Tapping into New International Markets: Opportunities and Challenges for SMEs

This report analyzes the expansion of a select organization into new international markets, specifically the Philippines. It includes a critical analysis of the global business environment, opportunities and challenges for SMEs, and evaluation of trading blocs and agreements. The report also provides recommendations for appropriate methods and countries to meet specific business requirements.

Tapping into new
international markets

Table of Contents
Tapping into new international markets..........................................................................................1
Introduction......................................................................................................................................3
Part 1................................................................................................................................................3
Introduction to the chosen country and region............................................................................3
A critical analysis of the global business environment and the influence of key globaldrivers
specifically in relation to the chosen country..............................................................................4
Discuss the rationale for SMEs to expand their business internationally...................................5
Critically analyse the opportunities and challenges for global growth.......................................6
Evaluate a range of trading blocs and agreements and examine the advantages of specific
trading agreements that would have a direct significance for your region and country.............7
Critically evaluate how these stimulate and generate global growth..........................................8
Part 2................................................................................................................................................9
Advantages and disadvantages of the different types of exporting processes for exporting
merchandising and services.........................................................................................................9
The documentation that is required e.g. letter of credit, packing list, commercial invoice,
terms of payment, customs document.......................................................................................10
An evaluation of the different methods of tapping into new international markets, including its
limitations and benefits.............................................................................................................10
Different methods of tapping into new international markets:.................................................10
Justified recommendations on appropriate methods and countries to meet specific business
requirements..............................................................................................................................11
REFERENCES..............................................................................................................................12

Introduction
Tapping in new international markets can be very helpful in the process pf massive
undertaking that can help in the process of developing huge opportunity for business. It helps in
the process of achievement of higher market share as there can be new market share which can
be approached easily that helps in the process of expansion of the present productivity and
profitability of the business (Samiee and Chirapanda, 2019). Present report is based on analysing
the expansion of the select organisation into some new market region here they are not having
presence. The selected region is south east Asia and the selected country is Philippines.
Part 1
Introduction to the chosen country and region
Present report is based on Davison canners limited that is having its location across UK
and is part of fruits & vegetable preserving speciality food manufacturing industry. It is presently
having a workforce of 108 employees at this location and they are generation approx 16.26
million dollar sales. The main history behind Davison canners is that Davison family had grown
and harvested their first crop of Irish bramely apples (Vendrell-Herrero, Darko and Ghauri, ,
2019). Through the last four decades there is growth to meet the changing needs of customers
who have diversified to stay ahead of these trends. Presently the SME brand is willing to expand
its presence in the regions of south east Asia that is in Philippines. Philippines is the the island
country of south east Asia it is situated in western pacific ocean that includes 7,640 island and is
also broadly categorized across three main geophysical locations that is ranging from north to
south.
It is bounded by the south china sea to the west. It covers a area of 300,000 km and in
year 2020 the population is around 109 million people that is making it the worlds twelfth most
populous country. In the present scenario Davison canners is having a opportunity of market
expansion as Philippines is a emerging market and is also a newly industrialised country that is a
economy of transitioning from being based on the agriculture to more on manufacturing and
services. Further it is also a founding member if u8nites nations. Association of south east Asian
nations and world trade organisation (Assadinia, Boso,, Hultman and Robson, 2019). The
country has a variety of natural resources and a significant level of biodiversity that can help the
SME brand in having successful business expansion.

A critical analysis of the global business environment and the influence of key globaldrivers
specifically in relation to the chosen country
A global business is an organization that conducts its business operation such as factories
and distribution centres in many countries around the world. In context of it is essential for them
to understand the environment of the Philippines before they transform their organization into a
global business (Addicott 2020). To understand the environment PESTLE analysis is utilized and
elaborated below:
Political:
The Philippines has a fairly stable economy and is also an active member of the UN. In
context to Davison Canners, it is a suitable region to expand their business as the organization
will face no hindrances from the political environment of the country.
Economical:
The Philippines is an ideal country to invest into due to its low business set-up cost,
strategic location and availability of effective workforce. In context to Davison Canners, the
economy of the county is ideal for them to expand their operations within the country.
Social:
The country has an educated, highly trainable and efficient English speaking workforces
which makes it attractive for foreign companies. In context to Davison Canners, their expansion
into the country will provide them with an effective workforce at low-cost.
Technological:
The Philippines is tech-savvy and has made rapid progress over the years in terms of
technology and innovation (Caliendo, Monte and Rossi-Hansberg, 2018). In context to Davison
Canners, the expansion of their operation into the county will give them the opportunity to use
the technological resources offered by the Philippines.
Legal:
The legal laws relative to hiring employees are not complex and provide assistance in
hiring, firing, work hours and overall employee benefit. In context to Davison Canners, it is ideal
to expanding their business in the country as they will not face any legal issues while hiring
employees for their organization (Alembakis ., 2019).
Environmental:

The Philippines has rich environment with various flora and fauna but faces
environmental challenges such as earthquakes, typhoons and volcanic eruptions. In context to
Davison Canners, this can cause damage to their business facilities and overalls revenue of the
organization if they face damages from such events.
Discussing key global-drivers:
Global-drivers refers to the reduction of barriers relative to internation trade. It includes
factors such as increase in consumer demand, lowered cost of shipping and production and
terotechnological advancement within globalization (Pelton ., 2019). Given below are a few key
global-drivers that can influence canner to expand their business to the Philippines:
Strong work-force:
The country has an effective and efficient workforce which is a key global-driver for
Davison Canner to expand their business to the Philippines.
Favourable economic setting:
It has a stable economy which is attractive for the business opportunities relative to
Davison Canners to generate high revenue by operating in the Philippines.
Openness of new ideas and opportunities
The country is short-term oriented will make it easy for Davison Canners to introduce
new products in the market if they expand their business in the Philippines.
Domestic and regional market opportunities:
The country is consumer-driven with over 90 million people. This makes aspect makes it
a key global-driver for Davison Canners to venture into the country to increase their customer
base and market share.
Discuss the rationale for SMEs to expand their business internationally
For the purpose of business expansion in international markets it becomes very important
to understand the rationale because of which SME are willing to expand themes. Such type of
rationale is mentioned below:
Enhancing of revenue potential: While business organisations have exhausted the growing
opportunities they are willing to convert the global expansion that can help in the growth of
business (Follesdal, 2017). It can help in turning if the chances to explore the markets and further
gain accessibility to million of customers in order to have higher profitability.

Entry in new markets: In Davison canners this process can help in the context of exploring of
developed markets and then analysing the level of success and expansion opportunities. The
advanced technology can help in the process of having the requisite amount of success.
Expansion helps in the process of diversification: In case of various SME organisation there is
exposure to market changes. Taking the business to international level helps in having stability in
revenue (Pattnaik, Singh and Gaur, 2021). It also leads towards dealing with the uncertainties
that are occurring because of slower economic growth.
Greater accessibility to talent: Another benefit of going global business is that there can be
accessibility to the greater talent pool. When SME business organisation are expanding across
international markets it helps in the process of having employees who belong to diverse
educational backgrounds.
Improvement in the present brands reputation: One of the main reasons of global expansion is
to offer reliable services to international clients. In case of Davison canners the main aim of
global expansion is that there will be attraction of new customer base that will lead the brand
towards getting the required brand recognition and further establishment of international
credibility (Guercini and Milanesi, 2018).
Importance of E commerce and regulations faced by SME:
Cyber security: In SME organisations cyber security is sued for protecting data and networks
from unauthorized access. It also help to improvement information security & business
continuity management. In SME it also leads towards improvement of stakeholder confidence in
the process of security arrangements.
Data protection: It is a tool that helps in the process of maintaining the records of information.
It leads towards maintaining of records and protecting the data so that it does not gets leaked. In
SME it leads towards easier business process automation. Whether it is data processing there are
numerous advantages that are gains by following of GDPR that leads to higher credibility and
trust.
Critically analyse the opportunities and challenges for global growth.
Opportunities:
while expanding across new global markets there are several opportunities that are offered to
SME brands as mentioned below:

Entry to new markets: For SEM organisations it helps in the process of having accessibility to
higher market share. It leads to potential of building up a new customer base. For Davison
canners the expansion to Philippines will help in the process of having accessibility to untapped
markets quickly.
Access to local talent: In Davison canners while the brand is willing to expand itself across new
borders there can be specialised talent that can help in having accessibility to pool of potential
employees and unique skill sets. There can be local talent with the skills that helps in having
edge over the competition.
Enhanced business growth: One of the biggest opportunity for Davison canners in this process
of tapping in new markets will be to extend across global foot print that is connect with new
audiences that can help in further expansion.
Challenges of global growth:
Apart from the opportunities there are many associated challenges which posses a impact on the
present growth of business to approach the new markets:
Cost of expansion: While a organisation is planning its long term expansion it is important to
test the external environment to prepare for understand the associated cost with the overall
expansion process.
Compliance risk: For the purpose of entering in new market it becomes important to understand
the risk factors (Mauri, Song and Neiva de Figueiredo, 2017). For Davison canners it becomes
important to understand the regulations that are different in Philippines.
Evaluate a range of trading blocs and agreements and examine the advantages of specific trading
agreements that would have a direct significance for your region and country.
There are variety of different ways that can be used by countries for the purpose of
protection of domestic economies from competition. One of them in through use of trading blocs.
A trading bloc is a type of intergovernmental agreement that is part of regional
intergovernmental organisation. In this regional barriers are part of international trade that is to
be managed or reduced by the SME organisation who is willing to expand across other
international borders.
Types of trading bloc:
There are different types of trading bloc as mentioned below:

Preferential trade area: It exist when countries in a specific geographic region agree to
eliminate or reduce the tariff barriers on specific goods imported from other members of the area.
Free trade area: It is created when two or more countries in a region are agreeing to eliminate
the barriers to trade on goods coming from other members.
Customs union: It involves the removal of tariff barriers of members and acceptance of a
common external tariff against non members.
Common market: It is the important step towards having economic integration that takes place
when members countries are willing to freely trade across all economic resources and not just
tangible products.
Approaches of international trade: International trade theories are the ones that are different
from international trade.
Mercantilism theory: It is one of the earliest theories that is related to the aspect that country's
wealth is determined by the amount of its silver and gold holdings. The objective of this country
was was to have trade surplus and to avoid trade deficit where value of imports is less than value
of exports.
In year 2015, there are negotiations for EU Philippines trade & investment agreement was
launched in the year 2015 in December. The main focus was to formulate a agreement that
covers various broad range of issues that includes tariffs. Trade aspects of public procurement,
competition, sustainable development, and intellectual property.
In Philippines being one of the 10 members of the association of south-east Asian nations and the
fifth largest economy region in terms of GDP and is also the European unions 7th largest trading
partner. The country is EU third largest trading partner after china and united states. The ASEAN
region is the dynamic market having approx 640 million customer and there is a population of
100 million Philippines is the regarded as the second largest market in ASEAN. EU co-operates
closely with ASEAN as a whole. Co-operation is maintained that includes discussion on
investment and trade issues ate senior economic official and ministerial level. For Davison
canners there will be a better accessibility to EU exporters that will be a property for EU.
Negotiations for region to region trade & investment agreement was launched in year 2007 and
there has been a mutual agreement in 2008 that was part of bilateral format of negotiations (The
Philippines, 2020).
Advantages of specific trading agreements:

In the presents scenario for Davison canners in the process of international expansion of brand
free trade agreements are playing a very important part in the greater economic activity. It is also
helping in the process of delivering of opportunity (Majocchi and et.al., 2018). There is regional
economic integration and also formation of shared approaches towards investment and trade
between trading partners and Australia.
Free trade agreements and trading blocs are helping SME organizationals in having proper
businesses to business links that helps in enhancing the present bilateral business relations.
Trade risk diversification: In presents scenario for Davison canners the various trading
agreements of Philippines will help in hedging the unfavourable consequences on national nd
global trade that may take place because of geopolitical turmoil. That is oil crisis after Iran
Imbroglio (The Philippines, 2020).
Innovation and competition: There is better market integration and enhancement of competition
that helps industry in moving towards innovation for benefiting the customers in long run.
Tariff reduction: when there are trading agreements it helps in the process of managing overall
tariff rates and there is accessibility to market by having lower tariffs that provides competitive
final prices for exporters of the parent country.
Critically evaluate how these stimulate and generate global growth
In present scenario there are various regional trade agreements that is taking place
between two or more partners. There are different countries that are facilitating this movement of
product and services.
Economic integration: It helps in the process of global growth as there is economic integration
arrangements that is part of economic union. Economic union eliminates various international
barriers and are also adopting external barriers, there is permit of free movement of resources
and adoption of common set of economic policies. Such as all the countries that are part of
European union who are following a same currency and also pursuing one monetary policy &
trade that leads to simplification of the trading process.
Considerations to be made while expanding across international markets:

Legal considerations: There are some of the legal considerations that have to be taken into
consideration for the the purpose of expanding across international borders. It is important for
organisations to focus on legal aspects such as intellectual property rights. It also includes
trademark, patent rights that is required to be considered.
International regulations: There are certain international regulations that include data
protection laws. There are also certain essential requirements that vary from country to country
& other industries. There are also employment laws that are required to be abide that may
include laws of entry into market. International trade compliance is associated with laws that are
part of International PEO that is professional employer organisation. There are other intellectual
property rights that are required to be followed.
Part 2
Advantages and disadvantages of the different types of exporting processes for exporting
merchandising and services.
Exporting is a process that is to be used for the purpose of sending and carrying of goods
it is part of sales and trade. It is the simplest & widely used mode of entering the foreign
markets. There are different types of exporting methods that includes indirect exporting and
direct exporting.
Indirect exporting: It is exporting of products in original form or modified medium from one
foreign country to other domestic country.
Direct exporting: It is the selling of products in foreign country that is done directly through
distribution of arrangements that is through host country's brand.
While a organisation is willing to expand across various international borders by use of exporting
as a technique there are associated advantages and disadvantage as mentioned below:
Advantages of exporting:
The brand can significantly expand the markets by being less dependent on one single market.
There will be greater production that can help in having better economies of scale and also better
profitability margins.
Reduction of vulnerability: Exporting is a aspect that is related with leading with unfavourable
aspects that may effect the operations (Ko, 2019). If the overall economic conditions may

became unfavourable then it can affect the operations as it may be very difficult to expand the
business across foreign markets. When there are proper exporting aspects there will be timely
dealing with the vulnerable fluctuations in the market.
The documentation that is required e.g. letter of credit, packing list, commercial invoice, terms of
payment, customs document.
There are some of the important documentation which has been discussed such as:
 Letter of credit: Letter of Credit is a type of document that guarantee the buyers
payments to the sellers. This is mainly issues by the bank and ensures full payments to
the sellers.if the buyers is unable to make payments as the bank covers full of the
remaining behalf of buyers. The importance of letter of credit where nature of
international trade includes factors such as distances, different laws in each and lack of
personal contact during international trade letter a credit make a reliable payment
mechanism.
 Packaging list: this is also counted as document which used at the time of commencing
international business. This provide exporter international freight forwarder and ultimate
with detailed information of shipment. The main objective of packing list of shipping
documentation that is use within international trade. It contain information about the
content to the exported goods.
 Commercial invoice: This is legal documentation that assort for processing agreements
in international trade. It is having legal legitimate and holds no standard format about the
sellers which can issue the document to the buyer importer once the good are shipped. It
is also part of export and import documentation and might be used through custom duties
authorities to assess effective applicable taxes and duties.
An evaluation of the different methods of tapping into new international markets, including its
limitations and benefits
Different methods of tapping into new international markets:
For the purpose of entering into new international markets it becomes important to analyse the
various marketing strategies that can be used in the present scenario for the purpose of market
expansion:

Licensing: It is a method in which there can be use of property of another business in the target
country. This method may be used by organisation for the purpose of enter into new markets. It
has a benefit that there is requirement of less investment that leads to possibility of offering high
return on investment (Giudici and Rolbina, 2018) . In this method it is the responsibility of
licensee to be conscious about the expenses , manufacturing after entry.
Franchising: It is also one of the market entry that is gaining more popularity in the present
scenario. It is one of the most aspects that differ from each other and the rules for franchisee are
engaged in the business to be more rigours.
Joint venture: It is a method in which two independent brands are merging together for the
purpose of creation of a third independent company. It is a method in which the organisation that
is willing to expand itself in the international borders have to form the merger and joint venture
with the existing brand in the host country.
Foreign direct investment: It is a market entry strategy that is used by many organisations when
there is direct investment for facilities that the organisation is willing to conquer. This method
may lead to lot of requirement of capital for covering of different cost. It usually occurs when the
investigator in foreign corporation is developing foreign business operations or acquires some
foreign business properties.
Exporting: It is also a method that is regarded as one of the methods for entering into foreign
markets having lower risks. In this method there is investment in facilitates located in the
selected country that is being targeted by the organisation, in this there is production in domestic
country there is chance of boosting of transportation costs.
Justified recommendations on appropriate methods and countries to meet specific business
requirements.
In the present scenario the most suitable method that can be used by Davison canners for
the purpose of expanding in the new markets is use of exporting as technique of connecting and
approaching new market share. The requirement which essential to arrange by Davison Canners
that employees, investments, market scope and opportunities. By suggesting one of source of
funding that makes more help to create better business expansion within international market.
Thus, Davison Canners would get help to also attain more competitive advantages.
Exporting is a process in which there is direct sales of products and services across other
country. It is one of the best known methods that is associated with low risk. In Davison canners

there can be entry into foreign market that is selected country Philippines (Baláž, Zábojník and
Harvánek, 2019). There is involvement of other parties that includes importer, business,
transport provider and government of other countries.
Advantages Disadvantages
 There is diversified market
opportunities so that if the domestic
economy begins to falter, this would
along to make better good and services.
 Better expanding life cycle of mature
product.
 There is cost of doing export business
where it involves greater initial outlay
before profit begins towards flow. In
small exporting firm cannot arrange in
adequate manner.
 Direct exporting involves many risks
that related to credits, financing,
collection, rejected merchandise after
sales services.
As the Davison Canners company would require to measure the market external factors
of Philippines market. This is essential for Davison Canners company can easily trade in
international market. Political, Economical and social factors scope along with competitors
performance within Philippines country. All these factors would help to Davison Canners
company to sustain in market as well as it will raise the sustainability to generate business
effectively.

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Online

The Philippines, 2020 [online], Available through<https://ec.europa.eu/trade/policy/countries-
and-regions/countries/philippines/>