I have posted two examplers, one is for section 1 and the other one is for section 2, these examplers show how my assignment needs to be outlined. I am looking for 6,000 words in total, therefore 3,000 for each section. Please do not use the same countries and companies that the exampler has already used.
BTEC Business Studies
External Factors and Cultural
The following journal will analyse two potential countries and a chosen business
which should commence international trade with one of the nations. The external
factors of the two countries will be researched to determine the country which will be
chosen. The external factors of the business will also be examined in order to
identify the reasons why the business would be successful in the country. This
process will be carried out by researching a number of different countries and
businesses, then narrowing the selection down to just two countries and one
Apple Inc. is a company that was created on January 3rd, 1977 by Steve Jobs,
Steve Wozniak and Ronald Wayne. The launch of their first iMac computer on
August 15th, 1998 helped them become a well recognised company which then
allowed Apple to grow as a firm, eventually becoming the most valuable brand in the
Apple designs, manufactures and markets mobile phones, home and work
computers, music players and other devices. They also produce their own software
for their devices such as iOS for mobile phones and other handheld devices and the
macOS for their iMac computers. The company provides digital downloads for
applications, videos, books, etc.., through their operating systems for the appropriate
As of 2011, Apple has 490 stores in 20 different countries, although they operate
globally through mobile network carriers and mobile phone and electronic devices
Apple Inc. is reliant on thousands of independent factories for cheap production in
China, but the country is volatile in terms of political and social unrest. If a political
issue arises concerning the United States, then Chinese production would be
hindered and Apple would face many issues as they are not receiving the supply
relative to the demand. If there is a social dispute in China, such as a strike by
workers for higher wages, Apple will lose some of the positive effects of having their
products made overseas as they will not have such a wide profit margin. By using
cheap labour to produce their devices, Apple has created some moral concerns
about the ethics behind production. Apple products are quite expensive in
comparison to their most threatening competitor, Samsung, and if the purchasing
power of the public is lower, then they will probably choose the cheaper alternative.
Pollution and other environmental side effects from factories in China are a growing
concern. This could lead to increased regulation for pollution and higher
manufacturing costs at some point in the future. China’s efforts to cut greenhouse
gases and limit fossil fuel use could increase electricity rates and manufacturing
costs for Apple.
NIKE, Inc. is a global company that focuses on the design, marketing and distribution
of sports clothing, footwear and equipment.
Nike is a brand that designs, produces and sells athletic apparel and equipment.
They also sponsor hundreds of sports teams and endorse athletes such as Cristiano
Ronaldo, Kobe Bryant and Maria Sharapova
Nike operates in 120 countries with over 40,000 employees worldwide. Their main
production locations include, but are not limited to, Indonesia, China, Taiwan, India,
Thailand, Vietnam, Pakistan, the Philippines and Malaysia.
For Nike, if the purchasing power of customers falls due to an economic crisis in
certain parts of the world, consumers may opt for alternative brands and products
which may be cheaper. Nike’s revenues are to some extent dependent on the low
cost of labour in Eastern countries. Because of social change this may result in
higher prices for Nike products due to the development of third world countries. Nike
receives a lot of backlash for its production methods. By using cheap labour in Asian
countries to boost profits, the company has created a lot of controversy even though
it is not a recent issue, resulting in people being more aware and conscious of the
process behind Nike and an overall fall in prices. Nike has had some issues
regarding the law; as a large corporation, they have been known for tax evasion and
hiding certain details about their finances. Other legal issues include fake discounts
on certain clothing items as part of misleading marketing strategies. Due to the use
of mass production factories in the Far East, it is undoubtedly causing some harm to
the environment due to the pollution created in the process. This includes both aerial
pollution and waste being disposed directly into rivers.
Chipotle Mexican Grill
Chipotle Mexican Grill is a Mexican style fast-food restaurant chain that was founded
on 13 July 1993 in Denver, Colorado, United States.
Chipotle serves traditional Mexican cuisine in a fast-food format. Their menu
includes burritos, tacos and bowls which can be customised with a variety of different
meats, vegetables, rice and sauces.
Currently, Chipotle operates in the United States, Canada, Germany, France and the
An issue that may arise from operating internationally is their supply chain. Chipotle
Mexican Grill has high and strict standards for how animals are raised in farms and
they may find it difficult to find different suppliers across the world that meet their
quota. CMG may also have trouble adapting to different markets across the world as
they have a non-generic menu, unlike other fast-food chains like McDonald’s and
Burger King. This means that the popularity of their restaurants will fluctuate
between different countries.
Google was founded in 1996 by Larry Page and Sergey Brin. The company is
currently known as Alphabet Inc., which trades under 2 names: “GOOGL” and
Google’s main focus is their search engine, which is what truly brought the company
to fame. Their search engine uses automated programs called spiders or crawlers,
just like most search engines. Also like other search engines, Google has a large
index of keywords of where those words can be found.
Google’s headquarters are in San Francisco but their search engine and other online
services are available globally. Additionally, the company has other headquarters
around the world and they also have their Google Maps services, which requires
their specialised vans equipped with 360 degree cameras to travel around the world,
photographing different locations to put on their maps.
The company does not have many challenges because they are a mostly digital
company but one of the challenges that they may face is being able to adapt to
different languages and cultures since they are such a large corporation. Another
problem they may have to deal with is not being able to photograph certain areas in
the world, such as Area 51, because they are confidential and not open to the public.
Some content on Google can also breach copyright laws, which they must be aware
of in order to prevent litigation.
China is an ancient country, with a civilization that originates from over 5000 years
ago. It is located in Asia and it is the 4th largest country in the world, just behind the
USA, Canada and Russia. It has a population of over 1.3 billion people, the most in
Their products that they make the most are computers, broadcasting equipment,
telephones, office machine parts and integrated circuits. In general, their main focus
is technology as the country is abundant with minerals and some metal ores.
China’s most valuable trading partner is the USA, with around $521 billion worth of
goods traded in 2013. They also trade with Japan, South Korea and Germany. Their
most valuable region is the European Union, with a total of $567 billion traded in
An issue that has arised from international trade with China is that it has sacrificed
the quality of their products over quantity. Products made in the country have been
branded with the image of bad quality due to mass production. Another implication of
global trade is that the factories that big brands have partnered with in China have
been known to use forced, illegal labour to mass produce and cut down on labour
costs in order to maximise profit margins. This has given some brands a negative
reputation, causing them to cancel their contract with independent Chinese factories.
The United States of America is the third largest country in the world, in terms of
population and size. The country is made of 50 different states, including the island
of Hawaii and Alaska. Their total population is 318.9 million people.
The USA’s main imports are machinery, transportation and, of course, crude oil and
fuel. Their main exports also include machinery and transportation, such as planes
and trucks. The different imports and exports fluctuate according to every state. For
example Kansas’ imports mostly consist of airplane parts and their exports are,
coincidentally, made up especially of manufactured airplanes
The United States’ main trading partners are China. The Asian country sells them
computer parts, electronic devices and other electronic machines while America sells
different minerals and chemicals such as gold and coal to China.
Perhaps the largest issue that has arisen, mostly from greedy demand, is the
disputes with oil suppliers. Due to a high number of cars in the US, the demand for
oil is high, which has caused some US traders to force their way with oil suppliers. It
is even highly suspected that the 9/11 attacks were an inside job planned by former
president George Bush to allow the US military to attack Iraq. It is possible that this
was an excuse for the United States to get to Iraq’s abundant oil supply for their own
gain. America’s high demand for oil has weakened relations between the States and
some middle eastern countries like Kuwait and Saudi Arabia.
Portugal is a small mediterranean country with a population of 10.46 million people.
The nation is known for its nice beaches and warm weather, great cuisine and the
best football player in the world, Ronaldo. The south region of Portugal, Algarve, is a
famous holiday destination, especially for North European countries such as the
Netherlands and Germany as well as the UK. In fact, the Algarve is the permanent
residence of some British people, with over 50,000 Brits living in Portugal.
Portugal’s main imports are Crude Petroleum ($7.58B), Cars ($3.53B), Petroleum
Gas ($2.84B), Vehicle Parts ($2.73B) and Packaged Medicaments ($2.21B). The
main exports for Portugal are Refined Petroleum ($3.27B), Cars ($2.82B), Vehicle
Parts ($2.39B), Leather Footwear ($2.3B) and Uncoated Paper($1.44B).
Portugal’s biggest export partners include Germany ($6.71 bn), France ($6.89 bn),
UK ($3.83 bn) and Spain ($13.4 bn). Their main import origins include Spain
($25.2B), Germany ($9.6B), France ($5.55B), Italy ($4.1B) and the Netherlands
An issue that will soon come will be related to one of their main export destinations,
the UK. Once the referendum takes full effect, trading policies will be changed
meaning that trading with the UK will be more expensive as they are no longer in the
free trade area of the EU. This means that the exports from Portugal will either be
cut down massively or just stopped completely.
Situational Analysis of China & Portugal
The following situational analyses will examine two different countries with the
PESTLE and SWOT methods to determine which nation is more suited for my
chosen business, Chipotle Mexican Grill, to expand into. I will be choosing which
country, between Portugal and China, the business should open their first branch in.
PESTLE Analysis – China
China has a well organised government and policies, which can help improve its
economy. The Chinese government’s policies for investors allow them to invest
different amounts in different industries. The government has also focused on the
development of e-commerce, which is purchasing and selling goods over the internet
During the past five years, the economy of China got excellent growth rate in GDP
and China can also continue its pace on its development. It has a tremendous rate of
savings, large number of skilled workers, and has an extensive export business.
With an increase in GDP (Gross Domestic Product; the value of services and goods
produced during a certain time period within a specific country), the purchasing
power of consumers increases which means that more products are purchased. Due
to cheaper labor cost which maximise profit margins, companies are growing
economically which leads to a physical growth in the scale of the company. This
means that they can then expand to another country, creating the process of
globalisation. An issue that is still present within the country is high inflation due to
overproduction. High interest rates as well as high property prices means that
mortgages will be very expensive and it would be hard for new companies to grow
without being in a large amount of debt.
The demographics of population growth and fluctuation in age distribution have
changed and they are important aspects in social and cultural terms of the country.
They have the potential to change the social and cultural trends and values of their
society. China’s literacy is up to 90% currently and it is crucial towards the economic
development of the country. With social developments, more people are able to
access the internet and do online shopping
Technological factors for China include areas such as new product development,
new purchasing methods, new manufacturing technology, new distribution methods
(such as the internet) and new methods of labour, mostly related to technology. One
problem that may hinder the development of the Chinese industry in technological
terms is the lack of secure online payment systems. Although this is the case, only 1
percent of people had used credit card payments during 2005 and the following
years. This means that even though online payments are not secure and not widely
accepted, they are the method which is most used.
The legal Chinese structure for e-commerce (online shopping), which is a rapidly
developing industry, is still very recent and has already faced some security issues.
China has almost no experience with passing e- commerce legislation for problems
such as copyright protection, taxes and secure transactions. There are also no
regulations or agreements as of yet that help with the many different aspects of the
growth of e-commerce such as privacy and consumer rights, as well as a reliable
system for digital signature recognition and validation of electronic contracts.
In recent years, the Chinese government’s main targets were decreasing the poverty
rate and developing their economy, therefore there hasn’t been much focus on the
environmental factors. With the large increase in the outsourcing of jobs to China
and use of cheap labour, the pollution emitted by factories which produce for many
large companies has increased exponentially for almost 40 years. Being the world’s
leader for manufacturing, the country has the highest pollution rating in the world.
Now that there has been some developments in the economy and education, the
government can educate the public about their impacts on the environment and also
set regulations for factories to reduce pollution.
– The country has a government
structure which allows for quick
– High employment rate.
– Not reliant on shadow banking
(financial activities conducted
under unregulated conditions).
– Under-funded banks.
– Too much residential property
which people are not using.
– Industrial production rate is
– It is estimated that over 100
million people will move into
China’s cities which are
– Disputes with Japan and Korea
over the East China Sea
– Corrupt government
– Rich Chinese residents planning
to emigrate elsewhere.
PESTLE Analysis – Portugal
Portugal has a parliamentary democracy, which means that voters can elect a
parliament which forms the government. However, there have been economic
recessions in the past years which has created economic instability. It has also led to
the loss of trust in international markets with other trading partners due to their
economic issues. Furthermore, the government is suspected of being corrupt, which
hinders the recovery of the Portuguese economy.
Although the country has had a crisis recently, it is easy to start a business in
Portugal due to its liberal economy. In addition, the cost of living in Portugal is
relatively low, therefore so is the price of property, meaning that the property market
is booming. Due to corruption in the government and a poor level of education,
Portugal is unable to grow more economically. Because of the 2010-14 crisis, the
country has now got of the worst performing economies in Europe. Not only is
unemployment is rapidly increasing, the government is also unable to control their
The Portuguese society was heavily affected by fascist regimes for nearly 50 years
(1926-74), which still to this day reflects on the modern society. During this time
period, there were no attempts at improving social conditions. This has led to the
hindrance of social developments. As a result, the image of a normal Portuguese
person is seen as a low paid, uneducated but also satisfied person.
The technological improvements are always developing in Portugal and they
combine the latest skills set along with innovation and creativity to create a fluent
and solid product and a brand. Companies have access to a well organised
infrastructure for research through Research and Development (R & D). Additionally
they also have access to an accomplished infrastructure of communications and
internet infrastructure. Research and Development means that the country is
technologically advanced. Although a large quantity of research is done in the
Science and Technology field, not much of it is materialised.
Starting a business in Portugal can be very difficult, as it is not easy to penetrate the
red tape (excessive use of regulations and adherence to official rules). This is even
more difficult when trying to set up a business if you don’t speak the language
yourself. Apart from that, there are no specific legal factors that stand out.
Air and water pollution are significant environmental problems especially in
Portugal’s urban centers. Portugal’s water supply, especially in coastal areas, is
threatened by pollutants from the oil industry. The nation’s wildlife and agricultural
activities are threatened by erosion and desertification of the land.
– High production capacity.
– Flexible solutions to changes in
– Specialised expertise.
– Developed human resources.
– Popular tourist destination
– High production/capital costs.
– Level of production is lower than
– Weak structure.
– Weak economy.
– Market demands differentiation.
– Increasing demand for
– Vulnerable to terrorism,
underlying terrorist threats.
– Unstable economy could lead to
– High concentration of drug
Some features of the external environment may be more important to Chipotle than
to other businesses because not all businesses are identical, therefore they have
different needs. For Chipotle, the major factors that affect them are economic and
social, but also political.
Compared to other fast-food restaurants, Chipotle’s prices are higher. This means
that if the purchasing power of the average consumer falls, then sales will mirror the
fall. Even if there are no changes in the purchasing power of consumer bases, many
people may still opt for cheaper alternatives.
As for social aspects and personal preferences, this restaurant appeals for the large
Mexican/South American population in the US as well as adding some variety to the
range of fast-food available, straying away from the typical burgers and fries.
Instead, Chipotle provides traditional Mexican cuisine in a fast-food format, making it
a unique and popular restaurant.
However, due to the recent election of President Trump, there has been even more
discrimination towards hispanic people and the social tension between different
nationalities and races has been increased massively. This could affect CMG as they
are a Mexican-style restaurant chain which may be frowned upon by many,
especially those who support Trump.
Chipotle Mexican Grill – PESTLE Analysis
Political Most political factors don’t directly impact Chipotle apart from
the regulations set by the US Food and Drug Administration and
other administrations in the different countries that they operate
Economical CMG is heavily impacted by economic factors. For example,
inflation or a lack of supply can lead to an increase in the price
of ingredients, ending in lower returns on investments. As a
result of higher ingredient prices, the price of menu items will
increase. Chipotle is slightly more expensive than their
competitors; if there was a sudden inflation, usual customers
would likely choose the cheaper alternatives.
Social Social factors have impacted Chipotle and many other fast-food
chains because average consumers are becoming more health
conscious and cutting down on fast-food. However, Chipotle is
a healthier, higher end fast-food chain meaning that they may
not be as heavily impacted as other restaurants; in fact, they
can actually benefit. Chipotle appeals to the younger
generation, also known as “Millennials”, which is a generation
that has been built up on consumerism.
Technological As a company, Chipotle has integrated itself online by providing
information about their menus, prices and locations on the
internet. Although their business mostly consists of face to face
dialogues between customers and employees, finding suppliers
and communicating with business partners is much easier with
the use of technology (specifically the internet).
Legal Much like political factors, they don’t heavily affect Chipotle
apart from different regulations set by the US FDA. An issue
that has arised in the past was the E-Coli outbreak in November
2015, which led to thousands of people getting food poisoning
and as a result, numerous court settlements.
Environmental Environmental factors are a high priority for Chipotle; they are
an environmentally friendly chain that promotes sustainability
through 100% recyclable packaging and organic food sourcing.
CMG has very strict guidelines for the standards of living for
animals and does not use preservatives in their food.
There are many support systems in place which have helped Chipotle Mexican Grill
to expand into different countries. The following systems have become available to
any business in the world due to the rapid development of modern technology, which
has allowed for the globalisation of numerous colossal firms.
The most common and helpful support system is the internet. This has allowed
businesses to expand globally for years and has simultaneously developed other
systems. Through the WWW (World Wide Web), businesses can communicate with
each other to create partnerships, negotiate contracts and purchase items in bulk,
sourced from all over the globe. Due to the common use of the internet, the
exchange of information has improved massively as large amounts of information
can be stored digitally while also being made available globally. The development of
technology has enabled countries to also mass produce and have effective systems
in place for providing services and products. Marketing through social media is a
strategy that many companies now use; this has been proven to be extremely
successful due to the enormous amount of people who use social media, meaning
that it is easy to reach a very wide audience at a low cost.
The use of the internet has permitted Chipotle Mexican Grill to grow exponentially in
the past two decades. With the growth in technologies and communications in the
past two decades, McDonald’s were able to invest $360 mn in Chipotle through
online transactions. This led to the fast-food chain growing from just 16 restaurant
locations to over 500 from 1998 to 2005. Chipotle was able to find a new source of
pork for their restaurant chains with the use of the internet, after their old supplier
violated the terms and conditions for the standards of living for their farm animals in
early 2015. After only a third of their restaurants served carnitas (pork) in their
menus for the first half of the year, CMG were able to find a new supplier based in
the UK which met their animal welfare standards. With the use of social media,
Chipotle has grown their customer/fan base massively, simply by sharing photos,
videos and links relating to their products, restaurants and customers. This is a form
of marketing that is very cost effective; companies now have social media managers
who specialise in advertising their company on social media and communicating with
customers through this platform to answer questions and resolve complaints.
Employing social media managers is cheaper than paying for advertising and it has
proven to also be more effective. Due to the lack of online services such as
takeaways, online transactions have not affected Chipotle on the same level as other
businesses, but they still have facilitated payments between partners.
Needless to say, all of the strategies which Chipotle has used to expand have been
extremely effective, especially because all of them are carried out on the same
platform, the internet, making the processes much easier and cost effective. This is
evident, as their stock price grew by 645% in a 4 year period between 2011-2015.
The company Chipotle Mexican Grill should target Portugal for international trade for
various reasons. The country shares some of its traditions and values with other
Latino countries, such as Mexico, which is the country that is known for the food that
inspired Chipotle’s menu.
Chipotle should expand into Portugal because one of the strengths are the
similarities in the cultural background that are shared with Mexico, the country which
Chipotle’s menu originated from. This means that their food would likely appeal to
Portuguese people, as the cuisine is similar in some aspects between the two
countries. This nation is also neighbours with Spain and there is a large Spanish
community in Portugal as a result. Spanish cuisine is also very similar to Mexican
cuisine, which would also appeal to the Hispanic community who reside in Portugal.
Traditional restaurants and cafes are part of the Portuguese social culture and
Chipotle can take this into account in order to adapt their branches to the country by
adding different items to their menu that are exclusive to Portugal, while maintaining
its original values. In economic terms, Portugal has had a low, but continuous
growth in GDP (average of +0.39% from 1988 to 2016), which poses the opportunity
for further economic growth, should Chipotle launch new branches in the country.
Even though this nation has shown improvement in the economy, Portugal is still
subject to economic instability. As a result, Chipotle may encounter problems, such
as a lower amount of sales, due to the lower purchasing power of customers.
Furthermore, Chipotle is more expensive than other high end fast food chains,
meaning that many people may choose the cheaper alternatives. Not only that but
other chains such as McDonald’s and Burger King are very popular in Portugal
already, which means that it may prove to be difficult to make Chipotle a popular
choice in the country.
For Chipotle, it may be risky to launch new restaurants in Portugal because of its
economic instability and popularity of other competitors. Keeping this in mind though,
this nation is open to new opportunities and variation, so Chipotle can easily adapt
themselves to the Portuguese culture by offering traditional Portuguese food with
their own adjustments while also maintaining the original menu.
The Portuguese business etiquette heavily revolves around punctuality, formality and
mutual respect between parties which all ties in with the culture and traditions of the
nation. As per usual, business suits are standard etiquette as well as being groomed
and generally having a pristine presentation. It is quite common to undertake
business meetings in traditional Portuguese restaurants over long lunches.
In Portuguese negotiations, verbal and written statements are not given as much
importance as in other countries, such as the UK, meaning that nothing should be
assumed as long as the final contract has not been finished and signed. Portuguese
businessmen/women tend to focus on the emotional and friendly side of partnerships
rather than the financial gains. Therefore it is important to create trust and a new
friendship and not just a partnership. The main goal is to reach a mutual agreement,
which is much easier done with between a friend instead of an opponent.
The most common Portuguese business management style
“…a managerial approach that involves a dominant authority
figure who acts as a patriarch or matriarch and treats
employees and partners as though they are members of a
large, extended family. In exchange, the leader expects
loyalty and trust from employees, as well as obedience.”
In the Portuguese business environment, it is tradition to give a gift to customers and
partners. Gifts are considered to be a personal gesture, meaning that it is also
considered rude to redistribute a gift to someone else. Gifts are seen as part of the
Portuguese hospitality, rather than a bribe. Portuguese people are very accepting of
other cultures and religions but they also assert their own, making sure that others
are respectful of their culture.
Chinese business etiquette is quite standard as far as dress codes go; men should
wear beige, brown or dark blue suits while women should wear long sleeved blouses
with high necklines and flat shoes. The Chinese dress code is not as formal
compared to other countries, but dressing well is advantageous. Clothing that is
revealing is looked upon as appropriate and is considered as bad taste for both men
Contracts are usually negotiated by a balance in dialogue between the two parties
involved to reach a mutual goal. This method is used to simultaneously build a
relationship based on trust and the ability to cooperate with each other effectively.
This allows each party to evaluate and judge the different terms of a contract to
reach a balanced decision that is equally beneficial to both sides.
Punctuality is very important in Chinese business meetings, so members that are
involved should arrive either early or on time. Usually, the most important member of
the group enters first and has dominance over the conversations between their
respective party and the other group. Greetings are done through either traditional
bowing or simply by handshakes, which are becoming more popular in Chinese
culture. Chinese businessmen and women believe it is rude for members who are
lower in the hierarchy to interrupt others who have higher authority than them.
Business conversations tend to be more relaxed, instead of being enthusiastic like in
western culture and meetings usually open with friendly, casual conversations.
The management style of Chinese business structures, which is
most common, is based on the ‘Confucianism’ ideology. This is a
term that focuses on the respect of a person’s elders/parents. This
same idea translates into the Chinese business world, in a
hierarchical sense, where members with higher authority are
respected by those below them.
Chinese hospitality revolves around creating friendships to establish networks and
partnerships. Chinese hosts often make sacrifices and adapt to their hosts traditions
in order to please them. This is done in order to get something that is beneficial to
them as a result of their sacrifices. Usually, Chinese business people try to create a
personal friendship prior to making arrangements because it makes negotiation
processes and co-operation much easier.
Having a diverse workforce can benefit businesses in many different ways, such as
introducing a broader range of perspectives and beliefs, and a greater ability to
compete in the global marketplace. Introducing new languages and cultures into a
workforce can, however, create barriers and resistance from other employees.
There are not many language barriers for Portuguese businesses because English is
a very common language, especially in Portugal, which allows people with different
nationalities to communicate effectively. In real estate, knowing the English language
is very advantageous, as there are thousands of expats residing in the southern
region of Portugal, who wish to purchase property. Due to the popularity of tourism in
the country, usually there are adverts and signs in public that are presented in other
languages, particularly English. Another benefit of the common knowledge of the
English language is that businesses can negotiate contracts with international
partners effectively because they often do not require translators. There is also a
large population of Eastern European people living in Portugal, seeking work but at
times, different languages can create barriers and make recruitment harder for
employers. Even though this may be the case, Portuguese is the 6th most spoken
language in the world and it is relatively easy to learn, meaning that language
barriers can be “knocked down” easily.
In Portugal, different religions do not impact businesses heavily. This is mainly due
to the fact that Portuguese people are very respectful and accepting of different
cultures and beliefs. Businesses do have to keep the various needs of certain
religions in mind though, such as the 5 daily prayers of Islam. As Portugal is a very
progressive country, businesses can easily adapt and operate effectively regardless
of the diversity within workforces. Due to how easy it is to start a business in
Portugal, many dedicated firms have been launched that relate to a certain religious
group, such as Halal markets and food. This adaptation is also evident, as many
restaurants have started offering halal meats in their menus.
Much like for different religions, Portugal is progressive, meaning that
gender-defined roles are not very common. In the past, the male gender was the
most dominant in business hierarchies but nowadays, it is more balanced between
the two genders. However, businesses are still mostly dominated by males even
though gender rights are fair and equal in Portugal. This is mostly due to the past
dominance in business structures as well as the competition between males for
supremacy. Regardless of rights, men and women are known for having
differentiated beliefs, values and perspectives, meaning that negotiations can be
very different according to genders.
For foreign businesses trying to negotiate contracts and arrange partnerships with
Chinese businesses, it can be difficult due to the complexity of the language. This
can be overcome with translators, but being unable to personally speak to business
partners affects the relationship that is built through negotiations.
Religion plays a key part in Chinese businesses. This mainly due to the principles
and philosophy of Confucianism; an ideology that heavily revolves around respecting
one’s parents and elders highly. This translates into the Chinese business
environment, where those who are higher in the hierarchy are looked up to and
respected by those below them. Buddhism is also a part of Chinese businesses and
society due to the impact that it has had on the Chinese literature, philosophy and
ethics. When producing marketing campaigns, Chinese businesses must be aware
of the different religious beliefs in their society, while also knowing how to use them
to appeal to certain people.
China’s sex ratio between males and females is uneven due to the discrimination
towards women in the business world. In China, women have suffered harassment
and discrimination in recent years which has stopped them from climbing up in
business hierarchies. The inequality in Chinese society does not necessarily reflect
on businesses however, as 2.5% of Chinese businesses have female chief
executives officers, the second highest percentage in the world. The tension
between the two genders can affect the decisions made by businesses and can
result in barriers within workforces, leading to less effectiveness in businesses.
Languages are the methods of communication between human beings. Different
regions usually speak different languages, but nearly any language is spoken
anywhere in the world.
Language can affect businesses in many ways, especially in negotiations and
business meetings. Being able to speak a language fluently with your business
partners prevents misunderstandings, makes negotiations easier with less hassle
and allows business partners to create a personal connection, since they are
speaking directly to each other without the need of translators.
Ethnic makeup is the concentration of different races within societies. For example,
in the United Arab Emirates around 19% of the population is Emirati (the native
ethnicity) while the other 81% is a mix of different ethnicities.
Ethnicities can affect international trade because of the different values that people
uphold. These are usually the result of fundamentalism and can be considered as
racist by some. These values tend to be the cause of barriers between trade
partners and workforces, which also leads to the creation of cliques. Having different
ethnicities can expand a business’ global reach and understanding of other cultures.
Social structure is simply the different classes within society. Typically, there is lower
class, middle class and higher class, with other sub sections in between such as
upper middle class.
The social structure in which a business operates has a heavy influence on their
operations. This is mainly due to the different target markets. Businesses need to
consider the different classes in order to create appropriate products and provide the
right services to the correct audience. If a company was to launch a new product that
is high-end, with a high price but targeted the lower class, they would not be
successful because their target market has a low purchasing power which does not
correlate with the price of the product. High end businesses may also find it difficult
to expand into different regions; if the company provides an expensive product line
or services, it can’t expand into an underdeveloped country.
Religion is a system of faith and worship of a god or deity. Within religion, there are
different rules that must be followed, like a certain lifestyle or tradition.
Religions, much like different ethnicities, can create barriers and tensions between
people in workforces. This is not only due to fundamental beliefs, but also to past
conflicts between different religions. Again, like with ethnicities, having different
religions makes a company more diverse and allows for a deeper understanding of
various beliefs around the world, which helps to make their products appropriate to
different target markets.
Values are the principles and standards that a person lives by and what they believe
is right and wrong. This can be determined by the different factors around them such
as the society that they live in, their religion or their parents values.
Values are important to businesses because it is the standards by which they
operate as a company. These values must always be respected and followed in
order to show prospective customers what the company is made up of. Different
values must be taken into consideration by businesses to avoid offending both
customers and employees. Businesses must show that they are able to adapt to
different values and be respectful of them while also keeping their own.
An attitude in business is a way of responding positively or negatively towards a
certain idea, object, person, or situation. Attitudes can shape decisions and solutions
to problems made by individuals.
Different attitudes to business can create misunderstandings and problems to how
they vary between businesses. For example, in China, meetings are carried out with
punctuality, respect and undivided attention. Tones are generally kept low and one
member gets undivided attention when speaking. On the other hand, Mexican
meetings are much more active. Interrupting someone while they are speaking isn’t
interpreted as rude but instead shows that members are engaging in conversation
and are committed to the meeting. If two businesses of the two nationalities were to
engage in a meeting, this may cause issues because of how differently they are
done in Mexico and Japan.
Attitudes to work are the different ways that workers react and operate in their
Attitudes to work have various impacts on businesses. For example, some
employees have competitive attitudes towards work and will try to be above others.
This is a positive impact as it makes their working environment more competitive,
which in turn can increase the volume of their output. On the other hand, some
people may have negative attitudes towards work. For example, some employees
may develop a hate for their job, which makes their working environment negative
and can decrease their performance. In different countries, there are also different
attitudes, relating to aspects such as work hours and holidays.
Openness to change is the ability to adapt to different cultures, religions, values and
In international business, being able to adapt to these aspects is very benefiting
because it allows companies to appeal to a diverse range of people. By taking into
account the different needs and requests of prospective customers, firms are able to
design products and provide services that are appropriate to certain groups of
people as well as their regular customers. On the other hand, certain religions and
values found in countries prevent companies from expanding because they do not
accept that business’ values, meaning that it would be an unpopular firm in the
This journal has investigated the external factors and cultural differences of many
countries and businesses that trade internationally. The cultural differences and
external factors of businesses are all affected by things such as religion, ethics and
The diverse cultural values of countries around the world have a heavy impact on
business. The impact itself is determined by how relevant the values are to a
business. For example, the values that Hinduism in India upholds about not eating
beef has a large impact on a company such as McDonald’s because their traditional
menu consists heavily of beef products. Different types of cultural differences, such
as language can also influence businesses heavily. Language barriers can create
problems in workforces as employees are unable to work effectively. Having different
language groups can also create cliques, which diverges the workforce completely
and results in people of different nationalities only speaking to outsiders when they
must, mostly for work purposes. Additionally, discrimination can take place towards
small minorities of nationalities. The same process also applies to ethnicities,
causing tension in workplaces that can eventually lead to arguments and
disagreements. Ethnic specific businesses will not be so successful in a country that
is not keen on ethnic diversity and change. Poland is a country that is known for
discrimination towards any differentiation, therefore a business such as a Middle
Eastern clothes shop will not find success in that country. Being open to change and
respectful of different religions, ethnicities and nationalities has great benefits for
businesses. This allows firms to operate globally with their advanced knowledge of
certain values and beliefs which they must respect and adapt to in order to be
Differences influence the way that trading and negotiations are carried out between
companies based in varying countries. For example, meetings in China heavily focus
on being punctual and respectful. Members should turn up on time or early and the
most important member of the group should enter first and lead the meeting.
Subordinates should not interrupt the leader, as it is considered disrespectful and
does not conform with the Confucianism ideology. In a different country such as
Mexico, these ideas are not shared. It is acceptable to show up to meetings late as
well as interrupt others. Members do not always have the undivided attention of all
the people involved in the meeting and usually there are sub conversations within
the actual meeting itself. These two sets of traditions contradict each other, therefore
a business from a certain country may find it difficult to negotiate with foreign
Overall, most differences in culture and values have an impact on businesses.
However, the relevance of the factor to the business determines how much a factor
truly affects it.
BTEC Business Studies
Strategic and Operational Approaches to
Developing International Trade
McDonald’s is a fast food, limited service franchise with over 35,000 restaurants in
more than 100 countries. This global giant employs more than four million people
worldwide. McDonald’s serves 70 million customers per day, generating a total of
$75.18 million daily.
McDonald’s serves a variety of burgers which alternates with special promotions,
alongside their famous fries and a range of branded drinks, such as Coca-Cola. They
also sell desserts including Apple Pies and McFlurry ice creams. Generally, their
menus vary (in size, options, etc) depending on which country the branch is located
McDonald’s operates in the tertiary sector because they sell their own products
themselves. The company operates on a nearly global basis; countries which they
don’t operate in include North Korea, Zimbabwe, Iceland and a few more.
McDonald’s supply chain is local for meat and vegetable/fruit suppliers, while coffee
beans are sourced from South America. McDonald’s serves the food and retail
McDonald’s opened their first UK branch in 1974, which has since then expanded to
1,250 restaurants in the UK. The main method of expanding their business
internationally is through franchising, along with using licensing from other
companies to make new products.
In the UK, there are around 1,250 restaurants with 600 being franchises. Many
franchisees own multiple McDonald’s branches. For example, Paul Crocker is the
franchisee who owns all restaurants in Dover, Canterbury and Thanet, as well as the
Ashford Designer Outlet McDonald’s restaurant.
MCD have also used licensing to create new products under their own name. Their
McFlurry range in the UK includes Oreo, Dairy Milk, Toffee Crisp and many more
options which rotate throughout the year. They have also used
licensing/partnerships for their drinks range, including their famous partnership with
Coca-Cola which has been ongoing since 1955.
The McDonald’s menu features a wide selection of meals, snacks, drinks, and more.
This includes their most famous burgers, the Big Mac, Chicken Legend,
Cheeseburgers and many more. The different options available at McDonald’s
depend on the country in which the branch is located. The Big Mac was introduced in
the Greater Pittsburgh area, USA, in 1967 and nationwide in 1968. It is one of the
company’s most recognised signature products. It consists of 3 buns, 2 beef patties,
pickles, onions, lettuce, tomato, cheese and Big Mac sauce.
Chicken McNuggets are a type of chicken product offered by McDonald’s, which they
introduced in 1983. They consist of small pieces of processed chicken meat that
have been battered and deep fried. In the UK, McNuggets can be purchased as a part
of a Happy Meal (4), as a regular/large meal (6) or as a box of 6/9/20.
The McDonald’s menu varies around the world due to different cultures, legislations
and religious aspects in different countries. For example, marketing used for
McDonald’s in India is focused more on vegetarian consumers due to the religious
customs of the country but also features meat burgers inspired by Indian cuisine,
such as the Chicken Maharaja Mac, the Indian equivalent of a Big Mac. McDonald’s
also adapts their own burgers to a traditional meal in that country. In Germany,
McDonald’s offers the Nürnburger, a mini bratwurst sandwich.
McDonald’s drinks range offers a variety of carbonated beverages in different sizes
as well as hot and bottled drinks. Their most popular drink is Coca-Cola, the
carbonated drink company which has had a partnership with McDonald’s since 1955.
In many countries, beer is also available for purchase. This includes Germany, Spain,
South Korea, Holland, Portugal and many others.
The McDonald’s Apple Pie is a crispy pie filled with hot apple chunks which is deep
fried. In the US and other countries, customers can choose between deep fried and
Baked (US) Fried (UK)
McDonald’s processes and products have
been adapted to better suit different
countries and cultures. For example, in India
instead of the Big Mac, McDonald’s serves the Chicken Maharaja Mac, a poultry
version of their classic burger. This is due to the Indian culture and religion, which
prohibits eating beef. In the US, customers can order baked apple pies, as it is a
traditional dessert in the country. In some countries where the legislation for alcohol
may be different, McDonald’s serve alcoholic beverages, particularly beer. In general,
McDonald’s tends to adapt different items in their menus to different countries as
well as adding new and exclusive items to that country. By doing this, they have
shown great flexibility as well as an understanding of different cultures. It has also
demonstrated that customers are not only just numbers to the company; they
actually take their feedback into consideration in order to perfect their services and
menu to their consumer base.
A subsidiary business is where a parent company owns 50% or more of another company’s
shares. The parent company controls the subsidiary business but they are still able to
expand overseas. The subsidiary must pay taxes and follow the laws of the country relevant
to them. Companies can expand overseas by establishing a subsidiary business in a
different country or by purchasing the rights of another company. Youtube is a subsidiary of
Google. The advantages are reduced risks, enables businesses to expand internationally,
and subsidiary businesses can use the experience/knowledge of the main business and vice
versa. The disadvantages are local knowledge may not be suited for the parent company
and some may disagree with being taken over as a subsidiary company by a parent
company, leading to disagreements
A joint venture is a limited time contractual agreement between two businesses for a mutual
gain. For example, businesses can share expertise and information to reduce risks. The
most common type is when producers enter a joint venture with suppliers (e.g.: farmers and
supermarkets). The 2008 joint venture launched by NBC Universal Television Group ,21st
Century Fox and The Walt Disney Company to create the enormously popular video
streaming website “Hulu” is one example of a large scale partnering of companies that has
been very profitable.The advantages of a joint venture are that it allows for business growth
without borrowing money, increases the capacity of the companies involved and risks can
be dealt with by both companies. The disadvantages are that there may be communication
problems, there may not always be an equal distribution of power and knowledge between
both companies and cultural differences between the businesses may lead to
Partnerships are similar to joint ventures but they are usually indefinite and create a closer
pact between the two businesses through legal processes. In partnerships, profits, liabilities
and resources (physical and human) are all shared between the two businesses. Firms in
partnerships work almost as one combined company. An example of a partnership is Uber
and Spotify; this allows passengers to enter an Uber car and listen to their Spotify playlists
during their journey. The advantages are that it is easy to establish and start-up businesses
(costs are low), more capital is available for the businesses and income splitting can be
done as it is an advantage due to resultant tax savings. The disadvantages are that the
liability of the partners for the debts of the business is unlimited, each partner is ‘jointly and
severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the
partnership debts as well as being liable for all the debts, there is a risk of disagreements
and friction among partners and management and each partner is an agent of the
partnership and is liable for actions by other partners.
Agencies are specialist organisations which help businesses to expand internationally by
providing certain services or products. For example, some organisations will help
businesses with customs while some can translate contracts and other business related
documents. The CIA is a type of agency whose primary mission is to collect, analyze,
evaluate, and disseminate foreign intelligence to assist the President and senior US
government policymakers in making decisions relating to national security. The advantages
are they can exchange information and contacts internationally, identifying opportunities
internationally is easier and companies can keep international control of products in new
countries. The disadvantages are loss of control in marketing and additional costs such as
Licensing is an agreement that allows businesses to manufacture another business’
product. Licensing can give permission to another business to sell services, expertise or
even ideas on behalf of the licensor. Licensing agreements can be used to cover copyright
patents and other forms of agreements. Disney is a prime example of licensing; companies
use their brand image and recognisable characters to sell a certain product, such as clothing
or toys. The advantages are support is available for the licensee, it is easy access to new
markets for licensor and low investment required in expansions in new countries. The
disadvantages are that licensors can lose track of production and licensees can damage the
reputation of licensor if the process is not carried out properly.
Franchising is an agreement where businesses pay to run a franchise of their original
business in another country. The franchisor distributes their goods through a legal
agreement to the franchisee. Franchising is a popular method of expanding and has been
used by many businesses, especially fastfood and takeaway restaurants such as
McDonald’s and Pizza Hut. The advantages are that franchises offer the independence of
small business ownership supported by the benefits of a big business network, business
experience is not required to run a franchise – franchisors usually provide the training you
need to operate their business model, franchises have a higher rate of success than start-up
businesses, it is easier to secure finance for a franchise. It may cost less to buy a franchise
than start your own business of the same type and franchises often have an established
reputation and image, proven management and work practices, access to national
advertising and ongoing support. The disadvantages are that buying a franchise means
entering into a formal agreement with a franchisor, franchise agreements dictate how you
run the business, so there may be little room for creativity – there are usually restrictions on
where you operate, the products you sell and the suppliers you use, bad performances by
other franchisees may affect your franchise’s reputation, buying a franchise means ongoing
sharing of profit with the franchisor and the franchisor do not have to renew an agreement at
the end of the franchise term.
A business practice where the main contractor hires additional individuals or companies
called subcontractors to help complete a project. The main contractor is still in charge and
must oversee hires to ensure the project is executed and completed as specified in the
contract. Chiplime is a British subcontracting construction company. They acquire contracts
for large scale projects, such as the Emirates Stadium, then subcontract other companies to
complete the project that they were assigned. The advantages are that this method is useful
for specific projects, low investment required, lower costs due to self employment of
subcontractors and fixed costs for the contractor. The disadvantages are that it is expensive
in the long term, there is less loyalty from subcontractors, loss of control from the service
provided is possible and less motivation from self contractors.
Outsourcing is a method of choosing an external agency to perform certain services or
provide certain products. This includes payroll systems, call centres, telesales, etc. An
example of a famous outsourcing company is IBM, a firm which specialises in technology
outsourcing services such as credit/debit card readers. The advantages are that the
outsourced vendors have specific equipment and technical expertise, most of the times
better than the ones at the outsourcing organization. Effectively the tasks can be completed
faster and with better quality output. Outsourcing certain components of a business
process helps the organization to share many responsibilities with the outsourced vendor.
The disadvantages are that when an organization outsources HR, Payroll and Recruitment
services, it involves a risk of exposing confidential company information to a third-party.
Outsourcing can be very cost effective, but at times there are many hidden costs regarding
signing contracts internationally.
I believe that McDonald’s has used franchising effectively because their image is very easy
to sell, therefore people will be attracted to their restaurants. This will also persuade
franchisees to take the McDonald’s franchise on and invest in the company, which is
beneficial for McDonald’s in many different aspects. Expertise and intellectual costs have
been well spent because McDonald’s is able to understand international markets in depth
and adapt their menus and restaurants to different countries. McDonald’s has also invested
heavily in staff training in order to be able to run their restaurants efficiently, interact with
customers in the correct manner and ensure the safety of the food produced in the kitchens.
The company’s organisational structure is both centralised and decentralised; the menu for
all the McDonald’s restaurants in one region or country is the same but they differ from other
countries due to religious/cultural reasons. Furthermore, decisions made by managers from
each restaurant are adapted in order to apply the most suitable solution to their problem.
This is very effective because it allows McDonald’s to be versatile and adaptable while still
maintaining their image and original values.
Influencing Factors of International Businesses
Organisation is the structure and coordination of systems. It includes the formal
arrangement of roles, responsibilities and relationships within an organization. Organisation
is a tool which relates to the strategy of companies and is a success factor that is greatly
important. In companies, organisation is used for hierarchical role structures. In international
businesses, multiple hierarchical structures must be produced which determine the roles of
different districts, regions and whole countries.
Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings,
construction, and equipment used in the production of goods or in the rendering of services.
It is the total cost needed to bring a project to a commercially operable status. Examples of
capital costs include land on which the project is built, permits and licenses, work equipment
Capital costs are costs that represent high levels of investment in permanent assets that are
required to operate the business. Businesses must be able to determine the appropriate way
of investing; these capital costs include franchising or licensing and many other methods of
Revenue costs are the costs which businesses must consider when expanding. These costs
are paid using the revenue generated from sales of their service(s) and/or product(s). This
includes wages for staff, rent, advertising, utilities, raw materials and any other extra costs.
Expertise/Intellectual Capital Costs
Expertise and intellectual capital is the cost of expert knowledge from specialised staff
working in a company. These are skills that have either been developed through training and
experience, however, companies can hire staff who are specialists in certain areas of work.
Training Costs for Local Labour
Training costs for local labour are the costs for training new staff in different countries or
the training for current staff in order to adapt to new environments. Companies must invest
in staff training, especially in international markets, in order to maintain their versatility in
different markets. This includes training on how to operate machinery, sales training or how
to offer specific services or products.
Organisational Structure of International Business
Organisation is the structure and coordination of systems. It includes the formal
arrangement of roles, responsibilities and relationships within an organization. Organisation
is a tool which relates to the strategy of companies and is a success factor that is greatly
important. In companies, organisation is used for hierarchical role structures. In international
businesses, multiple hierarchical structures must be produced which determine the roles of
different districts, regions and whole countries.
Centralised Decision Making
Centralised decision making is the process of undertaking all decisions from the core of the
business. Companies offering a branch or franchise in another country control many aspects
of their operations such as the products, services, packing and delivery method. However,
there are many disadvantages to centralised decision making in international business;
many aspects of a business in one country may not be equally appropriate for a different
Decentralised Decision Making
Decentralised decision is the opposite of centralised decision making. This means that
decisions are made by local managers for their branch of a franchise in order to make the
most appropriate decisions. The authority for decision making entirely depends on the
structure and hierarchy of a business, it is what permits people in certain roles to undertake
McDonald’s has used a variety of different strategies and resources in its US market in order
to expand exponentially and eventually become a multi-billion business. Their main method
for expansion was the franchising strategy, where franchisees can start a business under
the franchisor’s name. Currently there are over 14,000 franchises in the US and the main
reason for this global presence is because of McDonald’s friendly and almost nostalgic
image which attracts customers to their restaurants every day. Franchising has allowed the
company to generate a large amount of income, most of which is used to continuously
expand. Their capital has been well invested in order to continue opening new locations all
over the US. Their expertise and thorough analysis of the American market has allowed
McDonald’s to determine the correct menu items, size and service that should be provided to
customers. The reason for the difference between US sizes and other global counterparts is
because people in different countries have different dietary needs. This differentiation has
been proven to be effective because although the resources required to make a normal meal
are increased, their prices are proportionate to the meal and the average consumer will likely
still purchase these meals. McDonald’s has invested into employee training heavily in
different markets, especially in the US where their largest consumer base resides.
Their customer service, which revolves around being fast and friendly, understanding
customer needs and enjoying their job, is what makes McDonald’s employees provide
customers with the best service possible. They are also trained to work in a team dynamic,
with different sections of the restaurant working together as one. For example, the kitchen
must have good communication with the front counter to ensure that specific details are
met in order to satisfy the customer as much as possible. Similarly, the kitchen must
communicate with workers managing the stock, so that they may continue to operate the
kitchen with no interruptions.
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