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Table of Contents INTRODUCTION...........................................................................................................................4 TASK 1............................................................................................................................................4 P1 Global business environment in which SME business operate its functions.......................4 P2 Opportunities and Threats which are faced by SME in an competitive global business environment.................................................................................................................................6 TASK 2............................................................................................................................................7 P3 Determine and analyse advantage related with trading blocs and agreements.....................7 P4 Explanation of various tariff and non-tariff barrier related with international trading environment................................................................................................................................8 TASK 3............................................................................................................................................9 P5 Advantages and disadvantage of importing and exporting to ensure business deal..............9 P6) Explain the differences between merchandiser and service import and exports................11 TASK 4..........................................................................................................................................12 P7) Evaluate the various methods in which SME can tap into international market................12 P8) Compare and contrast the various ways SMEs can tap into international market, assessing the pros and cons of each method..............................................................................................13 CONCLUSION..............................................................................................................................15 REFERENCES..............................................................................................................................16
INTRODUCTION Globalisation provide platform to all organisation for performing and managing functions beyond the local market and it generate international market for each industry or sector. With sellingorganisationalproductorserviceinanothercountrymanagementintroducethe organisation to a huge market. This report is written from perspective of Smith brothers and they provide services in the energy sector and the recent focus of organisation is to establish their division within international market(Zhong and et. al., 2017). Moreover, this report highlights on global business environment in which small and entrepreneurial business operate and also threat as well as business opportunity that exists in global business environment. International trading blocs and agreements will also include the report along with tariff and non-tariff barrier of international trading environment. In the last, advantages and disadvantages of importing and exporting are focused in the upcoming report. TASK 1 P1 Global business environment in which SME business operate its functions The study of international business market involves and undertake different factor which is used to understand the effects of the organisation activities that is impacted due to performing operations into foreign market. This also defines that for accomplishing success in the foreign market it is essential for Smith brother to enter into international business that helps in recognise thediversityanddifferencebetweenlocalandglobalenvironment.Withtheanalyseof respective organisation market conditions it is identified by management that multi-domestic company that are independent to trade are more focused for entering global operations because it leads business to undertake huge market area that also enhance company profits(Yahya and Mutarubukwa, 2015). Smith Brothers can make use of PESTLE analysis so that it can evaluate the market of UK which can help the company in strategically expanding in the market of Germany: PESLTE Political-The first step relates with the political environment conditions and it include different factors which focuses on company and it also leads to complete all task in an appropriate manner by following the government rules and regulations. In context of Smith brothers it works as positive environment because most of the government are
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focused to adopt and establish renewable energy system in country.The political environment of UK is stable and also the government policies are such that they help in promoting business activities so that economic growth of Germany can take place. This can help Smith Brothers in efficiently expanding in Germany market. Economic-Monetary aspects are one of the most important aspect for organisation and government both it is because the existing conditions of global market is complex due to pandemic announcement in international market. Thus, it is challenging for Smith brothers to start a new plan related with global environment.The stable economic condition of Germany can help Smith Brothers in expanding strategically in market as the company can get loans and other economic benefits. Social-The term social aspect undertakes the behaviour, culture, education system of a particular country that is followed by individuals. This also defines that each country follow its own culture(Solheim, 2016). Further, the impact of society on small and entrepreneurial business is more because the initial actions of business are focused to fulfil society gap that exists between company product and individual requirement. With the advanced lifestyle of population of Germany the requirement of energy has increased which will help Smith Brothers in increasing its sales high profitability can be achieved by company. Technological-With monitoring the international market conditions it is identified that there all business houses whether small or large includes the technology to complete their functions and operations in an appropriate manner. SME use technology for adding more value in company products that helps to make presence in global environment.As Germany is technologically advanced nation which can help Smith Brothers in acquiring highly advanced technology at low cost so that its operations can be made highly effective and can also help in providing high quality products to their customers. Legal-The term legal aspect includes different functions and all of them focused to complete company operations in an ethical manner(Rahman, Zailani and Musa, 2017). With analysis of Smith brothers it is identified that to perform all operations in renewable energy sector management follow all essential rules and regulations as it helps to improve organisation goodwill.The legal system of Germany is favourable for its expansion
which can help the company in efficiently functioning and operation in market so that the needs and wants of customers can be fulfilled in an efficient manner. Environmental- From the recent years all sector are focused to ensure environment safety. SME start its business with motive of earing profits by overcoming from the challenges of society. This defines persons or individuals engage in the Smith brothers are focused to trade in renewable service market for completing work in an effective manner. The environment of Germany can help Smith Brothers in gaining raw materials so that it can effectively perform its operations in the market along with maintaining the cost of company so that products and services can be provided to their customers at reasonable costs. P2 Opportunities and Threats which are faced by SME in an competitive global business environment There are various operations and functions performed by management and most of them are focused to improve organisation goodwill in market. Some opportunities and threats that are faced by SME is mention as follow: Opportunities-Different opportunities such as government policy, technological advancement etc. which is favourable for SME is mention as follow: Leveraging the trend of E-commerce-SME make its presence within online and global platform through performing all functions with the help of adopting digital scenario. From the previous years, SME face tough competition from multi-national organisation. So with the support of E-commerce trend Small and medium entrepreneurs are also capable for delivering their products at large platform. Adoption of technology-Social media, mobile phone, cloud technology and many more are some of the essential aspects that are related with technology(Pérez-Oviedo, Cajas- Guijarro and Vallejo, 2018). Moreover, majority of the population is able to utilise digital platform so it work as an opportunity for Smith brothers and other SME to take first mover advantage towards the existing market opportunity with the help of technology. Threats Inadequate access-All the SME that exists in the market face major threat related with weak and low marketing linkage of global environment. Example- lack of government support and inappropriate marketing facility misguide the SME’s owners to perform work
according to market conditions which create challenge for business to complete task in an appropriate manner.Lack of finance-One of the most significant constraint that is related with business growth is the availability related with credit facility. The major challenge which is related with SME is inadequate capital for organisation(Payne, 2016). With analysis of market conditions it is identified that large organisation are making collaboration with banks that are impacts on the growth of SME. Critically analyse the implications of threats and opportunities that face SMEs in an increasingly competitive global environment. There are two aspects within a SME for managing expansion of business. It is seen that SME's are having opportunities to expand their business in international market. With this, there is also presence of threat in SME's which affects these company's idea of entering into foreign markets. Main threat for SME expansion is lack of funds. SME do not have enough funds in which an effective market expansion plan can be prepared.There are attempts made to minimize the negative impact of threats that is high competition because of presence of large number of SMEs and opportunities in terms of having high customer support can help them in achievement of high Competitive advantage. TASK 2 P3 Determine and analyse advantage related with trading blocs and agreements The term trading bloc is defined as an intergovernmental agreement that is used to make regional which is related with organisation. Some of the regional organisation agreements depend on economic integration and it helps to make better economic integration that classifies trading area to make better economic conditions for organisation. Advantage Foreign direct investment-The trading bloc provides result to rise the foreign direct investment. The major advantage which is related with economic of scale undertakes the nation participating that helps to create large customer base. Moreover, by producing productsatlarge levelit iseasy tomanufacturegoodswith lowcostthattrade organisation goods at global level.
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Economic of scale-Market which are large and well-developed helps the organisation for formulating better trade blocs and it also allow the SME to make contract and trading blocs in market that aids entrepreneurs to improve economic scale(MacPhee and Sattayanuwat, 2014). Further, if the production is allowed at large level than actual average cost is managed by company in an appropriate manner. Disadvantage Increase in expenses-One of the major disadvantages that is related with organisation defines that if trading bloc or agreement is breached than the expenses for import and export is increased at large level. This also increases the probability that SME face challenge to close their trade or business with other country because of high incurred expenses. Not to trade with other-After making the trading bloc with one country it is complex for business organisation and the country to start trading with other organisation. It work as a negative perspective for organisation and this is because most of the trading bloc are developed to perform business within a particular area. P4Explanationofvarioustariffandnon-tariffbarrierrelatedwithinternationaltrading environment The term barrier generates problems for an organisation and it prevent the management of Smith brothers to perform their activities such as import and export that create problems for organisation for completing work properly. Tariff and Non-tariff are two types of barrier that impacts on company to complete the action related with import and export(Kohl and Brouwer, 2014). The term tariff barrier includes levy tax on the company goods for entering in country. On the other side, Non-tariff barrier includes excessive red tape and onerous regulations that stop business for competing in market effectively. Types of the tariff barrier in international market Import tariff/duty-This refers to the custom duty that is imposed by the importing country. Example- It refers to the tax that is imposed on products or goods which is imported. Smith brothers and other SME’s face challenge because the import tariff barrier directly impacts on revenue on organisation. Transit duties-This is levied on the commodities which are originated within the country. Transit duty challenge is one of the major barriers that exist in international
market. Example- If there is a conflict between two countries than SME and other business start to trade by involving third party(Karemera and et. al., 2015). So transit duty levied by country through with product or good passes that helps to ban the trade among country. Specific duty-It is based and relates with the specific attribute and physical characteristic of products. Smith brother face the specific duty barrier in global market because the energy instrument utilised by business are large in volume and weight. Non-tariff barrier Quotas-The term Quota refers to the numerical limit that is based on the quantity of products. It is also related with the time period in which SME face challenge because a particular limit is decided by government to allow the movement of products in country. If the products are identified more than organisations pay the penalty for exceeding the limit.VER-Voluntary export restraint is defines as the quota or export which is fixed by the organisation of exporting country on the request of importer. International trade and market implements the VER barrier in order to control the number of in a particular region and it support SME to complete work with in a controlled cost. Evaluate the advantages of international trading blocs and agreements and their implications for SMEs. The advantage of using an international trading block includes that people are more into foreign products these days. It is important for SME's to work in a way that they are able to meet needs and demands of customers. It is very important for employees that they are working effectively for analysing customer's needs and managing to attain success. For SME's, it is the easiest way toattract foreign customers towards their product or services and expand present domestic market with a rapid expansion by use of internationalising strategies. TASK 3 P5 Advantages and disadvantage of importing and exporting to ensure business deal The term international trade provide platforms to organisation at global level in which traders exchange company products or service across the trader(Zhang and Fan, 2014). Most of the SME such as Smith brothers perform business action in international market through
engaging import and export in the company. Some merits and demerits related with import and export are mention as beneath: Advantage of exporting :To enhance market-One of the major advantage that is related with exporting is that SME’s are capable to depend on more than a single market. Moreover, market area also helps to make a deal possible because huge market area provide more number of customers for offering business opportunity.Increase in production-With increase in the production activities an organisation is able to improve their economy of scale by managing cost of business(Getachew and Beamish, 2017). SME utilise the export perspective for improving production activities that leads to increase production. It also ensure that deal take place in an appropriate manner by improving existing products in order to add more value within organisation which also help to aids deal in the organisation. Disadvantage of exporting :Increase in work role-According to the export terms it is identified that the significant increase within area. Smith brothers also face challenge because it enhance work role like, if SME only focus to trade in foreign market than the probability to loss home market is more.Increase in cost-At the time of managing business by considering export regulations it is identified that the cost for administration, production and transportation is increased because of performing export related options. Example- If Smith brother make contract with business that exists outside the European Union than it increase cost of business. It also generate barrier for organisation to complete the deal in an accurate manner. Advantage of importing : Good quality of product-With the analysis of market it is identified that importing aspect support SME to buy good quality of product. This enhance possibility for business for generating deals that are beneficial for smith brothers and it also lead company to add more value in business.Adoption of valuable item-One of the best methods that make positive result for SME is importing(Dai, Yotov and Zylkin, 2014). This refers an organisation generates better results by adopting items which enhanced value of company items. Example- SME’s import value that is managing business culture. It is also used by management in making results which imports company to make appropriate deals. Disadvantage of importing business : To gain license- While the advantages of mercantilism out and away outweigh the dangers, small and medium-sized companies especially face a few challenges when venturing in the worldwide market to work with license as it increase expense for organisation.Extra charges.As an end result to expand markets, and additionally
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the payback durations are longer, the up-the front fees for growing new promotional substances, allocating role to employees and opportunity body charges associated to sell the product can enhance pressure on monetary resources that impact deal of small organizations(Brenton, 2014). P6) Explain the differences between merchandiser and service import and exports. The import and export services in between the different merchandisers plays more important role within the business and with this the willingness of business to make an entry in the newer market is getting satisfies. There is some basic difference in between the various merchandiser and import and export services that is as explained below as: BASISMerchandiser import and exportService import and export MeaningIt is a concept that is based on import and export by which tangible services are sold and with this company gain its certainprofit(AndersonandYotov, 2016). For example, Smith brothers has offer dairy products and services in the market by which there basic and needed requirementsarefulfilledincertain manner which is both in and out of UK. As compared with merchandiser product training of various products is based on intangible benefits. For example, Smith brothers have provide the payment to the other companies as in order to circulate its services in different sectors and areas. ScopeThereisslenderscopeandinthis tangible benefits are not much effective while dealing by the company in terms of import and export. It has wider aspect and under this the scopeisquitewiderinwhich infrastructural development, professional trainingandtechnological implementationandmanyother parametersaremeasuredwhile exchanging the money and shares.
CostThereplicatecostofmerchandiseis incorporated with the manufacturing and tradingaspects.Thecompanyneeds machinery,equipments,rawmaterial, capitalvaluesandmuchother investment as well. It is a basic process that includes the trading services which is more specific as it is used to manage the operating cost whichisnotutiliseintheproduct development. TASK 4 P7) Evaluate the various methods in which SME can tap into international market The companies might have operate its business in small, medium and large organisation but in separate there are various other businesses that have uses its operation and function in order to manage the working in an international market(Aziz, Hossain and Mowlah, 2018). In this the ability to enlarge the market share and profit market is being affected. In addition business have induces several strategy in order to generate more revenue by which market value of company is also increases. There are various methods that are used by SMEs while tapping into an international market and that is as described below as: Franchising:It is usually an agreement that is done in between the two different parties as one if franchiser that provide the permission or accessibility to other business i.e. franchisee under which the brand product, logo has been used by the different party. In this franchisee has been making a contract under which certain product and services are sold but along with this the quality and image of the brand must get maintained in suitable manner. Joint venture:It is a technique that is used by the company while collaborate its work with other businesses so as to accomplish certain project that is used to produce beneficial impacts on both the parties(Bhalla, 2016). It is also be known as the partnership that is basically developed for the certain period of time and aid to expand the working capability and abilities. Licensing:It is a process that is based on the agreement that is performed in between the two businesses and in this the one that allows the other to process its working under certain brand name is known as license and to whom it is provided is known as licensee. There are certain limitations as well as in this the image and quality of the business product and services might get diminished.
Smith Brothers can use Franchising method so that it can strategically expand in Germany which can help it in gaining the attention of target customers so that high competitive advantage in market can be achieved along with increasing sales of company. P8) Compare and contrast the various ways SMEs can tap into international market, assessing the pros and cons of each method. SMEs would have been tapped into the international market with the supportive usage of different methods as like franchising, joint venture and licensing with this there are some pros and cons that are as explained below as: Pros FranchisingLicensingJoint venture Itisamethodor process which is more suitable as there is no need of any ample of share or certain funds by which the amount ofriskisgetting much moderate. Thetermfranchisee providestrainingto theindividualsfor operating work as per business model. It is a method that is basicallyusedto capturebettermarket image and share under which it is easy for the businesstoprocessed itsworkineasiest manner(Berryand Kaul,2015).The businessmusthave managetheparticular informationabout certainmarketby which the involvement of risk is also be more balanced. Passiveincome provide opportunity to individualsbecauseit provideaspectsthat In this method SME get a chance to collaborate withthebusinessthat aremoreexpertand with this it is easy for them to make effective utilisation of resources andinthisrisk assessmentalsoget controlled in systematic format. Thisleadstoenhance and improve utilisation ofworkthatleadsto improveprofitsby using resources of two differentorganisation. It increase market area and sale of products.
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helpsinmaking effective agreement. Cons FranchisingLicensingJoint venture Thismethodhas generatecertain threataswell asin this the market image ifthebusinessis gettingreducesby whichitisdifficult for franchise to select adequate franchiser. Thecostfor purchasing franchisee is too high and this alsoreferscompany facechallenges.In contextofthisit definemanagement facechallenges because control holds inhandof organisation. There are some cons of licensing as well as in thistheamountof returnpaymenthas inducesnegative impact on the royalty andimageofthe businesswhichisin turn to huge loss. Theriskrelatedwith both parties define that businessisengaged among all stand point so with test marketing itiscomplexto condusct actual results. Ifthismethodis selected by SME that therearesome rigidness that is faced bybusinessasitis basicallyget generatedasperthe unbalanced involvementofrisk and its impacts. Jointventurecreate difficulty if it relates withlicenseeand licensorbecause products are designed accordingtolocal marketbutfor international area it is complextoworkas foreign perspective. Evaluate different methods SMEs can use to tap into various markets with application to a small business or entrepreneurial venture, making valid recommendations. There is a way to expand market share in SME by sharing risk. This can be done by working effectively with some distributor who is already providing services and products in
international market. For a SME which is going to expand market in international level, it is considered that they must export directly to the international customers through online medium. This helps in minimising the cost incurred by the company while working on market expansion strategies. Such as there can be use of strategies like price penetration to get a cost leadership position or a differentiation advantage of their products. CONCLUSION It has been concluded from the above report that the SME and entrepreneurial ventures both have worked to attain more benefits by which long term sustainability is maintained in effective manner. In this they have also develop much of the job opportunities as well and with this its market image and values are getting enhanced that helps to attain better revenue in appropriate manner. In addition to this there are different challenges that are required to overcome by the SMEs by which the ability to attain better competitive advantage is being processed. The blocks and trade agreement also being used by the SME under which they have gained adequate profit in terms of the interest rate and tax policies. Furthermore the different methods are considerate that is used while taping in international market.
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