Starter task:
What does ‘innovation’ and
‘diversification’ mean?
Changing business aims and
objectives II – Going international
GCSE Business studies
Unit 2
Topic 6
Learning objectives
I can discuss what ‘being an
International company’ might involve?
££ Am I able to identify the benefits of
becoming an International company?
£££ Can I evaluate how a firm might gain
more market share by going
International?
£
Recap from last lesson
What is innovation?
What is diversification?
Here are some text book
definitions…
Innovation
• Innovation is where a firm is constantly
trying to improve and develop its range of
products, staying at the forefront of
fashion, trends and technology
• For example, in industries such as
computers, new products are being
developed every few weeks.
Diversification
• Diversification occurs when a firm moves
into a new market. For example Mars
produces chocolate such as mars bars but
also make pet food (Pedigree chum).
• If there are problems in one market they
could be offset by gains in another.
Going
international
Going
international
Do you remember the fizz & burp
drinks co.?
Lets get in my time machine
and have a look at what they
are up to now…
The year is 2015…
Fizz & burp drinks
co. have been a
huge success &
now have a 23%
stake in the very
competitive UK
market
A very rich Robin Banks is looking
to grow his company even further,
but despite spending huge amounts
of money promoting his products,
Robin does not seem to be able to
increase his sales in a saturated UK
market. One of Robins managers
has recommended that he consider
expanding the business abroad.
What are the benefits of Fizz & burp going
international?
Stretch & Challenge: are there any
disadvantages to what you are
recommending?
Mr Goodacre’s ideas
• Additional potential customers
• Other countries markets may be growing
• Offers growth when further expansion in
the UK market becomes problematic (e.g.
Tesco monopoly on supermarkets)
• It may reduce risks. If there are problems
in one country you can still rely on sales
from another country
Using data
Robins manager has also estimated that
by ‘going international’, Fizz & burp could
have a growth rate of 25%
But what does ‘growth
rate’ mean and how do
you calculate it?
‘Growth rate’ looks at the
rate that sales are growing.
Let me explain…
• Imagine a business had sales of £200,000 and this
increases to £250,000.
• To find the growth rate we use:
The change in value
The original value
X 100
In this case:
(£250,000 - £200,000)
£200,000
X 100
=
X 100
£50,000
£200,000
= 25%
What would be the
growth rate if sales
increased from
£250,000 to
£300,000?
Remember…
• A company could export its products
Remember…
• Or ‘set up shop’ abroad
Individual task
• You are to write a memo to Robin advising
him on the possibility of Fizz & burp ‘going
international’
• Ensure you consider the pros and cons
• Calculate the potential growth rate if sales
could go from £450,000 to £625,000
• Ensure you tell him your judgment whether
or not it is a good idea