Tapping into New and International Markets: Critical Analysis of Global Business Environment and Opportunities for SMEs

TAPPING INTO NEW AND
INTERNATIONAL
MARKETS

Table of Contents
Table of Contents.......................................................................................................................2
INTRODUCTION....................................................................................................................3
PART 1......................................................................................................................................3
Critical analysis of global business environment and influence of key global drivers..........3
Rationale for SME to expand their business internationally..................................................5
Analysis of opportunities and challenges for global growth..................................................5
Range of trading blocs and agreements and advantage of specific trading agreements which
will have direct significance...................................................................................................6
Evaluation of the above and how these will stimulate and generate global growth..............8
PART 2......................................................................................................................................9
CONCLUSION.......................................................................................................................10
REFERENCES.......................................................................................................................12

INTRODUCTION
Internationalization is the process followed by business to expand their global
footprints across domestic market by understanding global consumer preferences and patterns
(What is internalization, 2021). The global corporate trend towards internationalization
develops the economy, interconnects different economies due to cross border commerce and
finance and also involves international transaction throughout the global market place. A
market that exists outside of a company's native country or operates in international borders
is referred to as an international market. Globalisation is the growth of interdependency of
world economy, culture and cross border transactions which will facilitate movements among
different countries (What is globalization, 2021). Monzo bank is an online bank based on
UK. Monzo bank was founded in 2015 by Jason Bates, Paul Rippon, Tom Blomfield, Jonas
Huckestein, and Gary Dolman in London, United Kingdom. The country chosen for this
report is Iceland of European region. This report will define the global business environment
in which business operates and will outline threats and opportunities. The project will also list
some advantages and of international trading and importing and exporting. Tariff and non-
tariff activities will be listed in the report which exist in international trading environment.
The study will also outline different methods which will help an SME business to operate in
international market with listing the benefits and drawbacks.
PART 1
Critical analysis of global business environment and influence of key global drivers
"Globalisation" is the term which defines the growing commercial and financial
interconnectedness of the global economy (Global business environment, 2019). By taking
part in global business environment, this can bring several advantages to a business which
can also create a negative impact on global companies. The global business industry
compromises of internal and external factors which involves various factors, such as-
political socio-cultural, economic, environmental, technological and legal factors.
PESTEL analysis
PESTEL analysis is an approach which is followed by companies to understand their
external business environment. In context of Monzo bank, the company will be expanding
their business in Iceland, the global business environment factors and key drivers of change
for the company is analysed with the help of PESTEL analysis which is discussed below:

Political factors- Political issues are important to consider when assessing the aspects
that may have an influence on Monzo Bank's long-term profitability in the free market.
Before entering Iceland's markets, Monzo Bank must assess political stability, amount of
corruption, bureaucracy, legislative framework, trade rules, pricing restrictions, preferred
trading partners, and other political aspects that will aid in comprehending the country's
political climate.
Economic factors- Inflation, savings, and foreign exchange rate, aggregate demand,
bank industry growth rate, consumer spending potential, interest rate government
intervention, infrastructure quality in banks industry, and labor skill level in banking industry
of the market in Iceland are all economic factors that Monzo bank must consider (Aluko,
Siwale and Simba, 2020). Such factors are responsible to create an impact on the stability and
operations of Monzo bank in the European marketplace.
Social factors- Societies culture, shared believes and attitudes of population plays a
crucial role in understanding the customers of the chosen market for Monzo bank. The social
factors which can bring change must be evaluated by Monzo bank, some of these factors are-
skill level of population, class structure, education level, culture and leisure interest. These
social factors can limit the operations and can also support business in successful expansion
into new markets which will be helpful in managing the profit margin of the company.
Technological factors- As technology is rapidly developing, this has been creating a
huge impact in driving change in business environment of companies operating at domestic
and global level. In case of Monzo bank, the company must understand some of the
technological factors which will help them in successful expansion of business in Iceland
(Cheah and Ho, 2019). The factors such as- impact on cost structure in banking institutes and
value chain structure in financial sector, pace of technological diffusion, and impact of
technology on product offering are some of the technological elements that must be
considered while expanding the business into the European market.
Environmental factors- Different environmental standards are responsible to create
an impact on the organization's profitability in a dynamic commercial environment. Some of
the environmental factors, such as- air and water pollution, weather, climate change, laws
regulating environmental pollution, regulation in the banking industry, waste management in
financial sectors, and attitude toward support for renewable energy are some of the
environmental factors that Monzo bank must consider before entering the European market in