International trade occurs when there is exchange of goods and services across national boundary. It allows flows of economic resources – capital, labour, technology, and production to countries, as well as sharing knowledge and cultural values for the benefits of mankind and national and international marketing development. Tesco PLC is the UK’s largest retailer and has its presence in 12 countries all around the world. If the revenue and market share of Tesco is considered, it is the 3rd largest retailer in the world. In UK, Tesco has captured around 29% retail market and now it is expanding to overseas countries to exploit the benefits of the international trade.
The World Trade Organisation (WTO) is global international organization dealing with the rules of trade between nations. The goal is to help producers of goods and services, exporters, and importers conduct their business. WTO ensures that there are fair trading practices among partner countries across the globe and its work can be summarized as: ‘To stimulate economic growth and employment, cut the cost of doing business, internationally encourage good governance help countries develop, give the weak a stronger voice and support the environment and health’
Its functions are for example to:
As mentioned in the previous section, the emerging markets like India and China are now become the focus on Tesco and company is concentrated a lot in these markets because these markets have huge potential for growth. Although there are some protectionist policies of the overseas countries which tries to make sure that their local organisations also stay in the competition and no organisation from other country like Tesco dominate the home market. That is why there are FDI (Foreign Direct Investment) policies are being developed by the government of these countries which make sure that Tesco do not have the controlling share in a local organisation especially in the public sector.
The barriers to international trade through protectionism is being dismantle giving way to global trade, which benefits companies leading to world economic growth, better standard of living among nations. The international competitiveness among nations and multi-national companies in particular has created market opportunities, movements in technology and technical skills across national boundaries (Dolia, 2012). The Common Agriculture Policy (CAP) is the policy initiated by European Union to implements agricultural subsidies to farmers and landowners of the member countries. This policy impacted on UK agriculture and of recent this policy is criticized for preventing fair trading and competition among some member countries.
The EU policies which are related to the fair competition in the market have been incorporated by the UK government and the EU commission is making sure that the free market economy could be established 100%. The EU Competition policy has given the opportunity to the new small organisations to grow and find new methods in the business processes for the increased efficiency (Lee, 2006). Because of this, the innovation has become one tool which is now setting up the stage of exponential growth of the UK market and in the coming 10 years, the UK market would set an example for the rest of the world. Tesco is aware of this trend and that is why Tesco has already started its online e-commerce stores in many countries where people could order from the e-commerce websites and mobile application and receive the delivery of the products at their door step.
European Union competition policy regulation of competitiveness want to ensure that organisations do not create trade barriers through cartels and monopolies that would damage the economic interests of society (Moreno-Dodson, 2013).
Through the following activities, for example:
Some other policies of EU which have great impacts on the Tesco are:
Tesco has established its facilities in the EU countries where the cost of land and taxes are less and now company is exporting the labour from the other countries where labour is cheaper. The free movement of labour across the EU countries has made it easy for Tesco to reduce the production cost and improve the revenue and Customs Taxation of the organisation. It is also benefitting Tesco in providing the cheaper products with good quality to the people. France, Hungry and Poland are some examples where Tesco started its operations only because of the liberated EU policies and now company is making lots of profit from these markets.
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