Tapping into new and international market

This presentation discusses the opportunities and challenges faced by SMEs in the global business environment, with a focus on South Africa. It also explores the advantages of international trading blocs and agreements, as well as the implications of trading blocs for SMEs. Additionally, it covers tariff and non-tariff barriers in the international trading environment.

Tapping into new and
international market
TASK- 1 & TASK – 2

Introduction (TASK – 1)
Due to technological advancement and globalization in
recent years, international trade becomes more rewarding.
Further, the importing and exporting of goods and services
are satisfying both the personal as well as professional
needs of the organizations.
As an Assistant Business Advisor on International Trade at
COOK UK, the current research study will be undertaken to
analyze the global environment of South Africa. Further the
report will evaluate various challenges and opportunities
being faced by SME’s in the global business environment

Continued….
Talking in relation with the South Africa, it is the nation
having political stability and has well-capitalized
banking system. it is largest economy of Africa. The
GDP figures of the Country well depicts the reformation
of its economy (Friedman, 2005).
In addition to this, South Africa’s fiscal framework
promotes competition in the domestic market and
provides various growth and employment opportunities.
Further, the legal and business environment is quite
favorable (South Africa: economy overview, 2005).
Thus, SME’s can enter in such international market with
proper planning an agenda

Analysis of global business
environment
 Political
 Legal
 Social
 Economic

Opportunities and challenges faced by
SME’s in global environment
Opportunities for SME’s
 Economies of scale
 Exploitation of lower input costs
 Favorable trade policies
 Global competitors
 Homogenous needs of the customers

Continued…
Threats or challenges to SME’s
 Lack of skills
 Availability of finance
 Cultural and language

Introduction (TASK – 2 )
Speaking in relation with the trade bloc, it is defined as a
group of nations who have combined together in order to
formulate agreements so as to promote trade between
themselves on preferential terms and conditions. Those
nations who responds and wants to have trade, the Trade
Bloc removes the tariffs as well as other barriers of trade.
The most common and known trade bloc is EEC i.e.
European Economic Community. Under this bloc, the
individual nations do not have any trade restrictions amid
themselves. In addition, they have common currencies
and labor can also move from one country to another
freely.

The advantages of international
trading blocs and agreements
 Foreign direct investment
 Competition
 Market efficiency
 Trade effect
 Economies of scale

Implications of trading blocs for
SMEs in general
SME’s will have great influence and impact on its operations due
to trading blocs and agreements. They can achieve economies of
scale by taking supportive hands of the trade blocs. Different
countries combine together to carry out a particular task. In
simple words, many manufacturers of varied nations come
together and work closely and thus, high rate of competition is
prevailed within the market. It is said that if the competition is
intense, the efficiency of the firm will improve. In addition to
this, Due to rise in the demand of the products in the market or
upward direction of consumption is experienced, enormous
amount of merchandise is being manufactured that ultimately
results into a resourceful market.

Tariff and Non-tariff barriers that exist in
the international trading environment.
Tariff barriers
 Protects the existing domestic industry
 Encourage the industry
 Helps in increasing the trade
 Sometimes restrict the trade

Impact of Tariff Barriers
 Tariff or tax barriers increases the inflationary
pressure
 Government control increases (Deardorff and
Stern, 1994)
 Political considerations in economic matters
 Tax barriers weaken the balance of payment
positions as well as supply and demand patterns
 It also weakens the international trade

Non-Tariff Trade barriers
This are considered as the another method in order to
control the trade that takes place with another nation.
In simple words, non-tariff barriers are the restrictions
that takes place because of the prohibitions,
conditions, or specific need of the market (Haveman,
1996). It makes difficult for the companies to import
and export products and services or make them too
costly to afford. In addition to this, it also
encompasses improper application of Non-Tariff
Measures and various other technical barriers to
Trade (TBT).

Types of Non-Tariff Barriers
 Export subsidies
 Countervailing duties
 Domestic assistance programs
 Standard disparities
 Import licensing requirements
 Quotas (Krugman, 1991)
 Valuation systems
 Documentation requirements

Continued…..
 Charges on imports such as variable levies,
border taxes, administrative fees and import
deposit subsidies
 Orderly marketing agreements and export
restraints

References
 South Africa: economy overview. 2005. [Online]. Available
through: <https://
www.brandsouthafrica.com/investments-immigration/busines
s/economy/south-africa-economy-overview
>. [Accessed on 27thMarch 2018].
 Porter, M.E., 1989. Competition in Global Industries. Sloan
Management Review, 31(1), pp.29–40.
 Friedman, T.L., 2005. The World Is Flat. New York: person
education.
 Deardorff, A.V. and Stern, R.M., 1994. Multilateral Trade
Negotiations and Preferential Trading Agreements.
Negotiating Issues in the Global Trading System. Ann Arbor:
University of Michigan Press.

Continued….
 Haveman, J.D., 1996. Some Welfare Effects of
Sequential Customs Union Formation. Canadian Journal
of Economics, 2, pp.941-58.
 Krugman, P.R., 1991. Is Bilateralism Bad? International
Trade and Trade Policy. Cambridge: MIT Press.
 Rodrik, D., 2003. Growth Strategies. Harvard University.
 Friedrich, S. and Enste, D., 2000. Shadow Economies:
Size, Causes, and Consequences. The Journal of
Economic Literature. 38(1), pp.77-114.

Thank You