walkers/Lays. My report will be exploring factors such as a brief review of the operation of both businesses which include the structure, activities, and chosen market, why reasons each conducts business internationally, different types of finance available to each, an analysis of the support that is available to both businesses, an explanation of how international support systems allow both of my chosen businesses to operate overseas, a review of external factors which influence businesses considering trading internationally, the main features of globalisation that can affect each business.
Vodafone Group PLC is a British multinational telecommunications conglomerate which, has headquarters in London. Even though its headquarters their headquarters are in London, its services are also in regions such as Asia, Africa, Europe, Africa and lastly Oceania. Vodafone is ranked 4th in the number of mobile customers in 2018 among mobile operator groups globally. Vodafone makes €46. 571 billion in revenue. The products and services Vodafone provides is mobile phones, broadbands, fixed line telephone, digital television, internet television. The business was found in Newbury in 1982. Walker/Lays was founded by Henry Walker in Leicester in 1948 which was 70 years ago. In 1989 was acquired by the Lays owner which Frito-lay. The business is best-known for its potato crisp. Walkers/Lays holds 56% of British crisp market. Its services are in Egypt, Vietnam, Israel, Columbia, Austria, Mexico however, different brand names are used. The business produces over 11 million bags of crisps per day by using 800 tons of potatoes. This business is annual revenue totales to $127 million. 2. 0 Vodafone Growth Vodafone is a well-known business worldwide which trades internationally for many reasons such as growth. Vodafone offers goods and services in other areas around the world like, Asia and Africa. This offers potential for Vodafone to grow which means growing sales should lead to long term growing profits. Since Vodafone operated successfully in the UK, so when Vodafone’s service were offered in other countries it ran successfully leading to sales which means profit. One of main reasons why it ran successfully is because the business was operated carefully.
Additional revenue streams
Vodafone chooses to generate in other countries because it gives the company a chance to generate more revenue. New revenue streams are methods which are used to generate new income. For example, Vodafone offers different products and services, so in case one revenue stream does not go well the business has other revenue streams the generate income.
Access to new markets
Vodafone trades on an international basis which gives businesses a chance to expand their sales. For example Vodafone will now look more interesting when entering new market because of the recession since, people in other countries have not come across Vodafone before.
Walkers/Lays
Access to new markets
Walkers/Lays decides to trade internationally since, it give the business an opportunity to expand their sales and income. Since the recusacion occurred Walkers/Lays will look more interesting in other countries where their services and products still do not operate since, they have not been introduced to this specific brand/ company yet which will make them want to purchase one of their products even more.
Growth
Walkers/Lays offer good and services in other areas apart from the UK which, give a chance for the business to grow, which also means growing profit. Since, the business offers goods and services around the world it has potential to grow therefore, sales are growing which means their profit is increasing too. Since walkers where doing well in one country so they tried doing the same thing in different countries which ran successfully.
Additional revenue streams
Walkers/Lays operates in a variety of countries since this means that they receive additional revenue therefore the business gets more income additional revenue stream is used by a business to create extra 9inco0me. If the business doesn't run well in one country the business knows it will still receive income from a different country where its products and services sell successfully.
Prepayment by the importer
Prepayments are upfront payments by importers. They will only receive what they want to purchase from the seller after they pay upfront. Refunds are not accepted even if shipment failure to arrive to its planned destination. Prey Payment by importer can also be known as advance freight.
Letters of credit
A credit letter, which can also be known as a bankers commercial credit or a documentary credit, is a payment system used in the international trade to carry out the same economic function like a guarantee, by assigning the risks by contracting parties. By law, a letter of credit is categorized under the financial law as a form of a basic position, which in a company with derivatives, insurance and guarantees assign risks as a form of a promise from a specific part to another. A letter of credit particularly achieves this by producing a written commitment from a bank on behalf of one party which matments has been made by a third party, which is provided that the terms as well as conditions stated have been met. Any other presents documents from the party which are outlined the letter of credit. The third party will be paid by the bank. The specific financial support is mostly common in the international trades as well as good as delivery, where the reliability of contracting certain parties cannot be easily and gladly determined. Letter of credit plays a big role in international trading since it relies on the dependability of financial institutions and their ability to pay.
Export credits
Export credit can be an guaranteed, financing arrangement pr event insurance which can allows foreign buyers of imported goods or services to delay a payment over a [period of time. Eport credit are usually sectioned into short-term, medium (2-5 years repayments) and long term ( which is mostly 5 years). Short term credit can be given on cash or even near cash terms through eg. letter of credit facilities or open accounts whereas, medium and long-term exports credits could take the form of supplier credits which are extended by exporters to the overseas buyers. Or buyer credit which are the exporter bank or even other financial institutions lends to the buyer or the buyer’s bank. Bank loans A bank loan provides medium or long-term finance. The bank sets the fixed period over which the loan is provided (e. g. 3, 5 or 10 years), the rate of interest and the timing and amount of repayments. The bank will usually require that the business provides some security (“collateral) for the loan, although in the case of a start-up this security often comes in the form of personal guarantees provided by the entrepreneur.
Bank loans are good for financing investment in fixed assets (such as plant & machinery, land and buildings). They are generally charged at a lower rate of interest that a bank overdraft. The interest rate can be either fixed (e. g. 8% per year on the amount outstanding) or variable (where the interest rate varies depending on the Bank of England base rate). International investment groups International investing is a investing technique that involves choosing global investment instruments as a part of an investment portfolio. Individuals usually investor globally t broaden conversations and lay out investment risk among foreign markets and companies. International investing gives investors with a broader investment universe for choosing portfolio investments. It can also widen an investors diversification, potentially joining new sources of return. International investing usually expands the eligible instrument for an investment portfolio far more than just domestic investments. An investor can look to the same types of investment options globally that they have domestically. For example, for investors from the U. S global investment markets offer variations of bonds, mutual funds and stocks. Investors could also invest options as well as futures on underlying international investments and currencies.
Franchising
Franchising are arrangements where one party which is the franchisor, grants another party the right to use its trade-name /trademark and specific business systems and processes, to market and produce a good or service according to certain specifications. The franchise must pay the franchisor one-time franchise fee and a percentage of sales revenue as gains and immediately name rejections royalty, training of employees, ongoing help upgrading and promotion of the products. 8. 0Financial support Financial support are financial resources which to make various types of projects possible. These can be methods such as prepayments, credit, loans and export credits. An example of this would be when Walkers/Lays and Vodafone do not have enough money to fund their business when they are expanding, so a way to fund it would be to apply for a bank loan.
Technological support
How the internet and e-commerce has supported businesses with international trade?
The internet and ecommerce has supported businesses with international trade in many ways. For example, the use of electronic use and intranet means that the duration of commencing and doing is trade is by far faster, cheaper, less time consuming and easier. Collecting information is quite time consuming as well as expensive when getting it from national borders like America. In fact, even negotiating the pricing, negotiating delivery, find the right supplier etc. is also costly. One of the ways it has supported businesses is by allow a variety of activities to occur without having buyer and seller to meet since, then they have to pay for flights, hotel arrange dates etc. for these reasons it is likely for international trade to increase since, it reduces costs and allows individuals to interact electronically. Also with the advent and evolution of the internet, international businesses can now provide specialised technical support from their UK head offices.
Technical support can also be provided in many ways such as through email, live-chat interface or over the phone. The cost of this support can usually be include of the overall cost of the product or service however sometimes it can be a additional fee. Large companies usually have an frequent technical support to their staff for problems related to computers, laptops and phones. The internet can also be seen a good tool for tech support which is free. Technology service/support can includes many types of things such as information technology, it support, hosting, email and social networking.
Technological support has benefited both Vodafone and Lays/Walker in many types of ways. These are things such as building a reputation for them which means that they are strong competitors, building a brand international brand meaning they are known internationally (known almost by the whole world), expanding their revenue streams (more profit for the businesses and lastly growth through expansion.
