Tapping into New and International Markets.

Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain the global business environment in which small and entrepreneurial businesses
operate....................................................................................................................................3
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment............................................................................................................................4
TASK 2............................................................................................................................................5
P3 Determine and analyse the advantages of international trading blocs and agreements....5
P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment............................................................................................................................6
TASK 3............................................................................................................................................8
P5 Determine the advantages and disadvantages of importing and exporting and how to
secure a deal...........................................................................................................................8
P6 Explain the differences between merchandise and service imports and exports..............9
TASK 4..........................................................................................................................................11
P7 Evaluate the various methods in which SMEs can tap into international markets.........11
P8 Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method.........................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Trading within global market is the method of tapping within nee international market in
order to get business growth and development as well. This aspect is highly associated with those
businesses which are involved in importing and exporting of their goods to international markets.
This report is prepared with a view to enhance knowledge of international environment and those
opportunities which are available within market so as to expose the business within global
periphery. For understand these concepts the company taken with this report is Barclays which is
a financial service provider headquartered in London, UK. In this report global business
environment of UK is examined so as to analyse prevailing opportunities and threats for business
development. Further this report includes tariff and non- tariff barriers so as to examine benefits
within international trading agreements (Barac and et. al., 2016).
TASK 1
P1 Explain the global business environment in which small and entrepreneurial businesses
operate.
United Kingdom is a country within Europe region which facing global turmoil within
their economy but still it is a country of forward looking approach and having an open economy.
In this country small businesses are having high value as they recognise small businesses as
backbone of the country so these are required to be developed so as to increase overall GDP rate
and employment within country. UK is the sixth largest country in economic position which is a
result of their private sector enhancement. UK is considered as financial sector of the world as it
is having high globalisation in their economy. In UK most of the organisation sectors are SME’s
which contributes near about 80% to the total GDP amount.
Small and medium scale business enterprises are having business in few regions only and
they operate their business within small scale. In the background of UK, small business
enterprises are having less than 50 workforces in their business and its turnover is less than 10
million pounds a year. Whereas medium business enterprises consists of less than 250 employees
and maximum yearly turnover of 50 million pounds. These business organisations are involved
in importing raw material so as to make finished products and those finished product are

exported to other region of world. These businesses are operated at global level so they affect
global business environment as well. In UK SME’s and other entrepreneurial organisation are
helped by government so as to assist those businesses in operating within global markets. In UK
SME’s sums to be 98% of whole business population so this is the major reason that UK is
willing to earn three pound for every one pound spent within the business. Major SME’s in UK
is having global presence and they are operating their business within Europe region. SME’s of
UK generally export their goods to Europe countries such as Spain, France, Netherlands and
many more (Kaynak and Lew, 2018). By exporting goods to native countries it saves additional
transpiration cost by which business may have high profits in short run. On the other hand by
exporting goods in native countries this helps them to save additional exporting cost and interest.
SME’s of UK has good trading relationships with Asia, America, and some regions of
Africa this helps them to broaden global business environments. This business environment
gives them chance to enhance growth and development opportunities so as to give immense
contribution in GDP and national income of their country.
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment.
Global business environment and the influence of key global drivers
UK is having dynamic global business environment as it is having high capabilities to change
with relation to prevailing external environmental factors. The business environment of UK has
faced so many changes due to Brexit. Before implementation of Brexit SME’s of UK had liberty
to trade within other countries without any barrier but after implementing Brexit SME’s and
other entrepreneurial businesses within UK has barred to pay high interest rate of exchange rates.
Various key drivers are there which are having high impact on economy of the nation. These
drivers include labour force, productivity and investment etc. UK is having expensive labour
force as a result SME’s of UK receives labour form other Asian nation so as to reduce their
overall cost on labour which is having positive impact on economy of the nation. In UK
industrial growth has been seen due to other global drivers such as productivity and overall
investments (Swoboda and Olejnik, 2016).

Rationale for SMEs to expand their business internationally
SME’s of UK is having huge interest in expanding their business in global periphery in
order to enhance their sales and profitability by broadening their target market. Yet another
rationale for SME’s to inflate their business within global periphery is to reduce their labour cost
by procuring this form selected Asian and African regions.
Threats and opportunities in competitive global environment
SME’s faces so many business issues in their operations as they have small portfolio of
employees so they have to go through from many challenges within global environment. The
most prominent issue faced by SME’s is about resource procurements in the form of labour and
market accessibility. In this context SME’s do not have vacant capital so they cannot invest it on
their required resources due to which it is having high negative impact over productivity and
profitability of the business. Another issue faced by SME’s is associated with economies to scale
which is having major restrictions over SME’s as they cannot get advantages from increasing
number of offerings and enhance their profits. SME’s are having global market capture but at the
same time they faces issues in market competition, market instability and less capability to beat
their rivals which are big multinational companies(Rua, França and Ortiz, 2018).
Along with big issues there are so many opportunities which are received by SME’s
exclusively. In UK government has initiated so many policies which are in favour of SME’s so
as to prevent them from paying additional taxes and providing them loan facility at nominal
rates. On the other hand SME’s are having great opportunity to expand their business at
international territory as they are saved from any customs duty.
TASK 2
P3 Determine and analyse the advantages of international trading blocs and agreements.
Trading blocks are sort of inter-governmental agreement which take place between two
governments in which the nations which are participating are eliminated from any trade
limitation and restrictions. Within this agreement participant nations are given liberty to trade in

each other country without any barrier so as to stimulate industrialisation and enhancement in
economy (Rugman and Verbeke, 2017).
Trade block and agreement stimulates the business of a nation to freely trade in another
region without paying any taxes and duties. UK is a member of European Union which allows
UK to freely trade in any European state. But when Brexit came into force UK signed other
agreement which allows them to communicate and trade with other countries of nation. One of
those trade bloc is CARIFORUM-UK economic partnership agreement. According to this
trade agreement SME’s of UK will be able to trade freely in eleven other countries including
Barbados, Bahamas.
Another trade agreement which is signed by UK is SACUM-UK economic partnership
agreement (EPA). This trade bloc includes free trade with southern countries of Africa. It is
analysed that southern countries of Africa are rich in natural resources so within this agreement
UK is able to import natural products form those nations without imposing any tax. This will
help them to save any additional cost allocation which will enhance their profitability.
After implementation of Brexit, now UK is required to trade as per prescribed rules and
regulations of World trade organisation (WTO). This agreement has taken place between UK
and other 163 countries across global periphery. This trade agreement is highly advantageous for
pertaining businesses of UK as this leads to trade within fair prices.
Stimulation of global growth for SMEs
International blocs and agreement are helpful for SME’s in their growth and development. By
this they will be able to import and export within global nation without any irrelevant barrier and
restrictions. This leads them to get market sustainability and earn high profit margins in order to
have high business growth (Bown, 2017).
P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment
International and global business environment is the sum of trading which takes place
within various countries around the world. The process of trading includes so many barriers
which are imposed by regulating authority. These barriers are of two types which are tariff and

non-tariff barriers. Tariff barriers are imposed by customs departments so as to earn applicable
amount of taxes as in form of custom duty and interest rates. Non-tariffs barriers are levied so as
to restrict and set a limit of importing and exporting certain products so as to avoid any illegal
trade (Dhingra and et. al., 2016).
Tariff trade barriers are a type of restriction which is imposed by government so as to
levy duties on products at entry points of region in order to control those transactions. There are
so many tariff barriers which exist within international trading environment so as to set control
over import and export activities and due to these barriers trading businesses are barred to pa
heavy duty and interest rate. The tariff barrier includes licensing requirements, price control etc.
On the other hand custom and taxation rates are those duties and barriers which are required to
be paid during trading from one nation to another.
On the other side non-tariff barriers restricts the trading activities within international
business environment. The objective of these barriers are not to earn profit or high revenues form
import export activities rather they are imposed to control illegal trade between two nations so as
to control them. These barriers includes administrative procedures, quantity restrictions,
procurement rules, product labelling requirements, subsides and many forth.
As per above discussion it is clear that both the barriers which are tariffs and non-tariff
are having major impact over growth and development of SME’s. These barriers are not only
subjected to obstacles even they helps the economy to maintain discipline within imports,
exports and industrialisation. These barriers help the nation to calculate exact and proper amount
of earned profits from trading activities so as to prevent any major loss. On the other side these
barrier help the nation to impose restrictions on import and export so as to prevent any illegal
trade between two countries which can harm goodwill and economy as well. The major reason of
these barriers are to stimulate stability within trading legislation so as to safeguard occupational
health and safety, employment law, import licensing, overvalued currency and many more
aspects of a country (Cheong and Tang, 2018).

TASK 3
P5 Determine the advantages and disadvantages of importing and exporting and how to secure a
deal.
Import
Importing is a process which includes procurement of products and services form any
other foreign economy to the local economy. This concept helps the economy to maintain their
balance of payment and balance of trade so as to introduce new and innovative products within
economy by taking assistance of other countries. There are various advantages and disadvantages
if import pertaining to nations which are explained as under:
Advantages:
 Products can be acquired in low prices and can be sold at comparatively high prices so as
to earn high profit margin and sustainability.
 SME’s can acquire raw material and labour from other countries in lower cost and can
start their process of production due to which they may have low cost of manufacturing.
 There are numerous nations which are giving tax rebates and this rebate can be used by
SME’s so by this they are able to acquire high quality labour and raw material with
investing low capital.
 Developed economies such as UK supports SME’s to freely trade so as to enhance
growth and development opportunities within global markets (Malthus, 2019).
Disadvantages:
 When a business is highly focused on importing raw material and labour form another
country then this will create issue of unemployment within local country as those labours
are not having vast opportunity to manufacture high demanded export goods.
 During import high duty and interest is required to pay on goods which are imported this
reduces overall profit margin of importer.

Export:
Exporting is a process when a country in involved in selling their manufactured products
to other nation so as to get international identity and earn high revenues in order to maintain
country’s economy in a prominent manner. It is analysed that export should be equivalent to
import so as to maintain sound position of economy within a country. Exports are having high
advantages and disadvantages which are elaborated as under:
Advantages
 Businesses are able to inflate their position in global market so as to enhance their market
share and goodwill within international business environment as well.
 By high export a business can earn immense sales revenue and profits which are helpful
for them to adapt high market growth opportunities and contribute the nation’s GDP as
well (Kaldiyarov and et. al.,2016).
 If business is of seasonal products then organisation can inflate their sales in global
market by exporting their goods to those region in which product can be used.
Disadvantages:
 This may lead to business and financial risk to country and business as well as
economic condition of any nation is not stable.
 Documentation for licensing in another limitation of importing as there are some
products and services which have restriction to have free trade in global business
environment.
 This involves high governmental requirements which are having high investment and
this cannot be handled by small investment companies.
P6 Explain the differences between merchandise and service imports and exports.
The concept of import and export is bifurcated into two major categories which is indirect
and direct import and export. This bifurcation helps the business to initiate process of
merchandising services. Direct import and export allows the business to take direct benefit and
eliminate intervention of mediator. Whereas indirect activity involve selling and purchasing of
goods/services to a mediator within own country (Sokolov-Mladenović and et. al., 2016).

Merchandise and service imports and exports are essential for business organisations that
are planning to get enter in global business environment. For businesses it is required to
differentiate these aspects so as to get clear understanding which can be helpful to get insight of
nature of import and export. Differentiation on these two has been elaborated as under:
Basis Merchandise imports and exports Services imports and exports
Meaning This includes import and export of
preferably tangible goods which can
easily be sold within global market.
For example: Barclays is a financial
service provider so they can take
initiative to sell their service outside
UK so as to capture more international
markets with their innovative services.
This includes import and export
of intangible goods and services.
In this context Barclays is
involved with an agreement
with another company so as to
import new professional
services to their country.
Scope It is having narrow scope within this
manner of import and export as no
involvement of proper tangible
product which can be traded by a
business.
In comparison to merchandise
import and export this field is
having wider scope as services
are having vast areas such as
financial services, professional
services, technological services
and many more.
Cost In the trading activity of
merchandising it involves high cost as
proper raw material and processes are
needed to develop these products as
only finished goods are forming a part
of this export import activity. On the
other hand so many trading norms are
to be followed in this procedure which
may have high cost investment
This is a way easier procedure
as only a significant service is
going to be traded due to which
high operating cost are
eliminated as product
development is not a part of this
activity. On the other hand it
does not involve huge
proceedings over formalities as

(Hoekman and Shepherd, 2016). in comparison of merchandising
activity so it can save cost to the
company.
TASK 4
P7 Evaluate the various methods in which SMEs can tap into international markets.
Entry strategies:
Direct exporting
This is a most commonly used entry strategy which can be used by businesses those who
are planning to get enter into new international markets. Within this strategy a company sell off
their product in that market in which they are trying to break off in a direct manner. The
foremost step within this strategy is to make dealer and agents which can represent the company
in international market so as to enhance goodwill in foreign market. They are working as face of
the company so it is required to keep in mind that dealers should be reliable and trustworthy
enough. It is a parallel way to sell a product in domestic market as all other constraints such as
labour and logistics are constant (Atkin, Khandelwal and Osman, 2017).
Franchising
Franchising is an agreement which is made between two parties in that one party is
giving license and other party is transferring their rights and authorities to that party for business
expansion. This is a contractual agreement in which two parties are involved which is franchisor
and franchisee in this franchisor renders rights to use their intellectual property or selling or
manufacturing of goods within international market. With the use of this strategy a business may
be able to get entry within international market. As this strategy is used by those businesses
which are having high goodwill within local market and their product is having high recognition
value.

Joint ventures
This is a different form of partnership in which two parties and associated and they are
agreed to form a different managed company which is having distinctiveness to conduct and
operate the functions of prevailing joint venture. Within this expansion strategy two businesses
are mutually agreed to perform their business operations within an international market by
pooling their resources and rights of ownership with a view to sell or trade as per the agreement
has made by them. On the other hand risk and rewards are shared in equal manner by both the
parties involved. In joint venture both the parties are equally responsible for all the profits and
losses and all the cost which incurs during joint venture. By using this businesses may have high
expectation of success in international markets.
Greenfield investments:
This is known as methods of foreign direct investment in which a company operates in
other company as subsidiary company and then invests in plant, sites and building over that
place. This method is an expensive one and the riskiest strategy as due to governmental
interventions the company who is willing to invest as Greenfield investment have to upkeep all
the risk and cost. High research and development is required in this method as proper market in
foreign country in to be determined and then only investment can be made. This tool helps to
create huge job opportunities in foreign country which may increase brand image of the investing
company and creates a positive impact on minds of potential clients.
P8 Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method.
SME’s may use several methods to tap into international market and they have different
advantages and disadvantages which are elaborated as under:
Advantages
Direct exporting  It helps the business to get better knowledge of market
trends and operations.
 It provides effective after sales services by which high
customer satisfaction can be received.

 This renders full control over products in international
market as there is no mediator involved.
 By using this methods market cultivation is way easier as
agents and distributors penetrates the market through
effectual strategies.
Franchising  It is an alternative way of capital procurement so this allows
the business to expand without incurring any additional cost
on debt or equity.
 Risk of failure is lowest in this form of expansion as
goodwill is already built within domestic markets.
 In this form of expansion franchisor provides full support so
which creates easiness in supervision due to which high
profitability can be achieved.
Joint venture  This gives high access in new markets and market
distribution networks (Rosado-Serrano, Paul and Dikova,
2018).
 It enhances capacity of the business as this will help them to
tap into international market in effective manner.
 This brings new insights and expertise within business due
to which international markets can be unleashed.
Disadvantages
Direct exporting  This creates difficulty in valuation of stock which can
hamper overall profitability.
 The cost of distribution is higher in this as there is no
mediator and customers are catered directly.
Franchising  This involves high initial investments in setting up as so
many contracts are made within this business expansion in
international markets.
 This strategy is risky as brand name of the company is

directly associated so if entry within international market is
a failure then this can ruin whole brand image.
Joint venture  This may involves clashes of culture due to business may
have conflict and this can create barrier in successful entry
in international markets.
 These types of contracts are not flexible so cannot be altered
in the mid-way of entry in international markets.
CONCLUSION
From the above detailed report it can be concluded that global business environment is
having several aspect in which rules and regulations are involved. These rules are made for
obtaining restrictions and limiting activities of import and export within each other nation.
SME’s are having high opportunities form agreements and blocs as they provide free trade
opportunities to them. On the other side there are several strategies which can be used by
businesses to tap into new international market so as to capture new region and expand their
business opportunities. These opportunities can be handled by business in effective manner so as
to get business growth and development.

REFERENCES
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