Ted Baker plc is a British luxury clothing retail company. Ted Baker’s founder and CEO, Ray Kelvin, started his first store in March 1988 in Glasgow, and opened further stores in Manchester, and Nottingham. Ted Baker has several stand-alone stores in the UK. The Ted Baker range is also sold by other retailers (which it refers to as Ted Baker Trustees), in particular stores of the John Lewis Partnership and House of Fraser.
Ted Baker has stores and outlets in the rest of Europe, the United States, Canada, Australia, Asia, South Africa and the Middle East. Ted Baker has expanded its high street presence through its wholesale business which includes Australia, New Zealand, the United States, Canada, Norway, Greece, Spain, the Netherlands, Belgium, as well as the British Isles. Wholesale operations commenced in 1994 through careful selection of retail stores.
Ted baker is within the clothing and retail sector, it is in the developed market as its trading within widely developed international countries.
Vodafone Group plc is a British multinational telecommunications, with headquarters in London. It predominantly operates services in the regions of Asia, Africa, Europe, and Oceania. Vodafone owns and operates networks in 25 countries, and has partner networks in 47 further countries. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in 150 countries.
They provide both products and services:
• Fixed line telephone
• Mobile phone
• Digital television
• Internet television
Vodafone operate in both developed and developing economies.
International business can take many different forms, and these include sending things overseas (exporting), bringing them in (importing), operating in different countries (multinational) and being involved with the support for businesses operating in multiple countries, through activities such as marketing or logistics.
Reasons for conducting business internationally
The first reason for trading internationally is growth, offering goods and services in other areas outside the UK offers massive opportunities for organisations to grow. Increasing the number of potential clients by massive amounts each time businesses start selling in a new country. This will probably be much easier than companies trying to expand their market place in their “home” country. Most businesses who are selling a wide range of products successfully within the UK benefit from trading internationally massively. For example ted baker who established the brand within the UK and decided expanding internationally would increase profit and growth. Although Vodafone’s majority of international customers fuel their profits.
Choosing to sell goods or services in other countries also gives companies more opportunities to generate revenue. New revenue streams are methods to create new income. The more ways a business has to generate income, the stronger the business is likely to be. For example, Vodafone, choose to offer different products and services such as Fixed line telephone, Mobile phone, Broadband, Digital television, Internet television and IPTV.
The ability to stand out amongst competitors is a crucial factor in business. When there are fewer competitors, this task is made easier. Businesses like Vodafone and Ted baker, which may be viewed as comparable to others in the UK, may, when placed in a larger and more diverse environment, turn out to be a unique product or service not to be missed. By making the product or service available to worldwide buyers’ businesses instantly create another life line for the business by being in less competition and increasing the possibility of standing out. This will in turn boost sales potential and allowing the business to flourish.
When working with companies overseas, businesses and their customer will want to execute the transaction in the safest and most efficient manner possible. One of the many advantages when trading internationally is that overseas payers often pay upfront. This reduces payment risk and may help with working capital.
Trading on an international basis gives businesses the chance to expand their sales and offer goads and services that may be common in one country and sell them in another. Accessing new markets offers new opportunities, as people in those countries may not have come across those products before.
Extending the life of the product and service, companies like ted baker and Vodafone may have products that are reaching maturity in the domestic market so will be conserving developing the new offerings to the market. Although trading within an international market means that customers may be willing to purchase existing products.
Increasing market share and market leadership is a very important to businesses that are trading internationally. Having a greater share of the market means they have more sales in that market and they are more dominant over the other businesses that operate in that market. Vodafone for example has a share of the market and is one of the market leaders in the telecommunications industry. By becoming the leader in a market, the business has the most control over a particular market and can make sure that they are first to make changes to a particular product or service meaning beating the wide range of competitors to it.
Fiscal benefits and enhancements relate to the amount of spending and tax that a government of a country is seeking to make. If a business is choosing to export outside the UK, they may have been given support by the UK government to do so, a this has a positive impact on the performance of the UK as a whole.
Economies of scale mean that more of a product or service that a company sells, the lower the cost per unit to make it. This is because, whether Ted Baker produces one product or 1000 products, the companies overhead will remain the same. Being able to produce a large volume of goods means costa go down.
UK businesses like Vodafone may find that exporting internationally may attract more potential employees. Business owners may find themselves able to recruit staff with better qualifications and greater levels of ambition, who wish to help the company develop internationally.
Ted Baker deals with Developed countries such as the United States, Australia and the UK. The advantages of this are that there are higher employment rates for people in these countries which means that it improves the economy and there are established trading which means they know the rules and regulation to follow whilst trading to avoid breaking the law and getting fined.
The disadvantage is that the market is already extremely competitive, so Ted Baker needs to be ahead of the game to have the largest market share which means they need to sell more luxury items to beat the competitors that also trade internationally for example Hugo Boss, Burberry and Louis Vuitton.
Ted baker also belongs to the advanced emerging countries in the middle east such as turkey, which means that there will be reduced taxes for them as they are providing jobs for the locals and so they benefit from low tax and high profits. Ted Baker make sure they are ensuring to stick to ethical issues regarding wages to international workers, if they decided to offer lower wages in these countries, they may get lower sales growth as locals may not want to shop with them.
By ted baker operating in developing countries like Russia, Shanghai and China means that there will be a growth in sales for them as they are providing a new market for the luxury women’s and men clothing items. However, they need to do their research on the countries to ensure they know their target market in order to dominate the luxury fashion market.
Vodafone is a worldwide organisation whose activities include Fixed line telephone, Mobile phone, Broadband, Digital television, Internet television and IPTV. Vodafone operates in Europe, Africa, Middle East and Asia Pacific Countries. Vodafone is one of the leading telecommunication companies.
The advantages of Vodafone being in developed countries is that they get to hire people with the right skills to work for them, for example hiring experienced telecommunications staff with different ideas of how to gain biggest markets and get a bigger market share. This however means that they will have competition with other worldwide companies such as China Mobile, Verizon and AT&T.
Vodafone is also a part of the emerging markets and has potential of increased sales due to fast economic growth; this means that the government will offer incentives to them as they created jobs for the local community. However, some of the countries Vodafone trade in have unstable governments and political issues can cause problems to Vodafone, the high inflation in these countries can cause problems for Vodafone as their investment could decrease.
In less developed countries that Vodafone trade in are likely to have higher sales due to the high populated community, this means that as a lot of people in the developing countries don’t need the newer products that Vodafone are bringing in to the developed countries like the USA and the UK.
There are four main ways in which to finance international business and these very much depend on which market the business is operating within and what services or products they are supplying.
Pre-payment by the importer
The business choosing to import the goods or services to sell within a different country may be expected to pay in advance for the products. The reasons that this might be the best available financial option would include;
• There being little trust from the business supplying the product.
• The political situation within one or both the countries may be unsettled.
• There is a high demand for the good and therefore a price can be pre-agreed for the product.
• The importer may be a brand-new business and therefore a high credit risk or may have a poor credit record.
• The exporter can avoid non-payment since part of the payment is received during the transfer of the goods.
• There might be a fixed price if you pre-pay for goods and services, which means that there will be low problems with cash flow forecast problems.
• This method can cause cash flow problems for the buyer.
• Buyers can also be concerned that their goods might not be sent after payment is made which then makes it possible that sellers make this their way of exploiting buyers.
Letters of credit
Letters of credits are a very common way of financing international business. It works when the bank of the importing firm agrees to pay the supplier as soon as the order is completed. Although the bank doesn’t check the goods it monitors the progress of the agreement between businesses and can act as a go between to ease the process.
• Buyers are certain to receive goods they have payed for as it would be a breach of contract for the seller to not abide by the contract, which can lead to a legal process being encountered.
• Sellers are protected against non-payment from the buyer because if the buyer does not abide by the contract and the bank does not cover up the payments, this can be a breach of contract.