(P1) Explain the international
business environment in which a selected organisation operates
this report I will be explain the type of business environment of which
JaguarLandRover operates within. I will be providing information and conducting
research of which will show you the importance of national trade to the country
itself (China) and will be looking into the way the country imports and exports.
It is important that I identify to you what it is like for China to trade in
the current markets and any barriers that they may be faced with in trade.
business oversees all of the activities that take place that allow the transfer
of goods, services, resources, people, ideas, and technologies across the
world. International business can take place in a number of different formats:
movement of goods from country to another (exporting, importing, trade)
agreements that allow foreign firms to use products, services, and processes
from other nations (licensing, franchising)
formation and operations of sales, manufacturing, research and development, and
distribution facilities in foreign markets
What is Chinas current economic
clear that in Chinas current financial climate, they are working hard on making
it easier for companies that are wishing to bring business from foreign
countries to invest and establish groundwork in the country. China is currently
undertaking a vast series of measures to ensure that all operating countries
can predict a steady growth on their foreign investment, making the procedures
more internationalised for growth.
the never-ending growth taking place in China, the opportunities in China are
endless and the market is one of the largest across the world. With this
growth, it carries a large possibility to be successful in China. Taking a
business to an environment such as China requires much patience and a large
understanding of the business environment.
is comprehensive legal framework and a set-in stone judicial system works hard
for its foreign investors. It works to protect proceedings. This of course is
encouraging to foreign investors.
has an ever-reforming economic market and strive for transformation. Chinas
transforming market, the economic reforms that China has been attempting to
implement over the past two decades have begun to have an effect of both companies’
individual initiative and entrepreneurship. From Chinas ventures and programmes
set in place, the poverty levels throughout the country have dramatically
declined and subsequently the average income has reached its highest level,
boosting the economy. Chinas economic growth is very sustainable. It has
successfully sustained at a percentage of 9.5% over the past 26 years. In 2009
the Chinese economy reached a record $4.814 trillion, this being about a third
of the size of the US economy. It a large economic growth in China and a higher
number of income for its citizens, China is able to continuously grow and allow
for businesses and brands to launch branches in the country.
addition, Chinese Government pursued agricultural reforms, dismantling the
commune system and introducing a household-based system that provided peasants
greater decision-making in agricultural activities. Besides that, non-agricultural
activities like village enterprises in rural areas were also encouraged.
Similarly, the government promoted more self-management for state-owned
enterprises in order to increased competition in the marketplace, and create
opportunities for China’s domestic enterprise directly contact with the foreign
now be looking into the JaguarLandRover Company taking their business to China
and operating their business in a foreign country. It is essential that when
you are tapping into the Chinese market that you adapt your workings to ensure
that you are innovative and flexible. This is something that JaguarLandRover
have done. Going into the venture with an adopted long-term approach allows the
company to build a strong work force in China.
Land Rover first established a presence in China over a decade ago. It has over
4,000 employees as well as more than 200 operational retailers. Additional
activities include four regional offices, three training academies and a Land
Rover Experience Centre.
Land Rover is committed to inspiring future generations of Chinese automotive
engineers. The Jaguar Land Rover apprentice training programme was created six
years ago and today 400 apprentices graduate from its 10 training centres each
company has developed a compelling corporate social responsibility (CSR)
programme in China, creating the Jaguar Land Rover Children and Dream Fund,
working with the Soong Ching Ling Foundation. Jaguar Land Rover has committed
to invest RMB 50 million over three years in an initiative that supports and
develops underprivileged young people.
organisation would have needed to of considered that in a foreign country, they
would be faced with much stronger competition, as there will already be
successful organisations in that field that have originated or had a presence
in China. Language will also be a barrier when attempting to build a successful
branch in a foreign country, it would be essential for JaguarLandRover to have
representatives that speak Mandarin, the main language that is spoken in the
country. Advertising in the country will also have to appeal to the culture
that is present, it is certain that an advert that is presented and understood
in a country such as America won’t be perceived or understood the same in
China. Business Etiquette is also a strong factor that would need to be adapted
when doing business in China. An uncommonly known fact is that when doing
business, shaking hands is deemed to be bad and unacceptable so bowing has
taken its place. This is part of the Chinese culture and is something that
JaguarLandRover employees would need to understand and be aware of.
conclusion I have explained the international business environment in JaguarLandRover
operates in. I have explained the different challenges of which the business
will be faced with and how they can overcome them.
P2 describe the mechanisms that
regulate international trade
this report I will be identifying the various different mechanisms that have an
effect on and regulate international trade. When trading in a foreign country,
there are number of barriers than an organisation would be required to consider
when attempting to trade internationally. If these regulations were not
followed, it is possible that the organisations will cause trouble for
themselves as they would be disobeying the rules set from the country they are
attempting to operate in. I will be identifying six different regulations that
a company looking to trade in a foreign country would have to follow.
Regulation: Trade -What is it
and why would it effect a company?
is an economic concept of there is buying and selling involved in a process of
goods or services being purchased or being paid for. Trade can also be seen as
compensation being given to each other in a situation or the exchange of goods
or services, this is where no money has traded between the two parties. The
most commonly seen mechanism of trade is the transaction of money through the two
different parties. Trade may also be exchanged online between the two different
parties, this is known as a barter or payment with an online currency. Trade
can simply be seen as the buying and selling of social securities.
transactions range in complexity, this could be from the simple purchase of a
product from a store to multi-international policies setting rules and regulations
for imports and exports. Trading is facilitated through three different types
of exchanges. These being payment in the specific countries currency, the exchange
of goods and services or virtual on-line services and currency.
Regulation: Quotas -What is it
and why would it effect a company?
is an imposed restriction by your counties government of which places a limit
on the number of or the monetary value of a product. It can also be a restriction
of which regulations that number of goods that can be imported or exported during
a particular time period that has been imposed. Quotas are widely used within
international trade as it assists with the regulation of the volume of trade
between the different countries. It is known that sometimes specific goods have
quotas imposed to reduce imports into the country. With certain restrictions,
it could allow for domestic production in increase since there would be restriction
on foreign competition.
are different to that of tariffs or custom regulations of which a tax is
implied to a product or service by a specific country. A quota is a protective
measure that is imposed by the countries governments to control the amount of
trade throughout countries.
Regulation: Incoterms -What is
it and why would it effect a company?
are specific trade terms that are published by the International Chamber of
Commerce that are implied in both international and trade contracts. They are
commonly used in international trade agreements as it strives to assist traders
of whom are working from different countries to work with and understand one another.
Incoterms were developed in 1936 and are continuously updated to conform to the
new and improved trade practices. Trade terms are used in a variety of
different countries, but would have different internal meanings when used
domestically. Incoterms are recognised to prevent confusion arising in foreign
trade contracts by allowing buyers or sellers to understand rules and
regulations throughout transactions.
Regulation: Free Trade -What is
it and why would it effect a company?
trade is simply the economic policy that involves discriminating against imports
and exports to jurisdictions from foreign countries. This involves buyers and
sellers from different economies that voluntarily trade without implying the
domestic tariffs being applied to the process. These being quotas, prohibitions
and subsidies for the goods and services they have provided. A free trade
policy is simply the absence of any other trade restrictions or policies put in
place. Free trade is not positive promoted as companies strive to trade this
way when they can already do so. Governments with free trade agreements (FTAs)
do not necessarily abandon all control of taxation of imports and exports.
Regulation: Embargoes -What is
it and why would it effect a company?
embargo is a regulation put in place by the government of which restricts exchange
or trade between specific countries or the exchange of specified goods. This is
a regulation of which is usually implied when an unfavourable political or
economic circumstance arises between nations. The restriction simply isolated
the country in hand and formulates difficulties for its government.
strategic embargo prevents the exchange of any military goods with a country. A
trade embargo restricts anyone from exporting to the target nation. Because
many nations rely on global trade, an embargo is a powerful tool for
influencing a nation.
Regulation: Barriers to Trade
-What is it and why would it effect a company?
to trade are specific measures that have been applied by the governments or
political authorities in their retrospective countries. They are introduced to
maintain that imported goods or services from foreign countries less
competitive and appealing than the products that are produced and sourced
locally. But not everything that prevents trade can be characterised as a
barrier to trade.
Barrier to trade can be linked and identified to a specific product that has
been traded. It could also be a barrier that has been implied in an administrative
way for example the rules and procedures that are connected with a transaction
that has to be carried out. In a number of areas, special international ground
rules have been agreed, which limit the ways in which countries can regulate
trade. It means that some barriers are legal while others are illegal.
I have identified and described that mechanisms that regulate international
trade and summarised the meanings of each factor.
P3 describe how the environment
and culture of another country affects a business operating internationally.
this section of the report I will be identifying the how the culture of China
and its environmental practices would have an effect on JaguarLandRover operating
internationally. I will be looking at the environmental and social factors that
will affect JaguarLandRover and look at how it will affect their operations in
external business environment in Chinas is very challenging and has a high
complexity. China is still a communist state and is still going through a
rapidly changing process off substantial environmental and social change. There
is an everchanging economy in China of which brings with it substantial costs. Throughout
the past number of years, China has set it self an extensive list of targets
and predicated growth for its internal expansion. Chinas political and legal environment
is relatively volatile and has a harsh vetting process for foreign businesses wanting
to operate in China such as JaguarLandRover.
important to explore the external environment for a business such as JaguarLandRover
that have decided to create a branch in China. They would be required to
identify factors such as the current Urbanisation, Wealth, Poverty and social
inequality. They would also need to consider the current ageing population and
the ongoing air pollution and working conditions of the individuals that will
be working in the companies’ factories.
environment has been deemed as terrible throughout previous years, with vast
amounts of pollution that does not appear to be getting any better. The current
levels of pollution in Chinas capital are currently at a level of 80 micrograms
per cubic centimetre. This of which is still tremendous amounts away from the World
Health’s Organisations target of just 35 micrograms. This is a serious issue
and subsequently fails to capture the changes that are occurring internally and
the business ventures that are continually taking place.
of British and Chinese scientists published the results of their research in
Nature Geoscience that said they believed that China’s coal consumption had
peaked around 2014 and that China’s economic growth had, in fact, already
decoupled from coal consumption.
“new normal” period of slowing economic growth has set in and a gradual
reduction in water, soil and other kinds of pollution has followed. According
to data released by the Ministry of Environmental Protection on November 30, by
end 2015, heavy metal emissions had fallen by 27.7 per cent compared with 2007.
is a strong toxic heavy metal pollution throughout China that is continuously causing
problems for the countries water and soil. Whilst there is a decline in the
pollution and in reflection it looks good for the environment, clearing up past
occurrences is not easy and therefore pollution will continue at no fault of
Social Culture in China
home to one-fifth of the worlds population and is therefore one of the worlds
fastest-growing economies. When visiting the county, you are able to see the
countries ancient culture crossed with the forever modernising process going on
within the country. Chinas communist party holds strict control over most
aspects of those that live within China, especially for women. But these
processes have been Improved recently.
population officially over 1.3 billion and an estimated growth rate of 0.494%,
China is very concerned about its population growth and has attempted with
mixed results to implement a strict birth limitation policy. The government’s
goal is to stabilize the population in the first half of the 21st century, and
2009 projections from the U.S. Census Bureau are that the Chinese population will
peak at around 1.4 billion by 2026.
similar factor of which has to be considered is the ongoing trend of employment
throughout China in relation to the unemployment levels. The countries unemployment
is currently at a very high rate and subsequently a big company such as
JaguarLandRover bring a large number of jobs to the country would be highly
is also the issue of gender roles that would have to be combatted if a company
such as JaguarLandRover was to launch a Chinese branch. Traditional beliefs
have always placed men ahead of women in the social hierarchy, and the issue
has been exacerbated since the Communist government initiated the one-child
policy. Age-old beliefs created pressure on families to produce a boy so the
family name will carry on. The result is an ugly history of female infanticide
and abandonment, which hasn’t yet been eliminated. However, under Communism,
women have made great strides in other areas, particularly in working and
taking on greater roles in professional and public life. They are able to
Behaviours, Etiquette and
culture has traditionally prized the worth of the group over the worth of any
one individual; the rise of Communism has enforced this. For the Chinese,
failure to do one’s duty is dishonourable, not only to the individual but to
the entire family. Deference and obedience to one’s elders are of the utmost
importance, as are ideas of hospitality and social ties. Several generations
might live in close quarters and have contact with one another daily, and neighbours
visit and interact on a regular basis.
conclusion I have described how the environment and culture of another country
affects a business operating internationally.
P4 describe how the monetary
environment affects businesses that operate internationally
this final section of the report, I will be discussing how international businesses
are financially supported and their impact on the monetary environments.
monetary environments are simply internationally agreed rules and supporting institutions
that are able to assist and facilitate trade across borders. It also assists
with the reallocation of net capital between different countries both inside
and outside the European union. They are able to provide a safe and secure
means of payment for sellers and buyers from different nationalities and
countries. In order to operate successfully, the business needs to be able to
let off confidence and be able to provide liquidity and depth for the
fluctuating levels of trade throughout countries.
are a number of different factors that affect the international monetary environment.
The success of the transferring of money is essential as it is common in larger
companies that vast amounts of money are required to be moved online and not always
in the traditional ways of cash swaps or checks.
International payment methods:
Letters of credit:
is a letter of which you receive from your bank that ensures that a buyer or
business partners payment to the seller or college will go through, be accepted
and received on time and is of the correct amount. The letter requires that in
the event of which a buyer or business partner does not have the finances in
order to make the payment, the bank will cover the full amount of the purchase.
Differing laws may play a part in international dealings and therefore the
letters of credit are a very important aspect of international trade.
International clearance and
clearance and banking is a system of trade where the transition phase of a
contract is entered on an international level. It is also designed to be able
to promote and lift world trade and the international markets efficiency. It is common that international clearing transactions
are overviewed by an international clearing house.
exchange is the exchange of one currency for another or the conversion of one currency
into another currency.
exchange also refers to the global market where currencies are traded virtually
around the clock. The largest trading centres are London, New York, Singapore
Exchange rate fluctuations:
is the rate of which the value of an international currency is determined by the
free market. When a currency has a fluctuating exchange rate, the value changes
constantly depending on supply and demand. Although there are some advantages of
fluctuating exchange rates. This is that it tends to be much more efficient for
the company economically. Although on the other hand it allows for the currency
and trade to be much more volatile.
credit insurance, business credit insurance, export credit insurance, or credit
insurance is an insurance policy and a risk management product offered by
private insurance companies and governmental export credit agencies to business
entities wishing to protect their accounts receivable from loss due to credit
risks such as protracted default, insolvency or bankruptcy.
are also a number of institutions that support international business relations
and their finances. It is common for business of which have not ventured into
foreign countries and currencies to need advice, and this is what institution
such as the ECGD, UKTI and the EMU are there for. International institutions also
monitor the importing an exporting of goods. It allows the company to be sure
they are complying to the correct rules, regulations and costs and that they
are also receiving the correct amounts for their services.
of institutions that support international business with their finances:
ECGD (Export Credit Guarantee Department), UKTI (UK Trade and Investment), EMU
(European Monetary Union).
conclusion, I have described how the monetary environment affects businesses
that operate internationally.