P1 Unit 5 - Businesses Operate In Contrasting International Markets PDF

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P1: Explain why two businesses operate in contrasting international markets. The two chosen businesses.HSBC Holdings plc is a British multinational banking and financial services holding company, tracing its origin to a hong in Hong Kong. It is the world's seventh largest bank by total assets and th...

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P1: Explain why two businesses operate in contrasting international markets. The two chosen businesses. HSBC Holdings plc is a British multinational banking and financial services holding company, tracing its origin to a hong in Hong Kong. It is the world's seventh largest bank by total assets and the largest in Europe with total assets of US$2.374 trillion (as of December 2016). It was established in its present form in London in 1991 by The Hongkong and Shanghai Banking Corporation to act as a new group holding company. Tesco plc, trading as Tesco, is a British multinational groceries and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-largest retailer in the world measured by profits and ninth-largest retailer in the world measured by revenues. It has shops in seven countries across Asia and Europe and is the market leader of groceries in the UK (where it has a market share of around 28.4%), Ireland, Hungary and Thailand. In this assignment I will be reviewing how HSBC and Tesco a reviewing the different activities that they take as Tesco is a multinational company and HSBC is worldwide. Four Business Activities 

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Exporting businesses - An exporting business is a business that trade their merchandise goods and services in a country that is not their origin. For example, If Tesco were to export Television sets that have been produced in the UK and exporting them to another country in Europe to sell. An advantage of businesses exporting items is that the business exporting will be able to see business opportunities in other countries Importing businesses – A importing business is a business that receives goods from other countries and use the products to trade in their country. The advantage of this is that business will be able to trade with products they cannot find in their own country. Multinational companies- An enterprise operating in several countries but managed from one (home) country. Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation. http://www.businessdictionary.com/definition/multinational-corporation-MNC.html Associated businesses- These are businesses partially owned by another business

Tesco Tesco is a british grocery retailer and general merchandise retailer that operates in 12 different countries across Europe and Asia. They are the UK grocery market leader with a market share of 27.7%Tesco has expanded its operations outside the UK to 11 other countries in the world. The company pulled out of the USA in 2013 but continues to see growth elsewhere. Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such Charoen Pokphand in Thailand to form Tesco Lotus, and by appointing a very high proportion of local personnel to management positions. Our business was built with a simple mission – to be the champion for customers, helping them to enjoy a better quality of life and an easier way of living. This hasn't changed. Customers want great products at great value which they can buy easily and it's our job to deliver this in the right way for them. https://www.tescoplc.com/about-us/core-purpose-and-values/ HSBC

HSBC are third place in the banking market in the UK. The hold 12% of the market share and are just behind Barclays and royal bank of Scotland by 18%. The purpose of HSBC is to provide their 38 million customers with financial products and services such as current accounts and loans. Tertiary Sector Tesco and HSBC are both in the tertiary sector. This is the sector that as they provide products such as, clothes, homeware and electronics and offers services such as insurance, mobile phone services and opticians. HSBC are in the tertiary sector as they provide banking services for people that need them. There are two other sectors called the primary and secondary sector. The primary sector involves acquiring raw materials. For example, metals and coal have to be mined, oil drilled from the ground, rubber tapped from trees, foodstuffs farmed and fish trawled. This is sometimes known as extractive production. The secondary is the manufacturing and assembly process. It involves converting raw materials into components, for example, making plastics from oil. It also involves assembling the product, e.g. building houses, bridges and roads. Reason for conducting businesses internationally 1. Cheaper Labour One of the advantages of multinational corporations is the opportunity to operate in countries where labour is not as expensive. This is one of the perks that smaller companies do not enjoy. Multinationals can set up their offices in several countries where demand for their services and products are high while cheaper labour is available. 2. Broader Market Base By opening establishments or offices in several countries, multinationals increase their chances of reaching out to customers on a global scale, a benefit which other companies limited to regional offices and establishments do not have. The access to more customers gives them more opportunities to develop and cater their products and services that will fit the needs of potential customers. 3. Tax Cuts Multinationals can enjoy lower taxes in other countries for exports and imports, an advantage that owners of international corporations can take at any given day. And although not all countries can have lower tariffs, there are those that give tax cuts to investors to attract more international companies to do business in these countries. 4. Job Creation When international companies set up branches in other countries, employees and members of the team are locals. That said, more people are given employment opportunities especially in developing countries. Tesco, as a major UK supermarket has decided to trade internationally because it has seen massive results in its home market and due to all the profits accumulated over the past years, it has the ability to expand internationally. They also decided to operate internationally because they saw an opportunity to meet customer needs and to retain more customers than they already have in the UK. HSBC, as the world’s fifth largest bank and a British multinational banking and financial services holding company, decided to operate worldwide because it has seen a need of their services worldwide and with their funds they were able to trade internationally....