Selling & Operating Globally (AQA A Level Business): Revision Note

Benefits of selling and operating globally

• Businesses can become more global in two distinct ways

  • By selling more of their existing products into overseas markets (exporting)

  • By operating, producing, staffing or basing part of the business abroad

• A business does not need to choose only one

  • Many businesses combine exporting with overseas operations as their global strategy develops

Why sell or operate globally?

• Selling globally (exporting or expanding international sales) allows a business to extend its customer base far beyond a saturated or slow-growing domestic market

• It can extend the life cycle of an established product by launching it into markets where demand is still emerging

Example

Costa Coffee has expanded rapidly into China, tapping into a large and fast-growing coffee-drinking market well beyond its original UK customer base

• Establishing actual production or operations abroad can significantly reduce costs by taking advantage of cheaper labour, land or materials in the host country

Example

Adidas manufactures a significant proportion of its footwear in Vietnam and Indonesia, taking advantage of lower labour costs to keep production competitive

• Operating within a target market, rather than only exporting to it, can also help a business avoid trade barriers

Example

Nissan built its Sunderland car factory in 1986, allowing it to manufacture vehicles directly within the UK and European market rather than importing them from Japan

In doing so Nissan avoided the tariffs and quotas that would otherwise have applied to Japanese car imports

• It can also respond faster to local customer needs and build closer relationships with local suppliers

Example

Aldi's UK operation sources the majority of its fresh produce directly from British farmers, rather than importing it

The retailer can respond quickly to local customer preferences and build close working relationships with domestic suppliers

Drawbacks of selling and operating globally

• Selling globally exposes a business to trade barriers, including tariffs

  • This can suddenly increase the cost of exporting and reduce profit margins

Example

Jaguar Land Rover faced significantly higher costs exporting UK-built vehicles to the United States in 2025, after new US tariffs on imported cars made shipments considerably more expensive and briefly disrupted deliveries

• Operating globally brings the added complexity of managing overseas operations

  • This includes unfamiliar regulations, different business cultures and consumer habits, which can lead to costly failure if not properly understood

Example

After years of losses, Walmart was forced to exit the German market in 2006, having failed to adapt its store format and pricing approach to local shopping habits and strong existing competition

Glocalisation

• Glocalisation means adapting a global product or brand to suit local tastes, culture or regulations in each individual market

  • It balances the benefits of a global brand and scale with local relevance

Advantages of glocalisation

Disadvantages of glocalisation

Attractiveness of global markets

Factors influencing the attractiveness of international markets

• When a business is deciding whether to move into a new country, it needs to determine whether it will support it in meeting its long-term strategic objectives

• Managers weigh up several key features of the target economy before committing time and money

Why international markets are attractive

Market size and growth rate

• Large populations with rising incomes, or smaller markets growing quickly, offer more potential customers and fast sales growth

Example

Nestlé has expanded its baby food and consumer goods sales significantly across Sub-Saharan Africa, drawn by rapid population growth and an expanding middle class

Economic and political stability

• Low inflation, steady government policies and the absence of conflict reduce the risk of sudden losses or business disruption

Example

Tesla has prioritised developed markets such as Germany and the United States for its major Gigafactories

It is attracted by strong consumer purchasing power, reliable infrastructure and stronger legal protection for intellectual property

Legal and regulatory environment

• Clear, business-friendly laws on property rights, taxes and product standards make it easier and cheaper to operate

Competitive intensity

• Entering a market with few strong rivals can be more attractive than trying to compete with established global brands

Cultural and consumer similarity

• When tastes, language and buying habits are similar to those at home, a business can adapt its product and marketing with less cost and risk

Example

Greggs' expansion into Northern Ireland required very little adaptation, since tastes, language and shopping habits are so similar to other areas of the UK, allowing it to use largely the same menu and store format

Quality of infrastructure

• Reliable transport, power, internet and supply networks cut delays and costs, helping a business meet customer demand efficiently

Why are different markets attractive to UK businesses?

• Market attractiveness is not a single, fixed measure, but depends on what a specific business is trying to achieve

United States

• The US is the world's largest economy

  • It offers an enormous and extremely wealthy consumer base

  • This is particularly attractive to businesses selling higher-value or premium products

• It shares a common business language and many similar consumer habits with the UK

  • This reduces the cost and complexity of adapting products or marketing

• It offers strong legal protection for intellectual property

  • This reduces the risk of a UK business's innovations being copied

• It has high levels of healthcare spending and a sophisticated research infrastructure

  • These factors make it particularly attractive for science-based UK businesses

Example

AstraZeneca generates a very significant share of its global revenue from the United States, attracted by the sheer size of the market, high levels of healthcare spending, and a strong environment for pharmaceutical research

India

• India is one of the largest and fastest-growing populations in the world

  • It offers enormous long-term market potential as incomes rise

• It has a rapidly expanding middle class with increasing disposable income

  • This creates growing demand for mobile technology, financial services and consumer goods

• English is very widely used in Indian business

  • This reduces language barriers compared with many other high-growth markets

• It has long-standing historical and trade links with the UK

  • This familiarity and existing business relationships help businesses entering the market to succeed

Example

Vodafone built a very large mobile network business in India through its joint venture, Vodafone Idea, attracted by the sheer scale and rapid growth of India's mobile phone market

Germany

• Germany is the largest economy in the European Union

  • It has high average disposable income and strong consumer purchasing power

• It is geographically close to the UK

  • This keeps transport costs and delivery times low and reduces logistical complexity compared to more distant markets

• German consumers value quality, engineering and innovative design

  • This closely matches the strengths of some key UK brands

• It has a broadly similar consumer protection standards to the UK

  • This reduces the cost of adapting products to comply with local laws

Example

Dyson has achieved strong sales in Germany, where consumers' preference for well-engineered, innovative technology closely matches Dyson's premium positioning, requiring relatively little adaptation to succeed