P6 unit 5 PDF

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Summary

Explain the external factors
that influence a selected
business considering
trading internationally....

Description

P6: Explain how business support systems enable a selected business to trade internationally.

In this assignment, I will be explaining how business support systems enable a selected business to trade internationally. The internet and international payment are the two main methods used as business support systems to trade internationally. The influence of internet has enabled businesses to trade all over the world.

Prepayment by the importer A prepayment is paying somebody or a company in advance for goods and services. So a prepayment to an importer is when a company pays for goods but is required to pay for the goods in advance. This requires for both companies to have a lot of trust in each over. A good example of this would be if, maybe a company wanted to import coke bottles into their shop to sell. The company will have to make prepayment or part payment before coke would import their goods to the company. The advantage of this type of financing is that if the importer does not trust the company they are importing their goods to, they will be able to trust the company after receiving the payment. Another advantage is that if the political situation in the importers company is not good, it may be expensive to import the goods, so a prepayment will help them overcome this problem. A disadvantage of this method is that the company pays before they are in ownership of the goods. This means that there may be cash flow problems, as they will need the goods they can make their own money. Letters of credit Letters of credit are normally used when for international trade. What happens in Letters of credit is that the bank of the importer will pay the supplier as soon as the order has be made and the terms and conditions of the letter of credit are met. For example, if a company was ordering chairs from another country, the bank of importer will not pay the chair company unless the bank has seen the documentation of the order they made. The bank will monitor the agreement of the two companies and just transfers the money when they have verified the order. The advantage of this type of financing is that the there is low risk for the importer as the company money will not be sent away without them having the documentation. The disadvantage of this is that the importers money not will be sent based on the verification of the goods they received but is based on documentation. Export credits Export credits is when a company gives another company goods upfront and allow them to pay back after agreed period of time. For example, if a company outside the UK wants goods to be supplied to them from a UK company. What The UK company will do is give then other company the goods upfront and will allow the company to pay them back after a period of time. Export credits may also be provided by an export credit agency. They help the business negotiate terms, and provide insurance to make sure the company owed receives payment. These agencies are important if country that the business is in is politically unstable. The advantage is that the company exporting goods can have insurance on the transaction. One disadvantage is that the company exporting may have cash flow problems because the money may come after a long period of time. Bitcoin

Bitcoin type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Advantages * Freedom in payment * Control and security * Information is transparent * Low fees Disadvantages * Lack of awareness * Risky * Still developing Apple payThis is a service that allows iPhone users to securely pay for items using their iPhone. They do this by touching the phone on the card reader and the transactions will happen. They must connect their phone with their bank accounts. This has all the advantages of a contactless card apart from the fact that there is no limit. The advantage of this is that your details will not be shown as it will with a normal bank card. It is secure way of paying for things. A disadvantage is that this service is only available for people that own Iphones. Also, to use this service you must have internet connection. International credit card This is a credit card that can be used in various different countries in the world. These are cards that can be used to make purchases around the world. These are normally cards with the Visa, MasterCard, American Express. There are many different reasons for using this card. This is good because of the fact the people going abroad will not have to carry cash around which can be a burden. This is because of the different risks that come with carrying cash around. One disadvantage of this is the fact that if you are faced with a situation where you need cash whiles abroad, International credit cards do not allow this. Benefits and drawbacks of businesses using the internet to help trade internationally for Tesco: One advantages for Tesco using the internet to help them with international trade is that they can communicate efficiently with customers through email. This is good as it allows Tesco to communicate with their customers in masses by automated systems that will send everyone the email at the same time. This service saves Tesco the stress of individually adding everybody's email. Also, using emails is free, compared to other alternatives like calling customers. Another advantage of using the internet for Tesco is the fact they can use social media sites to easily interact with their customers. These social media sites can include, Facebook, Twitter and Snapchat. Through these social media sites Tesco can find issues that customers are facing, the also can receive reviews from customers which Tesco can use as ideas to improve. Social sites can build awareness about the company which can allow Tesco to grow. Using the internet is also a positive for Tesco because this allows them to show all the good and services they can provide in one place, and also meet the needs of many different stake holders in one place

Using the internet for Tesco may also have some disadvantages on the other side. These can be the fact people that give reviews online can lie about their issues. This can give Tesco a bad light even if the situation isn't true. Also reviews given by people on the internet can also be very offensive. There are also issues with security as you can lose data or even are hacked by fraudsters. Tesco using the internet to trade could lead risk to bad investments which could lead to losses. A further issue for using the internet for international trade is the time and expense of constantly having to make sure that all the relevant websites are up to date, not breaking any laws and fully working at all times....