The context of international business Essay Example | Topics and Well Written Essays - 2500 words

The context of international business - Essay Example The company was founded by Jack Cohen in the year 1919, the number of stores as on April 2012 happens to be 6,351 stores. (Burgemeister, 2003, p. 192). The total revenue of the company happens to be ?64.539 billion as on 2012. The total market share in U.K. is 30.2%. The major global competitors of the company are Walmart, Carrefour, Aldi, Royal Ahold and Metro. Identifying the company’s main drivers of accessing foreign markets using theories of FDI FDI stands for foreign direct investment. There are various theories of FDI like the product life cycle theory, internationalization and eclectic paradigm theory of the OLI frame-work. Among these the internationalization theory has been used to identify the key drives. The internationalization theory states that a company operating in a matured economy needs to expand the horizon beyond the local market to get competitive advantage and economies of scale. In the early 90s Tesco was lagging behind Sainsbury’s as the second largest retailer in the country and the operations of the country was subjected to the U.K. market only. But the global economic reforms couples with the drive to become a global major retailer urged Tesco to enter the global market. The first phase of internationalization begun as Tesco entered Hungary in 1994. Since then there has been no turning back, Of-course there has been certain problems in countries like France, but looking at the overall perspective the results speak for themselves. Today Tesco is largest retailer in U.K. and the third largest retailer in the world right after Wal-Mart and Carrefour. Mainly Tesco is a general merchandise and grocery retailer and operates as following the business to consumer framework. External Environment Analysis External or macro environmental factors are those that cannot be controlled by an organization and yet the modus operand of an organization gets severely affected by the changes or developments in the external environment. The m ain external environmental factors include political, economic, social and technological factors. However, the legal factors are also to be included. Bit, since most of the legal legislatures in a country are developed by the government itself the legal factors are hereby included in the political factors. Here it is to be added that Tesco entered in U.S. in the year 2007. Therefore the PEST analysis has been based on the external environmental situation in 2007 -2008 only (Henry, 2008, p. 89). Political United States has always been a politically stable country. And the governments in U.S. have always welcomed business investments from both local and international firms. Many specialists have tagged U.S. as a very stable political country irrespective of the political regime. Probably due to such attitude of the political leaders of the country the country has become one of the strongest economies in the world. As mentioned earlier as far the legislative system goes the country as mentioned has a business friendly legal environment welcoming investments. Legal and Regulatory reforms in the 1970s actually resulted in de-regulation in various sectors and enhanced competition and efficiency.