This journal article covers Unit 5 – International Business, Assignment 2 Task 1. It uses comprehensive research on Innocent Drinks external factors as well as situational analyses on China and USA. This research is then used to recommend and justify one country that Innocent can target for international business. My work covers all of the criteria required to achieve distinction as well as the correct structure and layout needed to reach these high grades (please have a look at the previews). Just follow the content, it will save you time and help you easily achieve distinctions. Criteria covered: P5 Explain the external factors that influence a selected business considering trading internationally – P6 Explain how business support systems enable a selected business to trade internationally – M3 Carry out a situational analysis on two countries a selected business may consider trading in – D2 Recommend one country that a selected business could target for international trade, justifying your decision
1
Unit 5 International business
Assignment 2
Task 1 – P5, P6, M3, D2
John Price
Explain the external factors that influence Innocent Drinks considering trading internationally.…….2
Explain how business support systems enable Innocent Drinks to trade internationally ……..…….…..3
- Influence of the internet on Innocent Drinks
- International payment methods
Situational analysis on two countries Innocent Drinks may consider trading in.……………………………..5 - PESTEL of China
- PESTEL of USA
- 5C Analyses of Innocent Drinks
Recommendation and justification of one country that Innocent Drinks can target for international
trade………..……………………………………………………..………………………………………………………………….….….…..7
Conclusion.………….……………………..………………………………………………………………………………………………….8
References.………….……………………..………………………………………………………………………………………………….9
2
Political factors include the
guidelines and rulings from
government bodies; Department of
Health, Advertising Standards
Authority, Office of Fair Trading and
Trading Standards. The Department
of Health recently changed the
guidelines of the 5-a-day fruits and
vegetables, qualifying 100% pure
smoothies and juices up to 150mil to
count as one portion of the daily
intake (Donnelly, 2016). This can
positively affect Innocent because
now they are able to use this in their
marketing and packaging,
encouraging health-oriented people
to buy their product. Further
continues have different type of
governments – if Innocent considers
to trade in China the company has to
have in mind that China is a
communist state, which may mean
that there are more restrictions to
trade. Trading in China can be more
challenging for Innocent due to the
strict business laws.
Economic factors that influence
Innocent include the economic
situation in the countries where it
operates. Tax policies as well as
other market factors are influence
the way Innocent operates. For
instance, reports marked smoothies
as “too expensive for credit-crunched
Brits” which resulted in smoothie
sales falling by 33% (Levy, 2011).
Another factor that affected the
industry was the recession, resulting
in fall by 29% in 2008 to 2009
according to the Food and Drink
Innovation Network (FDIN). Also, the
level of taxation in different
countries can be determining factor
when deciding in which country to
trade in. For now, the UK is part of
The European Free Trade Area (EFTA)
thus there are no trade taxations.
However, if Innocent was to trade
with China there would be taxes.
Social/Cultural factors include the
consumer buying patterns and
attitudes in each specific target
demographics. There is a growing
interest in healthy eating not only in
the UK but across Europe also. This
presents considerable opportunities
for Innocent due to the fact that the
Unit 5 International business
P5: Explain the external factors that influence a selected business
considering trading internationally.
Innocent Drinks is international company that makes juices and smoothies, which are sold in most
supermarkets, coffee shops and other outlets. Innocent sells more than 2 million products every week
in the UK and Europe. To keep up to date with changes in the global environment every company
needs to perform PESTEL analyses which examines the trends in different environmental factors.
External Factors and
Cultural Difference
Figure 1
3
company is associated with healthy
lifestyle and ethical values.
(Gagliardi, 2015). In terms of cultural
factors Innocent drinks makes sure
that they translate their products to
native language in the countries they
operate in. If they didn’t do that and
sold all their products on English, the
company is risking to not be
successful due to people not being
able to understand the labels.
Technological – we live the era of
rapid information and technology
development. Innocent uses
technology to help the business
grow, reach new consumers and
reduce their environmental
footprint. There are a lot of new
ways of communication used to
connect with shareholders, suppliers
and most importantly with
consumers vie digital marketing
campaigns. There are positive and
negatives related with instant
information sharing. Innocent can
reach millions of consumers with
their digital channels – Facebook,
Twitter and Instagram. This enables
the company to share exciting news
about their products. However,
companies have to be careful what
they post, there are a lot of cases
where well-known brands have made
massive mistakes which have gone
viral and out of control, there by
harming the company’s reputation.
Technology also helps when it comes
to communication internationally – it
allows the different departments of
the company to have reliable
connection and pass on important
information.
Environmental and Ethical – The
whole brand image Innocent Drinks
is based on ethics. The company is
one with a strong drive of being
sustainable. They take responsibility
for the impact of their business on
the environment, striving to change
the negatives to neutrals or even
better positives. Innocent focused on
the 6 ethical factors – figure 1. They
achieve their environmental goals by
reducing their carbon emissions from
the manufacturing of packaging and
the use of recyclable materials. (our
approach to sustainability, 2013).
China started a new campaign to
reduce the pollution in the country
with 20% by the end of 2025.
Companies that consider trading in
this country will have to contribute
to this goal.
P6: Explain how business support systems enable a selected business to trade internationally
International business support systems refer to the tools that assist globalization and international trade. Now more than ever
before people and businesses are connected, they constantly exchange information with the help of the internet. The other
significant international support system are the international methods of payment. The combination of both of those systems
enables businesses, suppliers and consumers to buy and trade internationally.
Influence of the internet on Innocent Drinks – the creators of Innocent started using digital marketing and more specifically
social media marketing, soon after they found the company. It didn’t make much sales until Coca Cola took over all the
marketing, reaching more then 500 000 likes on their Facebook page in 2018 and almost 100 thousand on Innocent Instagram.
This digital communication channels enable the company to reach new consumers and markets, national and international. The
company keeps their consumer constantly engaged by posting regular and relevant content. Consumer from all around the
world are reminded 27/7 about the brand and its products. This builds customer loyalty and expands the business.
The internet is also a great way to collect instant feedback from
consumers by specialized services or even just buy how consumers
interact with the content. In Facebook we can react to a post in six
ways, Innocent analyses those reactions to determine what their
audiences love, like or dislike. Similarly, Instagram provides a wide range of analytical tools that can even help companies
determine their audiences geographic, sex and age.
Internet also makes international business activity – Innocent uses internet for international communications with suppliers and
retailers vie emails or social media platforms like Skype. This simplifies the day to day business activities because there is
constant international connection and reduces the chances of mistakes or misunderstandings.
Powered by learnexams