Tapping into New and International Markets

This article discusses the strategies and advantages of expanding business in new and international markets. It covers topics such as the global environment, trading blocs, and overcoming barriers for SMEs. It also explores the advantages of international opportunities and the significance of trading agreements for UK.

Tapping into New and
International Markets

INTRODUCTION
In today's world everyone is tapping into new and international market in order to remain
in the leading position. There are numerous ways to enter into foreign market such as, through
joint venture, franchise brand, direct exporting, licensing, piggybacks and so on. Every small and
big organization are framing unique strategies in order to expand their business in the
international market (Batalhone and Clement, 2018). Due to globalization every company is
expanding their business in the international market. By this they can survive for longer time
duration in the competitive world. Barclays is undertaken to complete the report. It is expanding
business in European nation, UK. This is British multinational investment bank and financial
services company. This assignment covers Pest analysis to better understand the external factors.
The main purpose of SMEs expansion in international market is examined. Various tariff and
non-tariff barriers are determined. Difference between merchandise and service imports and
exports are evaluated. The several documents like, packing list, commercial invoice, customs
documents etc. required by SMEs at the time of expansion of business in international market.
Additionally, different types of exporting is determined as well as their advantages and dis-
advantages are showcased .
PART 1
Introduction to the chosen country and discuss global environment where SMEs operate.
Barclays is expanding the business in UK because this nation is financially stable in
nature as well as are technologically advanced nation as to compare to other country. The
government of UK is encouraging new and innovative business to grow in their nation. SMEs is
expanding their business globally in order to survive and sustain in the competitive world.
Global environment is explained as those factors which are uncontrollable in nature but
create huge influence of business day to day working (Weerakoon, 2017). The global
environment in which small and entrepreneurial business operates are discussed as under:
Political factor: UK is politically stable so Barclays can easily expand their business in
this nation. It is technologically advanced nation which will help SMEs to grow and develop
easily.
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Economical factor: SMEs will be beneficial by expanding the business in UK as the
education rate of this nation is high. The labour are highly skilled which will help the business
to attain their set goals and objectives in the set time span.
Social factor: SMEs is investment bank and financial services company. As they are
expanding the business in UK firm need to understand their social factors . By this best services
can be offered to the customers (Beer and Waschiczek, 2018).
Technological factor: UK is well-known for using modern tools and techniques. By
expanding the business in this nation with the help of modern tools SMEs will be able to create
tough benchmark for others.
Analysis of global business environment and the influence of key global drivers in relation to
UK.
By deeply studying political, social, economical and technological factor management is
able to frame strong tactics to over the issues emerged from this factors. By analysing all this
factors business is able to capture huge market ratio easily. Along, with this huge customer base
can be raised for the business in the coming years which is a positive mark for the business.
SMEs will be able to gain competitive advantages against rivalry by measuring all this factors
deeply.
In the open market place global drivers are explained as those drivers like, international
trade, technological investments etc. which make the easy for goods, people and idea to circulate
across the boundaries (Turkina, 2018). Some of the key global drivers are, international
investments, technological advancement and international trade which are illustrated below:
International investments: SMEs is influenced by global drivers in UK because huge
investment is required to expand the business in the international market. They are small in size
and are not financially stable in nature due to which SMEs is more likely to be affected by global
drivers.
Technological advancement: Huge finance is needed to implement advance technology
in the working premises. SMEs is greatly affected by global drivers as they are small in size and
are does not have enough skilled employees with them in order to cope up with rivalry in the
international market.
International trade: International trading is done when the product and services are
innovative in nature and are able to compete in the market. SMEs does not have enough
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resources to come up with innovative idea every now and then. This is the reason the global
drivers most influence SMEs business day to day operating activities (Brown, 2017). All such
factors provides significant opportunities to Barclays with the help of which they can provide
their services to the people outside UK as they will have access to them and even to made
agreements with other companies. They will offer the people an opportunity to expand their
investment as more avenues will open for them, Barclays can easily increase their number of
customers. But the threat is they are into financial services and for financial services various
entry barriers are imposed by various countries to protect the interest of the investors such as
license to operate, partnership with any in-house country etc.
Illustrate the rationale for SMEs to expand their business internationally.
In the competitive world every large and SMEs business want to maximize profit by
selling their goods and services to their targeted customers. In the era of globalization it is very
important to expand their business in the international market. If expansion is done then SMEs
will be merged by large and multinational firm or their sustainability will be on stake. The main
purpose for SMEs to expand their business internationally are showcased as under:
Generating more revenue: By expanding SMEs in the international market they will be
able to maximize huge revenue by which further growth of business can be done easily. With the
phase of time this business will turn out to be financially strong.
Diversifying: The purpose of SMEs is to expand business in the international market is
to diversify their market and product segment (Turkina, 2018). By this customer base can be
raised gradually in the market which is a positive mark for the business.
Recruiting new talent: As business is expanded in the international market SMEs is
able to hire more talented and capable staff members in their organization in order to full-fill the
emerging needs of the customers. With this brand image of the company can be improved of the
customers. Due to which more loyal customers can be build with the phase of time towards the
product and company.
Critically examine how SMEs can take advantages of international opportunities and overcome
their barriers for global growth.
SMEs can take advantages of international opportunities in the following ways:
Planning an international expansion: SMEs management need to plan weather the
international expansion will aid with their long term scalability. Along with this they market
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researcher of the firm need to understand how will the resources be allocated to support a move
overseas. By clearly understanding all this aspects Advantages of international opportunities
that can be taken by SME prevailing in the market. As well as business will be able to flourish
smoothly without any difficulty.
Ways to overcome barriers:
 Experts should be hired in order to understand weather the expansion of SMEs business
in the international market will be successful or not.
 Both internal and external scanning of environment should be done in order to understand
how resources can be assembled by SMEs.
Understanding the market: To sustain in the international market it is essential to better
understand the market SMEs is planning to enter. The market is totally different from the home
nation. In many cases completely varied marketing strategy or product and service delivery
method need to be adopted in order to grow their business. By this SMEs can take advantages of
international opportunities for their benefits. By this huge market ratio can be captured easily.
Ways to overcome barriers:
 Before entering the UK market SMEs need to scan the market, type of customers, their
taste, disposable income and so on (Chen and Kohli, 2018). By doing so firm will be
able to design the product and services accordingly and can survive for longer time
duration.
Look to partnership: SMEs by building partnership with international businesses is the
best way to introduce goods and services to foreign customers. Partnership allows firm to pool
resources and render them access to build customer network. By looking to partnership
organization is able to take advantages regarding commercializing their goods in the market. By
this overall productivity and profitability ratio raises accordingly.
Ways to overcome barriers:
 Proper contract should be signed by both the parties regarding the products and services
sale. Along with this profit and loss ratio should be mentioned in the agreement in order
to avoid conflict in the up-coming years (Steiner and Fan, 2019).
 Before conducting partnership SMEs need to understand their terms and conditions
earlier so as to avoid mis-understanding and for how long will the contract is valid.
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Discuss trading blocs and agreements and evaluate advantages of trading agreement which
would have a direct significance on UK.
Trading blocs is stated as group of nations in particular regions which handles and
promote activities related to trade. On the other hand it is a intergovernmental agreements in
which restrictions regarding trade are abolished among the participating states. They are
accountable in economic growth to a large extent. Trading blocs are formulated to motivate
trading partners to buy and sell products which is already designed or prepared in the home
nation.
Advantages of Trading blocs:
 Through this competition raises and prices of the products and services decline in UK.
 The goods and services tend to be more cheaper in prices as foreign nation products are
more widely available in the open market place of UK (Dwyer and Vongvisouk, 2019).
 Trading blocs enables free trade between geographically close nations including UK.
 The another advantages of trading blocs is that it raises economies of scale of UK to a
large extent.
Barclays will have various advantages with such trading blocs as with the help of this they
can easily enter into agreement with other nations, their competition can be reduced this will
enable them to easily expand their business easily. With this Barclays can expand their market
size and the economic leverage along with better technology to satisfy the needs of the
customers.
Trading agreement is a written document signed by both parties by agreeing on all terms and
conditions as well as with the share of profit and loss mentioned in the agreement. It is legally
enforceable in the market. On the other hand agreement can be done orally or by written one. In
a agreement there must be an offer, a consideration and an acceptance in order to make it valid.
Advantages of Trading agreement:
 Raises trade among two or more nations due to which economy of the nation raises to a
large extent.
 It increased economic growth of UK and make it financially stable (Rana, 2018).
 Trading agreements build more dynamic business climate in United Kingdom.
 This uplift foreign direct investments in UK.
 With the help of trading agreement there is more technology transfer in UK.
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With trading agreements among different countries Barclays can easily ensure the success of
the company as with this they can expand their business in other countries which has potential
clients. Also it will reduce tariff rates for them with which their risk of trading in new
geographical location can be improved.
Illustrate several tariff and non-tariff barriers which is present in the international trading
environment.
Tariff barriers is stated as taxes imposed upon imports in order to safeguard local
industries. It helps in raising the revenue as well as supports balance of payment. Tariff is
harmful to the nation and economy when they decline mutual beneficial trade. Some of the
examples of Tariff barriers existing in the international trading are, Embargo, subsidies,
voluntary export restraint and so on. This points are explained as under:
Quotes: Limit placed on the number of imports.
Subsidies: The subsidies render from government side to the local company helps them
to gain competitive advantages in the open market place.
Embargo: Total restriction on imports from particular nation. Example US embargo with
Cuba (Fernando and Nizar, 2019).
Voluntary export restraint (VER): This same as Quotes that is used by nations in
order to agree to limit the number of imports. Example: US used it for importing of Japanese
cars.
Non-tariff barriers covers rules and regulations that makes trade more difficult. It is also
known as Tariff Measures (NTMs). On the other hand non-tariff barriers cut down the market
opportunities and render unfair competitive advantages to goods from other nation. Additionally,
it hampers all types of products and services exported. Imports bans, protections jobs, complex
regulatory environment, retaliation, phytosanitary conditions are some of the examples of Non-
tariff barriers existing in the international trading. The points are illustrated as under:
Protecting Jobs: By imposing non-tariff barriers government is trying to safeguard
domestic employment to a large extent (Lai, 2018). Due to foreign competition the domestic
employment is influenced because home nation companies start to import services from foreign
in order to cope with the competition prevailing in the global market.
Retaliation: This assist nations to permit for free flow of trade among them. Governing
bodies intervenes in the trade policies in order to act as bargaining tool.
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National security: Nation impose non-tariff barriers in order to safeguard the the
security of the country.
Examine how international trading blocs and agreements generate global growth for SMEs.
Trading blocs stimulate and generate growth for SMEs are:
Common Market: It the initial stage towards economic integration. In order generate
growth for SMEs in the common market there should be significant level of harmonisation of
micro- economic policies.
Free Trade area: This encourages growth for SMEs as through free trade when two or
more countries in a region agree to reduce barriers to trade on all the products coming from other
members (Geary, 2018).
Preferential Trade area: This is a type of trading blocs which stimulate and generate
global growth for SMEs when nation within geographical region agree to abolish tariff barriers
on chosen goods imported from other nation.
Trading agreement stimulate and generate growth for SMEs as they safeguard
domestic employment at a tremendous scale. Due to foreign competition the domestic
employment is influenced because SMEs start to import services from foreign in order to cope
with the competition prevailing in the global market. They help them to grow their business
successfully because they secure in every aspect. Also, the set goals and objectives of the SMEs
can be attained easily.
CONCLUSION
From the above it can be concluded that SMEs need to expand their business in the
international market so that they can meet the emerging needs of the customers easily. Those
factors which affect business operation activity are studied in order to make improvements in
the business functioning so as to attain productive results as compare to rivalry. PEST is
examined in order to better understand the it's affect on small and entrepreneurial bushinesses.
Trading blocs and agreement generating global growth for SMEs is measured so that tactics can
be framed in order to select the most suitable for business flourishment (Khan and Lew, 2018).
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PART 2
Advantages and dis-advantages of different types of exporting
Exporting is illustrated as product and services prepared in one nation and is purchased
by residents of the other country. It is important for the country as it directly or indirectly grow
and develop national economy. However, various trade restrictions are imposed on the business
in order to safeguard their domestic industries from exploitation. Example: From China rice is
shipped in order to sold in other nation.
There are two types of exporting which are, direct exporting and indirect exporting.
Direct exporting refers to as sale of product to foreign nation without indulging middlemen.
Here, the firm is accountable for dealing with foreign firm directly. Direct exporting enhances
better knowledge regarding the market.
The advantages:
 Direct exporting render full control over the goods
 It helps to provide attractive returns on exports
 It is short channel by which trading can be done easily.
 Firm trading through direct exporting is able to build good reputation in the market as
there is no middlemen.
 Direct trading helps firms to largely expertise in international marketing by which huge
revenue can be maximized.
The dis-advantages:
 Direct exporting involves huge risk as there is no middlemen in the trading
 Due to elimination of middlemen the distribution costs raises greatly,
 Firm requires greater managerial ability.
Indirect exporting is defined as selling to an intermediary who in accountable to sell their goods
either directly to the customers or by importing wholesalers. It involves less risk as compare to
direct exporting. On the other hand this is the best and cheapest way to sell products to an
intermediary in the home nation.
Advantages:
 Indirect exporting is the risk free method to sell their product as they are sold within the
nation.
 It assist to focus more on domestic business as products are sold in the nation itself.
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Dis-Advantages:
 Indirect exporting cut down the profit margin as goods are sold in the home nation.
 Less foreign sales are done as more concentration is done on domestic business.
For an organisation while entering into new market it is important to consider the import and
export process. Braclays with the help of this can easily plan their expansion such as it includes
introduction of the target market along with the start up cost, the process of operations, entering
into partnership with already operating company along with determination of the resources. This
will enable them to plan all their activities. As they are in service sector so their requirement in
comparison to others are less.
Recommendation: With the help of this process they can plan all their activities but to
support this process various recommendations are made to Barclays which includes the
identification of the efficient small companies already working in same industry with similar
operations as they will help them to expand business by investing in their business and operating
in partnership.
Distinguish between merchandise and service imports and exports.
The difference between merchandise, service imports and exports are showcased beneath:
Elements Merchandise Service imports Exports
Meaning It is stated as variety
of goods available for
sale and are displayed
in such a manner that
it stimulate customers
to purchase them.
Service exports refers
to as when firm or
individual receiving
payment at the time of
making service export.
Exports is explained as
product and services
prepared in one nation
and sold in other
country.
Characteristics Merchandise exports
are tangible in nature
as they are sent out of
the nation.
They are intangible in
nature.
Exports can be
tangible and intangible
in nature depending
upon the goods and
services exported.
Examples Wal-Mart, Dillard's ,
Macy's, Kohl's
Tax preparation
service, insurance
Rice shipped from
China to other nation
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Michaels Crafts etc. policies, cell phone
service contracts and
so on.
is an example of
Export.
Explanation of the document required
Letter of credit: SMEs required this for exporting goods and services because it is a type
of payment mechanism used in the international trade. It provides assurance from a creditworthy
bank to an exporter of the products.
Packing list: It is used in the international trading because they accompanies
international shipment so that transportation firm can be aware regarding how they are
transporting. It aid customers to check what things has been shipped against the proforma
invoice.
Commercial invoice: It is used in the international trade because it is a type of customs
documents which is provided by corporation which is exporting goods across the international
boundaries.
Terms of payment: In the international trade there are mainly five types of payment
accepted which are, cash- in advance, documentary collections, bank payment obligation and so
on.
Examine various methods of tapping into new international market, including it's limitations and
benefits.
The various ways methods of tapping into new ways into new international market are stated as
under:
Financial support: SMEs can tap into international market when are financially
supported. By this they can easily expand their business in the international market . Also, firm is
able to cope up with competitors prevailing in the open market place.
Benefits:
 Firm is able to come up with innovative idea in the market
 Organization is able to retain skilled employees for longer time duration by paying them
huge salary package.
Limitations:
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 Finance need to used in effective manner as environment keeps on changing frequently.
 Lack of funds slows down overall organizational activity.
Assessing market: Before expanding the business of SMEs it is important to assess
market. By this firm will be able to understand taste, demand, preferences etc. By this is become
easy to tap in the international market.
Benefits:
 Customer base can be raised for the firms goods and services
 Huge market ratio can be captured as market was earlier assess properly so
tapping into new international market became easy and time saving.
Limitations:
 Assessing market is time consuming as well as huge funds are required for analysing
international market.
 It is difficult to ascertain the taste of the customers as client demand and preferences
changes frequently according to the dynamic environment.
Discuss various ways by which SMEs can tap into international market stating pros and cons to
meet particular business requirements.
The various ways by which SMEs can tap into international market are illustrated as under:
Licensing: In this case, one firm give permission to another company in order to
manufacture it's goods for a specified payment.
Pros:
 It helps in lowering capital requirements
 Through licensing firm can easily enter into foreign markets.
Cons:
 By using licensing SMEs loss control over their own capabilities of invention.
 By this poor quality management is done which results in downfall of brand image in the
open market place.
Exporting directly to international customers: This is the best way by which SMEs
can tap into the international market. Here, there is no middlemen while exporting goods and
services to the international customers.
Pros:
 Without delay goods and services are exported to the end users.
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 Loyal customers are build when directly trading is done with international customers.
Cons:
 More time consuming as they need to research themselves their international customers.
 SMEs require huge funds while trading directly with the international customers.
Barclays can efficiently enter into new market with the help of all the identified methods. As
they are into service industry then they must focus upon accessing market method as they do not
require much investment but a partner with the help of which they can efficiently operate in new
geographical as will already have understanding of their place. Along with this they are
recommended to comply with all the requirements such as obtaining license etc. as with this they
can make their business efficient.
CONCLUSION
From the above discussion it can be recommended that it is very important to understand
differences between merchandise, service imports and exports. By doing so best suitable aspect
can be chosen for their business at the time of exporting. Necessary documents like, packing list,
terms of payment, commercial invoice, customs documents etc. are studied in order to use the
most suitable for their business in the international market. Various ways of tapping into new
international market is examined so that business can be flourished in the international market
smoothly.
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