BTEC Level 3 Extended Diploma in Business

Unit 39 – Investigating International Business

Assignment Title: Next Stores plc
Date set: Date due:
Assessor: Mr Henderson Learner:

Scenario

You are working as consultant to Next Stores plc, a clothing and homewares company that operates in
different countries around the world. Next buys materials from different countries around the world and
sells them in a number of countries. Your contact at Next, Rachel, has asked you to prepare some
information for her to use with the management of Next.

Grading Criteria
Pass Merit Distinction
To achieve a pass your work must: To achieve a merit your work To achieve a distinction your
must: work must:
P1 Explain the international business M1 Assess the methods to D1 Evaluate the potential
environment in which a selected increase trade between problems faced by
organisation operates countries and the methods businesses that trade
P2 Describe the mechanisms that to restrict trade between internationally when
regulate international trade countries entering new markets
P3 Describe how the environment and
culture of another country affects a
business operating internationally
P4 Describe how the monetary M2 Compare how cultural D2 Evaluate the impact of
environment affects businesses that differences and foreign cultural differences on
operate internationally business environments international business
P5 Identify why businesses operate affect multi-national performance in the
internationally corporations international market
P6 Explain the business strategies used
by a business operating
internationally

Learning Outcomes

On completion of this unit you should:

1. Understand the international business environment
2. Know how cultural differences affect international business
3. Know how international business is financially supported
4. Understand the strategies used by international businesses.
 What you need to complete this assignment

 Information from different textbooks

 Access to internet sites of different businesses
 Notes from lessons in class
 Notes from discussions, visits and visiting speakers you may have had
 Appendix B has an article about culture and retailing in Germany which might be useful for tasks
P3, M2 and D2
 Filination website (below) has adverts which highlight problems with trading in different countries
which might be of use for P3, M2 and D2

Websites that may be of use to you

 www.next.co.uk - Next website
 www.nextplc.co.uk/nextplc/aboutnext/ - information about Next
 www.nextplc.co.uk/nextplc/corporateresponsibility/suppliers/ - information about Next’s
suppliers
 http://en.wikipedia.org/wiki/Next_(clothing)#Stores - list of main countries Next operates in
 www.fco.gov.uk/en/travel-and-living-abroad/ - Foreign & Commonwealth Office website
 http://www.ukti.gov.uk/export.html - UK Trade & Investment website
 http://www.filination.com/blog/2008/07/24/hsbc-on-cultural-differences/ - impact of cultural or
manners on business (HSBC)

Important information about the assignment

 You need to complete each of the P tasks in order to meet the requirements for a Pass grade.
 Each task is marked independently and you can ask the assessor to assess each task as you finish
it.
 You should check carefully over each task and look at the assessment criteria before you submit
your work for assessment.
 If the assessor decides you need to do more work on a task then they will explain what you need
to do and set a new deadline for the task.
 Students who perform well are those who complete tasks throughout the assessment period of
this assignment rather than trying to complete the whole assignment at the end in a hurry!
 Remember copying work from another student, a textbook, an internet site or any other source is
plagiarism. You need to sign a statement when your assignment is completed to state that your
assignment is all of your own work!
 Task P1: Explaining the international business environment
P1  Rachel has asked you to produce a leaflet which will explain the international business
environment in which Next operates
 You should be clear about where materials come from, where products are made and
where they are sold
 Within your leaflet you should comment on which countries are developing countries and
which are developed, and the impact that Next has on developing countries that it
operates in
 At the end of this task you should have a completed leaflet which explains the
international business environment that Next operates in (P1)

Date Due:

Task P2: Describing the mechanisms that regulate international trade

P2  Rachel has been asked by the senior management to explain how international trade is
regulated
 She has asked you to prepare a presentation that will describe the mechanisms that
regulate international trade
 You should comment on how trade in EU countries is ‘free’ and how this developed over
time
 You should also include an explanation of the concept of free trade and describe the
different barriers which may be used by governments to restrict their markets to
international competition such as embargoes, tariffs and quotas, and the effect of these
barriers
 At the end of this task you should have a presentation which describes the mechanisms
that regulate international trade (P2)

Date Due:

Task M1: Comparing methods for increasing or restricting trade

M1  Rachel has asked you to follow up on your presentation that you completed for P2 by
producing a leaflet that will compare the methods for increasing trade and restricting
trade between countries
 You should choose countries that have more open and less open systems of trade and
compare these, making clear reference to quotas, embargoes and tariffs
 You should also comment on the impact of different measures that you mention in your
leaflet
 At the end of this task you should have a completed leaflet which compares the methods
for increasing or restricting trade (M1)

Date Due:
 Task P3: Describing environment and culture internationally
P3 [[[[[[[[[

 Rachel has been asked by Tony to investigate selling different products in their shops
around the world; Rachel has asked you to prepare a report which will describe how the
environment and culture of different countries might affect Next trading abroad
 For each of the following products, describe the problems which might be associated
with selling these products, and also comment if these are cultural or environmental
issues (the FCO website is useful here, especially the cultural sections)
o Selling Vicks inhalers in Japan
o Low cut women’s clothing in United Arab Emirates
o Winter clothing made for the UK market and sold as is in India
o T-shirts with scantily dressed women in Saudi Arabia
o Camouflage style shorts in Barbados
o Summer clothing made for the UK market and sold in Northern Canada
o An overtly religious statement on a T-shirt in China
 You should also explain how the following factors may influence selling abroad by Next;
language; religion; values; attitudes; customs; manners
 At the end of this task you should have a completed report which describes how the
environment and culture of another country affects a business operating internationally
(P3)

Date Due:

Task M2: Comparing cultural differences and foreign business environments

M2  Rachel was very impressed by the report you prepared for P3 and she has asked you to
focus on different countries in another report and compare how cultural differences and
foreign business environments might affect Next
 You should use the UK Trade & Investment website to research 4 countries and compare
the cultural differences and foreign business environments in these countries
 You should ensure that you choose countries that are different to each other –
preferably in 4 different parts of the world
 You can comment on how they are similar to the UK and how they might differ
 At the end of this task you should have a completed report which compares cultural
differences and foreign business environments in different parts of the world (M2)

Date Due:

Task D2: Evaluating the impact of cultural differences

D2  Rachel has asked you to prepare a report which will evaluate the impact of cultural
differences on international business performance in the market
 You should comment on some of the countries that you have already looked at in tasks P3
and M2
 In this report you will need to state what the impact will be, clearly explaining the impact
of the culture
 You should comment on how Next could overcome these cultural differences
 You should comment on whether countries have a similar or different culture to the UK
and how much, and in what ways, this might affect Next
 At the end of this task you should have a completed report which evaluates the impact of
cultural differences on international business (D2)

Date Due:
 Task P4: Describing the monetary environment for international businesses
P4  Rachel has asked you to prepare a memo to her which will describe how the monetary
environment affects businesses that trade internationally
 You should comment on what exchange rates are and how a rise or fall in the exchange
rate will impact on Next, and how it might impact
 It would be useful if you produce some examples with figures to show the impact that
exchange rates have on businesses such as Next
 You should also include comments as to the benefits of having a fixed exchange rate
such as the Euro (€) and how businesses can protect themselves against changes in
exchange rates
 At the end of this task you should have a completed memo which describes the monetary
environment for an international business (P4)

Date Due:

Task P5: Identify why businesses operate internationally

P5  Rachel would like you to prepare a memo which identifies reasons why a business such as
Next would want to operate internationally.
 You may like to include other examples of businesses which operate internationally
 At the end of this task you should have a completed memo which identifies reasons why
businesses operate internationally (P5)

Date Due:

Task P6: Explaining the business strategies used by a business operating internationally
P6  Rachel would like you to prepare a report which covers the main issues that Next would
have to consider when deciding to open up stores in a country that they currently do not
operate in
 You should complete this task as a report
 Explain different business strategies used by a business operating internationally
 You should describe the importance of different elements and a list of elements that you
might like to include is in Appendix A; you should consider at least two from each
section in the appendix
 At the end of this task you should have a completed report which describes the
strategies used by a business operating internationally (P6)

Date Due:

Task M3: Explaining and analysing business strategies

M3  To follow on from your report on P5 Rachel would like you to prepare another report to
explain and analyse the business strategies used by a business operating internationally
 You should follow the strategies that you described in task P5 and ensure that you fully
explain and analyse these strategies
 It would be useful to highlight the good and bad points of the strategies that you have
looked at
 At the end of this task you should have a report which explains and analyses business
strategies used by a business operating internationally (M3)
Date Due:

Task D1: Evaluating potential problems when trading internationally

D1  Rachel has asked you to prepare a report which will evaluate the potential problems
faced by businesses that trade internationally when entering new markets
 You should continue to focus on Next and consider countries that they do not currently
operate in
 You should evaluate the problems that they might come across, by explaining these
problems and commenting on how/if this can be overcome, and the extent to which this
might be a problem for Next
 It would be useful for Rachel if you chose at least two very different countries and
evaluated the potential problems in these countries
 At the end of this task you should have a completed report which evaluates the potential
problems faced by businesses that trade internationally when entering new markets (D1)

Date Due:

Appendix A

The strategies used by international businesses

 Marketing: identifying markets; data analysis; marketing information systems; promotion;
advertising; adaptation/standardisation of product and promotion
 Production and distribution: standardisation of products; product differentiation; product pricing;
distribution channels; transportation; supply chain; logistics
 Human resource management: staff; foreign personnel; expatriate personnel; recruitment;
induction and training; cross-cultural training.
 Technological: internet; industrial development; transfer of technology; adapting technology to
conditions
 Appendix B
Heading for the exit
After struggling for years, Wal-Mart withdraws from
Germany
Aug 3rd 2006 | FRANKFURT
BACK in 2003, some academics at Bremen headquarters (for a while) and three logistics
University published a study entitled “Why did centres, piled up costs without achieving
Wal-Mart fail in Germany?” Three years later, economies of scale. On the German Monopoly
the news finally reached Bentonville, Arkansas, board, Wal-Mart picked the wrong street names
the home of the world's biggest retailer. Last and lost, says Mr Elfers. It only once published
week Wal-Mart pulled the plug on its German its results for Germany, in 2003, when it lost
operations, selling its 85 hypermarkets to €487m ($550m). So it is safe to assume that it
Metro, the local market leader. never made a profit. The sale price to Metro
was not disclosed, but Wal-Mart says it will
It has been a sad tale of errors ever since late take a one-time charge of €1 billion on
1997, when the American giant bought one completion.
prestigious German store chain, Wertkauf, and
then gobbled up another, Interspar, without The pull-out leaves the American giant with
really examining what it was buying. only one European operation, in Britain, where
Competitors naturally trembled, given Wal- it owns Asda, the country's number two
Mart's reputation as a discounter and the supermarket chain. In May it also pulled out of
winning ways of its greeters and grocery South Korea, where it had a loss-making
packers. But they soon breathed more easily, network of 16 stores. Its Japanese operation
as Wal-Mart went on to get nearly everything could be next, though its partner there, Seiyu,
wrong in what the Bremen boffins called “a is well established.
textbook case of how not to enter a foreign
market”. Wal-Mart may be right to forget about Europe.
It has a growing joint venture in China, though
The first error was to appoint a boss for there is a threat that its 30,000 employees may
Germany who spoke no German. Not only that, be unionised—anathema in Bentonville. In India
he insisted that his managers work in English. it has a procurement operation and big plans,
The next boss, an Englishman, tried to run the although foreign investors cannot own
show from England. The men at the top supermarkets. And it is, of course, market
misunderstood both the employees and the leader in America, Canada and Mexico.
customers. German shoppers like to hunt for
bargains on their own, without smiling In Germany, Metro will add Wal-Mart's
assistants at their elbows. Other surprises for hypermarkets to its existing Real chain of 288
Wal-Mart were Germany's short shopping hours, stores. Ironically, eight years ago Wal-Mart
including almost no Sunday trading, and fierce considered buying Metro and canvassed the
competition from Aldi and Lidl, two discount support of its chairman. To put a stop to
chains. Kaufland, Lidl's sister operation, was in persistent rumours of a merger, Metro
direct competition with Wal-Mart's eventually fired him.
hypermarkets.

Wal-Mart's biggest error in Germany, according

to Jürgen Elfers, an analyst at Commerzbank
Securities, was to think small and ignore
Kaufland. Wal-Mart tried to get its existing
stores right instead of building critical mass,
which would have meant opening or buying
another 400 or so hypermarkets. Its
infrastructure in Germany, which involved two