International Business

Unit 5: International Business

Topic C2: International Business Support Systems

Topic C.2: International Business Support Systems:

• The influence of the internet: e.g. speed and ease of communication, changes to business processes.​

• International payment methods e.g. cash in advance, open account consignment, international credit cards, international bank transfers, commercial payment systems. 

The influence of the internet

Trade all over the world in several different countries that may not have been accessible before.​ Promotion using websites and social media is constantly evolving allowing businesses to build their brand and attract new customers.​ Customers can purchase products 24/7 and reduces the need for a physical store.

The influence of the internet (Cont.)

Delivery for purchases online can be tracked​ Some products can be downloaded instantly e.g. books, games, music & films

Open Ended

Can you identify any other ways the internet has helped international businesses?

Multiple Select

Why is its important international businesses keep up to date with advancements in technology?

• To stay competitive?

• To help with profits?

• Improve the International Business Environment?

• To lose market share?

International Payment Methods

• Cash in advance systems

• Letters in advance

• Letters of credit

• ​ Open account

• Consignment 

• International credit cards

• International bank transfers, Commercial payment

CASH IN ADVANCE

Businesses pay by bank transfer in advance ​

This is required when payment is needed in advance to produce the goods​ It relies of high levels of trust​

Cash may be preferred by the supplier​

Cash in advance may be used to negotiate a better deal e.g. a lower unit price for agreeing to pay upfront

Open Ended

In your own words explain the term cash in advance.

You can use a real business example explain how they would use cash in advance to help them trade internationally.

OPEN ACCOUNT​

This is where goods are shipped and delivered by a supplier without receiving payment.​

Payments terms are normally agreed between the buyer and seller e.g. 30, 60 or 90 days​

The payment terms will normally depend on the relationship between the buyer and seller. e.g. how long the buyer has been a client, how many items order and their payment history (have they paid on time)​

Cash flows problems can occur if buyers do not pay on time

OPEN ACCOUNT (Cont.)

Exporters who do not give credit may lose sales and those offering open accounts are more likely to get sales​

There is high risk of customers not paying​

Political conditions in counties where goods are being sent can affect the open account offering due to the level of risk.

Multiple Choice

What is Open Account?

• This is where goods are shipped and delivered by a supplier without receiving payment.

• This is where goods are not shipped and delivered by a supplier without receiving payment.

Multiple Select

Tick the risks of Open Account!

• Cash flows problems can occur if buyers do not pay on time

• Exporters who do not give credit may lose sales and those offering open accounts are more likely to get sales

• There is high risk of customers not paying

• Political conditions in counties where goods are being sent can affect the open account offering – due to the level of risk.

CONSIGNMENT ​

Consignment is a type of open account​ Payment is sent after the goods have been sold to the customer.​

A contract is in place stating that the seller (supplier) is the legal owner until the goods have been sold to the customer.​

High level of risk as the distributor (business) looks after the goods until they are sold.​

Consignments help goods to be sold more quickly, the distributor stores the goods which can help reduce the supplier's storage costs and means goods can available to customers quicker.

INTERNATIONAL CREDIT CARD​

Businesses can use international credit cards which have different rates and benefits.​

Some cards are pre-paid which lowers the risk.​

Some cards have low fees when different currencies are used.​

Credit cards can provide additional protection for businesses trading overseas for example additional insurances, but these may come with extra charges.

Open Ended

In your own words explain the term international credit card:

INTERNATIONAL BANK TRANSFER

International bank transfers are secure ways to move money from one country to another.​

Businesses may choose to operate with international bank accounts to benefit from lower fees for transfers.​

International bank accounts can avoid changes in exchange rates affecting the business which makes planning easier.​

Sometimes only major currencies are accepted e.g. euro or dollar​ Banks may charge to receive money into another account even if it was free to send

Multiple Select

Tick the ones you think apply to International Bank Transfers:

• Are secure ways to move money from one country to another?

• Businesses may choose to operate with international bank accounts to benefit from lower fees for transfers.

• Banks may charge to receive money into another account even if it was free to send

• Consignment is a type of open account.

COMMERCIAL PAYMENT SYSTEMS​

These are systems that move payments from one country to another.​

Other systems that can be used overseas include Google Wallet, Apple Pay, Android Pay and BitCoin.

Research the following payment methods and create a mind map describe each of them and their advantages and disadvantages.​ In on 09/12/2020!

• Google Wallet​

• Apple Pay​

• Android Pay​

• BitCoin