Tapping into New and International Markets

This article discusses the opportunities and challenges for SMEs in the UK to expand their business internationally and tap into new and international markets. It explores the influence of key global drivers such as rule of law, government size, regulatory efficiency, and open markets. The article also highlights the advantages of specific trading agreements and the opportunities and challenges for global growth.

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TAPPING INTO NEW AND INTERNATIONAL MARKETS
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Introduction
The UK is one of the largest players in the international trade. According to World Bank,
trade accounted for sixty two percent of its Growth Domestic Product in the year 2017.
United Kingdom is the sixth biggest importer of commercial services, the world’s second
largest exporter of goods. The United Kingdom imports majorly transport and machinery
equipment, manufacturing products, chemicals, food, fuels, live animals, beverages and crude
materials. The country’s major exports are similar in nature as its imports. United Kingdom’s
major partners in export include Germany, the United States, France, Ireland and
Netherlands.
The major suppliers for the UK include China, the United States, the Netherlands, and
France. United Kingdom possesses a structural deficit in trade even as it takes pleasure in a
big surplus in the sector of services. Based on World Bank data, the United Kingdom
recorded a deficit in trade in the year 2017 amounting to thirty six thousand six hundred and
fifty nine million US dollars. The accumulated deficit in trade extended GBP 8.4 to GBP 32.3
billion during the year 2017 and 2018, because of a GBP 7.2 billion intensification in imports
of services. The deficit in trade of goods broadened GBP 1.8 million, getting to GBP 138.8
billion. In the year 2018 goods, exports elevated by 3.3 percent contrasted to 2017 and import
goods went up by 2.7 percent (Clarke, N., Barnett, C., Cloke, P. and Malpass, A., 2007,
pp583). The United Kingdom is located in the European region. The country enjoys regional
trade with its neighboring countries in Europe. Such regional trade are conducted through
trade blocks such as the European Union and the United Nations Trade and Development
organization.
Analysis of Global Business Environment
Notwithstanding the unique economic challenges and the current global economic turmoil
presently encountered by Europe, the United Kingdom environment of business continues to

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be open for business, forward looking and positive. The government of UK is devoted to
establishing a business environment that is supportive, which will foster economic recovery
that is private sector led. Currently, the United Kingdom is one of the world’s top ten
manufacturers (6 of the world’s top ten vehicle makers are located in the United Kingdom)
and the world's biggest economy (BARTLETT, C. and BEAMISH, P, 2011, pp15). United
Kingdom is the 6th biggest trading country and also the world’s 2nd biggest exporter of
services after the United States. The county continues to be the most appealing location in
Europe for European headquarters: majority of the oversees organizations have European
headquarters in the United Kingdom compared to Germany and France put together. The
United Kingdom is the simplest location to run and set up a business in Europe. A study
conducted by World Bank notes that it takes thirteen days to establish a business in the
United Kingdom, contrasting to the average of fifteen days of the OECD. Moreover, the
UK’s growth plan cuts through regulation and corporate tax rates, making United Kingdom
the best location in Europe to initiate and develop a business, create a more flexible and
educated workforce and encourage investment and exports. The United Kingdom is focused
in attracting entrepreneurs and investors by offering an environment that is competitive. UK’s
growth plan (developing skills, cutting corporate tax rates, cutting regulation, investing in
infrastructure and reducing the burden for planning) is about offering a platform that is
competitive.
The tech cluster of East London referred as “Tech City” is a home of one of the biggest
focusses of fast growing, small digital organizations in Europe, and the growth of this
technology hub is a major concern for the United Kingdom authorities. UK was home to
fifteen high technology organizations in July 2008: currently, it accommodates over five
hundred companies. The United Kingdom Investment and Trade created the Tech City
Organization to assist take this effort ahead.

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Green companies are at the front position for the United Kingdom initiatives for the
development of the government. The country has a clear lead in the growth of offshore wind
and is a leading global player in wind energy (GIOELI, A, 2014, pp34) Markets that are key
in the United States for United Kingdom organizations that function in this field are presently
the East Coast, the Midwest and Texas. There is a stressing on the improvement of public
transit and rail to the uppermost probable standards: the capital spending in fast-speed urban
systems and rail in the United States, flowing from the growth in passenger services and
stimulus support in services of passengers. The UK has established important opportunities
for the capability of United Kingdom as the industry strives for better value for money and as
it seeks to become more effective. Prospects are exhibited in professional and financial
services, low-carbon solutions, cost consulting, engineering design and operators.
Influence of Key Global Drivers in the United Kingdom
Rule of Law
Private contracts and property rights are very secure in the UK, though the fees linked with
the implementation of contracts were elevated in the year 2018. United Kingdom court
system is independent and efficient. Moreover, UK’s rule of law is well developed, and the
World Economic Forum’s 2017-2018 Report for Global Competitiveness positioned the
United Kingdom eighth out of one hundred and thirty seven. Secluded examples of
corruption and bribery come about in the UK but are vigorously prosecuted.
Government Size
Forty-five percent is the highest rate of income tax, while twenty percent is the highest rate of
corporate tax. Other taxes include environment and value added tax. The general burden of
tax is equal to thirty three percent of the accumulated domestic income. In the past 3 years,
the spending of the government has rose to 41% of the nation’s Growth Domestic Product
Output and deficits of budget were around 3% of the Growth Domestic Product (Greenaway,

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D., Hine, R. and Milner, C., 2015, pp13). The country’s Public debt is equal to eighty seven
percent of the Growth Domestic Product.
Regulatory Efficiency
UK’s regulatory atmosphere is transparent and efficient. Beginning a business in the United
Kingdom consumes less than a week. The labor market is comparatively efficient, and
bankruptcy proceedings are direct. The authority keeps several controls on price for instance
partial controls of prescription drug prices and regulated rates for most utilities, and is
possible to improve present subsides of agriculture after Brexit.
Open Markets
United Kingdom has an accumulated value of imports and exports that is equivalent to 62 %
of the Growth Domestic Product. Two percent is the average applied rate of tariff. Some of
the European Union focused non-tariff trade obstacles including product-specific and
technical subsidies, regulations and quotas can be removed or adjusted after Brexit. A
financial sector that is well-developed continues to supplement one of the of the most
effective environments of investment in the World (Krasner, S.D., 2016, pp88)
Rationale for SMEs to Expand their Business Internationally
New Markets
For many organizations, global expansion provides an opportunity to reach more of
consumers and overcome new grounds, thus intensifying the sales. With the opening of
international markets, United Kingdom will be able to get more customers for their goods
thus leading to increased sales. International markets also make the Small Micro-Enterprises
to expand since with the new markets the SMEs are forced to produce more to sustain the
increasing demand by the international market. UK’s SMEs will also benefit from the goods
being imported to the county through the international trade.
Diversification
Several SMEs in the United Kingdom extend globally to broaden their assets, an act that can

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safeguard an organization’s bottom line against events that are unforeseen. Organizations
with global operations can counteract negative development in one market by functioning
effectively in another. SMEs in the United Kingdom can use global markets to make known
new services and products that can assist preserve a revenue stream that is positive.
Access To Talent
United Kingdom SMEs will profit from global trade through the opportunity to get access to
new pools of talent. In a number of instances, global trade can provide SMEs with
exceptional benefits in form of advanced language skills, increased productivity, diverse
educational backgrounds and more. Furthermore, global trade can also enhance the output on
innovation within the SMEs.
Foreign Investment Prospects
United Kingdom SMEs are also able to benefit from the extra opportunities of investment
that are provided by the foreign markets (Greenhalgh, C., 2013, pp105). For example, several
SMEs are able to forge significant connections and establish new resources through running
in the international markets. SMEs in the United Kingdom with operations that are
multinational can profit from investment opportunities that are lucrative that may be lacking
in the United Kingdom. For instance, many authorities around the globe provide incentives
for SMEs pursuing to capitalize in the region.
Competitive Advantage
SMEs in the United Kingdom also opt for international markets to get a competitive
advantage over their adversaries. For instance, SMEs that extend in markets where their
contenders do not function frequently have a first mover benefit that enables them to establish
robust awareness of brand with customers before their contenders. Global expansion can also
assist SMEs in the United Kingdom to obtain access to modern industry ecosystems and
technologies that can substantially enhance their processes.

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Opportunities and Challenges for Global Growth
Opportunities
The export market of the United Kingdom was valued at three hundred and six billion dollars
in the year 2016. The United Kingdom exported twenty five billion Euros worth of services
and products in August 2017 alone. Only a small percentage of are taking advantage of
opportunities of global trade. Achievement in global markets is a crucial element of the
United Kingdom authority’s plan of economic recovery. Studies indicate that SMEs that trade
internationally are more productive, profitable and more innovative than SMEs that do not
Involve in the trade. Apart from exporting and importing goods to international markets,
some of the most important prospects can be found in the supply chain. International trade
makes it possible for SMEs to get external partners contacts, which assist the SMEs to
improve productivity, reduce costs and find new markets.
Challenges
Present concerns concerning international trade concentrate both on sections where
international trade rules subsist but where moderate global competition is obstructed by
persisting state support and high barriers. Distortions in markets continue to be central in
crucial areas of international trade. Agricultural products tariffs are around 3 times greater
than subsides for industries. Furthermore, as technology is transforming how and what SMEs
trade on. New technology is bringing forth new concerns for the rules on global trade. From
the intensifying a distinct line between services and goods between methods of supply of a
service, to modern matters associated to 3D printing, smart products and data flows, there are
demands for up-to-date discussions on international trade that led by technology.
Trade Agreements
The United Kingdom takes part in the arrangements of free trade of the European Free Trade

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Association (EFTA) and the European Union (European Union). The UK is a participant of
the World Trade Organization. As a member of the European Union, the United Kingdom is
inevitably part of about forty agreements of trade, which the European Union has with more
than seventy nations (Gruber, W., Mehta, D. and Vernon, R., 2017, pp20). Currently, has
made “continuity” trade agreements with ten regions and nations. These countries and
regions include Norway and Iceland, Andrean countries, Caribbean Countries, Israel,
Switzerland, Pacific Islands, Palestinian Authority, the Faroe Islands, Chile, Eastern and
Southern Africa.
Trade Blocks
In the past forty-four years, the United Kingdom has depended on the European Union to
reach out for deals of trade, however, the bloc has effectively acquired thirty-six agreement of
trade for it member countries, traversing more than sixty nations. United Kingdom also
possesses trade blocs with the OECD, World Trade Organization and United Nations Trade
Development.
Advantages of Specific Trading Agreements
Undertaking trade with the EU nations provides several crucial advantages to United
Kingdom businesses. The European Union’s countries comprise of the world’s most
productive and wealthiest nations. The European Union is a big market in which to sell
services and goods (Goldstein, M. and Khan, M.S., 2014, pp1044) is easy. Moreover, the
trading bloc also provides the United Kingdom to access big source of suppliers. At the
center of the European Union trade bloc is the single market. This is program of loosening
the trade of services and goods and the transfer of individuals between the European Union
nations. There are a number of advantages that the SMEs in the United Kingdom acquire
through trading within the European Union. The goal is that undertaking business with
European Union nations should become progressively like undertaking business within the

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United Kingdom. There exists several methods, which countries in the European Union have
initiated to make it easier to trade with each other. This includes minimized paperwork and
bureaucracy for example; international trade with the European Union can be registered on
UK’s Value Added Form in a similar way as UK’s purchases and sales. Standards that are
harmonized is another benefit that is realized with the European Union trade block- European
Union broad safety and technical standards makes certain that if any country is able to cope
up with the standards of United Kingdom then it will have met the other European nations
standards. Movement of individuals becomes easy with the European Union trade block since
citizens of the United Kingdom have the right to live, travel and work in any country that has
a membership in the European Union. Citizens of with a membership in the European Union
are also granted the right to work freely in the United Kingdom (Hijzen, A., Görg, H. and
Hine, R.C., 2015, pp17). With the introduction of the euro as the medium of exchange has
minimized currency contemplations experienced by SMEs undertaking international trade
using the euros between countries of the Eurozone. Other advantages of European Union
trading block include removal of trade barriers, greater business costs, reduction of business
costs, elimination of anti-competitive practices such as cartels and monopolies and greater
competition in services, which is ideal for consumers and services.
Evaluation of the European Union Trade Block Stimulate and Generate Global Growth
Wide-based growth of the economy is key for socially –inclusive development and long-term
sustainability of the United Kingdom. The growth of the economy due to international trade
establishes opportunities of income required to lift people out of poverty and to raise the
living standard of the people of the United Kingdom. The EU activities focused at fostering
the growth of the economy in affiliate nations emphasizes on assistance for regional
economic integration, aid for trade, private sector development and public finance
macroeconomic evaluation.

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Through embracing a strategy based on private sector development and trade in sustenance of
growth of the economy, the European Union intends to utilize the great potential of the
private sector to establish jobs, with the principal objective of eliminating poverty through
socially –inclusive and sustainable development. Through this, the private sector will be
involved as a financing and implementing partner in the provision of the seventeen goals of
Sustainable Development focused at bring an end to poverty, tackling climate change by
2030 and fighting injustice and inequality. European Union dealings that enhance growth of
the economy through support for regional economic integration and private sector and trade
development, effectively complement the dealings by the European Union development
partners and Member States. These dealings focusses the establishment of enhanced
controlling environments in partner nations, access to finance and business development,
with a specific concentration on job-establishing small, medium and small sized businesses
Advantages and Disadvantages of Different Types of Exporting Processes
Advantages
The advantages of exporting to international markets include greater production that can lead
to better margins and huge economies of scale, The United Kingdom could substantially
broaden its markets, making it less reliant on a specific one and United Kingdom budget
could work tougher since it can alter the current goods to match modern markets.
Disadvantages
The disadvantages of international trade to the United Kingdom include losing concentration
on its existing customers and home markets, intensification of costs may upsurge as the
United Kingdom may have to deal with regulations of export when trading outside the EU,
the hardship of controlling relations that are more remote, that are normally a big distance a
away. The other challenge in the exporting processes of the United Kingdom is the
requirement to contemplate the new market contrarily to the home markets in the United

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Kingdom (PENG, M ,2014, pp30). The United Kingdom will experience diverse customers
with their own explanations for purchasing the goods.
Documentation of Required for International Trade
In a transaction of international trade, there exists a time lag through conveying goods by the
exporter to the importer together with the transmission of payment by the importer to the
exporter. To safeguard both teams from counter party threats, several documents are initiated
and utilized that include bill of exchange, letter of credit, inspection of certificate, certificate
of origin of goods and bill of lading.
Methods of Tapping into New International Markets Including its Benefits and
Limitations.
Utilizations of Local Partner Networks
Online partner marketing is a well-established channel of sales for several businesses. Local
partner networks could prove helpful in the United Kingdom foreign market mix. With the
exception of huge international partner networks, there are several others functioning
exclusively within the regional market. Apart from increasing sales, the use of local partner
networks is crucial for establishing the UK’s brand.
Use of Social Media Platforms
Many SMEs in the United Kingdom profit largely from well-managed campaigns of social
media in both the domestic and International trade. Social media is advantageous to many
marketing and sales functions, including competitor analysis, market research, customer
service and CRM. Using local social media skills within an international market can assist the
United Kingdom evaluate the response of international market to the country’s foreign roll-
out and direct traffic to UK’s website that is localized (RUGMAN, A. and COLLINSON, S,
2012, pp78)
Recommendations on Appropriate Methods and Countries to Meet UK’s Business

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Requirements
The United Kingdom should create a “blended finance” authority fund for outward
investments belonging to the LIC (WALL, S. and MINOCHA, S, 2015, pp46). A blended
finance is a capital that is concessional created to take threats that are above the role of
institutional private sector financiers. Blended finance tools comprise of financing, not just
grants, and can be created to obtain a return. In the case of the United Kingdom, “blended
finance” would result in elevated investment, trade and increased jobs.
The United Kingdom can stabilize its presence in countries with low income. DFID offices,
UK embassies, and other activities of the UK government will provide priceless support for
the country’s international trade. The presence of the United Kingdom will assist in
aggravating risks that are not insured.
Foreign Trade
Indicators 2013 2014 2015 2016 2017
Imports of
Goods (million USD)
660,034 690,466 625,806 635,762 644,055
Exports of
Goods (million USD)
540,616 505,205 460,446 409,397 444,982
Imports of
Services (million
USD)
202,225 210,230 207,704 198,653 209,775
Exports of
Services (million
USD)
332,276 361,350 345,052 327,176 347,345
Imports of Goods
and
Services (Annual %
Change)
3.1 4.5 5.1 4.8 3.2
Exports of Goods
and
Services (Annual %
Change)
0.8 2.7 5.0 2.3 5.7
Imports of Goods
and Services (in %
of GDP)
31.7 30.3 29.1 30.3 31.9
Exports of Goods
and Services (in %
29.7 28.2 27.4 28.3 30.5

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Foreign Trade
Indicators 2013 2014 2015 2016 2017
of GDP)
Trade
Balance (million
USD)
-187,580 -202,469 -181,205 -182,916 -174,681
Trade Balance
(Including
Service) (million
USD)
-55,547 -60,566 -49,524 -55,093 -36,659
Foreign Trade (in
% of GDP)
61.4 58.5 56.5 58.6 62.5
Main Partner Countries
Main Customers
(% of Exports) 2016
United States 15.0%
Germany 10.6%
France 6.4%
Netherlands 6.2%
Ireland 5.6%
See More Countries 56.2%
Main Suppliers
(% of Imports) 2016
Germany 13.8%
China 9.4%
United States 9.0%
Netherlands 7.4%
France 5.6%
See More Countries 54.7%

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Main products
442.1 bn USD of products exported in 2017
Motor cars
and other
motor
vehicles
principally...
9.5%
Turbo-jets,
turbo-
propellers
and other
gas...
5.1%
Medicaments
consisting of
mixed or
unmixed...
4.6%
Petroleum
oils and oils
obtained
from
bituminous...
4.3%
Gold, incl.
gold plated
with
platinum,
unwrought...
3.9%
See More
Products
72.5%
641.3 bn USD of products imported in 2017
Motor cars
and other
motor
vehicles
principally...
6.9%
Gold, incl.
gold plated
with
platinum,
unwrought...
5.4%

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641.3 bn USD of products imported in 2017
Petroleum
oils and oils
obtained
from
bituminous...
3.2%
Turbo-jets,
turbo-
propellers
and other
gas...
3.2%
Transmission
apparatus for
radio-
telephony,...
2.9%
See More
Products
78.4%
Source: Comtrade, Latest Available Data
Main Services
327.4 bn USD of services exported in 2016
Other
business
services
27.36%
Financial
services
25.42%
Travel 12.74%
Transportation 10.75%
Computer and
information
services
7.88%
Insurance
services
7.30%
Royalties and
license fees
5.24%
Cultural and 1.50%

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327.4 bn USD of services exported in 2016
recreational
services
Government
services
1.06%
Construction
services
0.74%
205.5 bn USD of services imported in 2016
Travel 31.67%
Other
business
services
28.58%
Transportation 14.57%
Computer and
information
services
7.08%
Financial
services
6.99%
Royalties and
license fees
5.84%
Cultural and
recreational
services
2.34%
Government
services
2.09%
Construction
services
0.71%
Insurance
services
0.13%
Source: United Nations Statistics Division, Latest Available Data

Economics 17
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