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Unit 12 - International Dimension of Business Task 2

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Introduction

Task 2 For this new task, my focus will be on investigating the factors that influenced one of my two chosen businesses to develop an international business. Throughout this task I will also be outlining the strategic objectives of having an international presence, I will be explaining the theory of comparative advantage and I will be explaining the effectiveness of my chosen business's presence internationally. The business I have decided to choose to focus on in this task is British Airways and this is because it is a global business, it will therefore most likely give me more to explain and analyse compared to the European presence of RyanAir. Strategic Objectives I will now be thoroughly explaining some of the basic strategic objectives that many companies decided to use/work towards. From this, I will then choose some of the strategic objectives that relate to British Airways and why they have them. A strategic objective simply put is an objective that has important long term implications - involves using major resources and states a main objective to be worked towards (end result). Examples of strategic objectives are as followed below: Raising Profits and Market Share Out of all the reasons for wanting to expand onto the international scene, gaining higher profits and obtaining more market share are probably the most obvious. Put very simply, working in a multinational market as opposed to an individual country provides the opportunity of more customers - meaning the opportunity of more sales (turnover). Along with this, expanding internationally gives a business the opportunity to work in a more demanding and competitive market as they will not only be battling for the most market share of a market in e.g. - the UK, they will be competing for the most market in a specific continent and on a world scale market which is likely to increase efficiency and work productivity of workers. ...read more.

Middle

Taking all of this into consideration, allowing British Airways to work in their nations must have been a good decision because not only does it give people a wider selection to choose from, it also provides firms working in the same field a good reason to improve their quality and efficiency and not take consumers for granted which in the end, must be beneficial to the nation. The only negative I would point out that comes from allowing a business such as British Airways into a nation is the problem of pollution. Pollution is quickly becoming a world spread problem and it arises from things such as cars and planes. Allowing British Airways to operate in turn means more planes entering the country which would definitely add to the problem, fuelling criticism from environmentalists as to why they were ever allowed in in the first place. Employment and Development of New skills and Knowledge No matter how established the nation may be, there is not one country in the world where employment is 100% and thee is where the allowance of foreign businesses relate. The more companies that operate in a country, the more jobs available there will be and that is without a doubt one of the main attractions for host countries when allowing businesses from other countries to operate there. As I mentioned earlier, ultimately it is a decision the government must take to decide whether the introduction of a foreign business would benefit the country's economical state and whether it be the Prime Minister of the UK or President of USA etc. one of the main priorities of country leaders is to tackle unemployment issues and that is why it is so tempting for governments to allow businesses from outside the country to invest in operating and advertising themselves there as it is a brilliant and effective way of opening up new jobs and this would apply to British Airways. ...read more.

Conclusion

Just like I previously done, I will now produce a table to try and back up this theory will the help of Wikipedia. Year Profit/Lost Before Tax (�m) 2008 883 (32% UK) 2007 661 (29% UK) 2006 616 (31% UK) 2005 513 (29% UK) 2004 230 (32% UK) 2003 135 (36% UK) As can be seen on this table, here is the data regarding the profit made by British Airways from the years of 2003 to 2008. The success of British Airways between this time period is clear to see as their profits continually rise which is strange considering their number of passengers flown consistently declined from 2003 - 2007. Even though, the percentage of UK based passengers flown each year is identical to the percentage of profits British Airways gained from UK operations each year. So for example in the year of 2008, British Airways gained �883 million profit before tax and 32% of this amount came from UK flights which would come to just over �2821/2 million and despite this being a substantial amount, yet again most over the profits came from overseas operations and this would amount to roughly �6001/2 million. Just like I did so previously, I will now show a table consisting of BA's profits from UK operations, from overseas operations and the difference between the two which will determine the effectiveness of British Airway's international presence from the years of 2003 to 2008 in terms of profit. PTO for table YEAR OVERALL PROFIT PROFIT FROM UK FLIGHTS ( PROFIT FROM OVERSEAS FLIGHTS DIFFERENCE (effectiveness) (�m) 2008 �883m �282,560,000 �600,440,000 �317,880,000 2007 �661m �191,690,000 �469,310,000 �277,620,000 2006 �616m �190,960,000 �425,040,000 �234,080,000 2005 �513m �148,770,000 �364,230,000 �215,460,000 2004 �230m �73,600,000 �156,400,000 �82,800,000 2003 �135m �48,600,000 �86,400,000 �37,800,000 Total between 2003 - 2008 �3,038,000, 000 �936,180,000 �2,101,820, 000 �1,165,640, 000 As you can see by this table, the effectiveness of British Airways' international presence over the last 6 years has been extraordinary. As expected, most of British Airways overall profits come from their overseas operations. ...read more.

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