BTEC Business Level 3 - Unit 5 - Task 1 - International Business
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Course
Unit 5 - International Business
Institution
PEARSON (PEARSON)
Btec business level 3 national diploma - unit 5, task 1 - international business... this is from a distinction* distinction* student in 2023
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Introduction
In this report, I will be reporting on businesses that have achieved globalization and the kinds of
effects that this may entail.
International businesses can come in many differet sapes and formations. The contents of how they
operate and what they include varies from sending things overseas (exporting), or bringing goods in
to the UK (importng) and being involved wih the support for business functoning in multiple
countries (multinationatiol) through different activities such as lositics – movement of goods and
how you move them - or marketing.
I will be analysing the two businesses Aldi and John Lewis. Aldi, known for their low prices and
quality foods, is a discount supermarket copany that spans multiple countries. Aldi Nord operates in
Denmark, France, the Benelux countries, Portugal, Spain and Poland, while Aldi Süd operates in
Ireland, the United Kingdom, Hungary, Switzerland, Australia, China, Italy, Austria and Slovenia. Both
Nord ad Süd is owned and run independently, but do have contractual business with one another.
John Lewis & Partners on the other hand, is a brand displaying high-end department stores
throughout Great Britain with concessions also located in the Republic of Ireland and Australia. At
john Lewis their focus is on meeting the needs of families with a variety of products, services and
celebrations all under one roof and online.
Businesses that operate internatially will be involved in one or more different activities. As a result,
they may need offices in different locations or the use of a person or business that carries out wrk on
behalf of another person or business – known as a subcontractor. As of 2021, Aldi South manged a
vast number of 6972 stores across their stretch of countries, the most being set up in USA, Germany
and the UK. Within these eleven countries of operation, they offer betwee 1480 ad 135 core range
products and a changing selection of special buys every week. In some countries, they also offer
services, such as travel bookings, telephone and photo services, the sale of green electricity, internet
streaming, or flower delivery. In addition, our customers in Austria, Germany, the United Kingdom
and China can shop online at ALDI. According to Statista, John Lewis saw a growth in their store
count in the year 2020 in the UK to 50, but due to a lack in profitability has reduced to 34 since
January 2022. Despite this negative, their online presence has remained unbeaten. Since the
coronavirus pandemic, the online website has not only remained popular but has accelerated sales
and is among the retailers in the UK who have recorded significant growth.
Import and Export
Importing of goods concerns bringing products or services into a country for sale that have been
made elsewhere. Whereas, Exporting involves goods ad services that are prodced in one country and
sold to buyers in another.
Importing goods from an Eu country into the UK usually means that businesses does not need a
liscence or need to pay any sort of import duties, but VAT (Value Added Tax) must be paid and the
business must accquire a commodty code attached to the import so that the right VAT level can be
paid. Commodities are raw materials or products that can be bought or sold and are given codes that
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,are used to give additional guidelines or to help identify how much VAT is required to be paid. On
the contrary, importing goods outside of the EU requires:
- Import Declaration – a document underlining all the details of the goods that are being
imported.
- Import Liscence – an official document from the government that allows the import of
certain goods or services into a country.
- Commodity Codes allocated to Goods
- Customs duties to be declared and paid to HMRC (His Majsty’s Revnue and Customs)
- VAT to be paid
Exporting goods can be done within the EU (Eurpoean Union) or ouside it. Operating within the EU
means that there are no customs checks on the gods that are moving into Europe and therefore
goods can bemoved freely. This type of export is called dispatches. However, if a business decides to
export outside of th EU, differing rules will apply. Businesses seeking to export to third countries
(counties where goods are sent to outside of th EU) may need:
- Export Declaration – a statement made by exporter, owner of goods, or their agent to
provide information about goods and the export transaction. This must be completed before
the export of goods.
- Export Liscence – governemnet document legally allowing companies or individuals to ship
their goods that are otherwise restirced.
- Pay Customs Duties – customs duties refers to tax imposed o goods whe they are
transported acrss internaional orders. This helps governmes raise ther reenues, regulate
moment of goods and ensure safety.
- Pay Taxes in the Country Where the Goods are Being Sent
John Lewis is an example of a country that tades not only in the UK, but also abroad. Although, they
have significantly reduced their markets as a strategic plan to help focus on their UK channels that
are currently struggling. Consequently, when trading abroad John Lewis will have to pay certain fees
like VAT and delivery charges. Fortunately, their products being offered already incorporate the
Value Added Tax, however other charges may apply to the customer. Additionally, they will have to
pay tax on any of their products or raw materials that may be utilised in their variety of products tat
they may offer. Comparably, Aldi is a company that heavily relies on import and exprt and therefore,
many regulations and rules spoken about must be adheard to by the near dominating supermarket
compay. An example of this is that a number of their items are from China this includes their kitchen
mats, hiking boots, exercise equipment, toys ad so on. Additinally, they have to logisitics partners.
Aldi South have a series of spplies that thy ensur meets the wants and needs of the cusomes, the
sole objective whe offering an sort of produt or service. They do this by enuring that they hae a
montoring program to ensure all social standards are met at all productio facilities. The eterprise has
numerous aims in place that they mst always hit, these encompass: human rights, child rights,
environment, discrimination and so on. Transparency is a good way to build firm relationships with
suppliers and customer, taking this ito consideraio Aldi ensures that extensive information is
avaliable, like reports and yearly results to gain an insight into the company, including significat
areas of the prodct cyle like where th raw aterial are extracted and how that leads to the
manufacture and distribution of their products.
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, Brexit would have had a major impact on how both Aldi and John Lewis functioned in the UK. This is
due to the economical impacts, like reduced invesement and recession. An example of this point is
that due to the recession we are noticing a seemingly ever increasing inflation rate. This causes
issues like needing to increased product prices as the costs number increases. This may reduce the
customer influx if competitors can match or even lower their prices. Additionally, importing and
exporting may incur added costs forcing companies like John Lewis and Aldi to find revenue
elsewhere, like increasing their prices. This is not the only impact of Brexit however, this is because
of manpower issues. Migrated workforces and skilled worker shortages may begin to occur as
residency problems arise. This majorly affects the international businesses mentioned in the UK, as
the money spent on finding new emplyees would incur; not only this, but production may be slowed,
resulting in product shortages and unhappy customers. Both terrible for business!
Aldi managed to somewhat benefit from thi situation, as instead of trying to maintain the current
suppliers costs and redu cing their proft margins, they decided to rely on more local products.
Multinational or National
Multinational businesses are those that operate in more than oe country, and they can often
operate in a number of different maekts globally, however national enterprises are those that only
function in one.
Multinational enterprses have to be very carefl to adapt th way that they trade to tth different
countries in which they are operating. The different decisios that are made by a company and how
they perform revolves around the distinct rules for importation, tax ad ther duties needing to be
paid, as well as specific cusoms, laws/regulations and cultures. Understanding this, we can identfy
that both Aldi and John Lewis are similar in the sense that they are both multinational corporations.
This means that they would have had to consider a more extensive set of issues that may arise and
what kind of development they would have expected to see when comparing agaist natioal only
companies and competitors. National companies, like John Lewis who are reducing their number of
appearances in global markets, will be able to focus all their efforts on that one marke . This means
they will be able to funnel more revnue back into reasearch on the minor details that may lead thm
to dominating the market when put up against global businesses like Aldi, for Sainsburys or
Morrisons.
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