Tapping into New and International Markets

This report discusses the global business environment, opportunities and threats faced by SMEs, advantages of international trading blocks and agreements, tariff and non-tariff barriers, importing and exporting, and methods for SMEs to tap into international markets. The case study is based on Green Sheep Group, a UK-based company that designs and manufactures nursery baby products and wants to expand its business in Switzerland.

Tapping into New and
International Markets

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
P1 Explain the global business environment in which small and entrepreneurial businesses
operate..........................................................................................................................................2
P2 Analysing the opportunities and threats that faced by the SMEs in an increasingly
competitive global environment..................................................................................................3
TASK 2............................................................................................................................................3
P3 Determining and analysing the advantages of international trading blocks and agreements. 3
P4 Analysing various type of tariff and non tariff that exist in the international Trading
environment.................................................................................................................................4
TASK 3............................................................................................................................................6
P5 Analysing advantages and disadvantages of importing and exporting and how to secure a
deal...............................................................................................................................................6
P6 Analysing difference between trading and service imports and exports................................6
TASK 4...........................................................................................................................................7
P7 Analysing various methods in which SMEs can tap into international market......................7
P8 Analysing pros and cons of various method in which SMEs can tap into international
market..........................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES.............................................................................................................................11

INTRODUCTION
Tapping into new and international market is a part of company's market plan for
entering into new markets of foreign or international countries. This makes company to increase
their growth as well as enhance their productivity. It also allows company to attract more and
more customers for their products as well as maximize their profit. For the following report,
selected company is Green Sheep Group which is established in UK since 2006. It specialises in
designing and manufacturing the nursery baby products. Its owners wants to expand business in
international market that is Switzerland. The following report describes the opportunities and
threats for firms that exposed to an increasingly globalised environment along with the
advantages of trading blocs for firms. It further determine the importing and exporting process
and the practicalities involved as well as it evaluates the ways that SMEs can tap into
international markets.
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TASK 1
P1 Explain the global business environment in which small and entrepreneurial businesses
operate
The environment in which companies operate and control their business in foreign
country from their home country for gaining various advantage are called global business
environment. The management of Green Sheep Group choose Switzerland for the expansion of
their business in international market. Switzerland is Central Europe's small country. Here, the
level of unemployment is low, it also has highest GDP as well as skilled labour that makes
beneficial for the management of Green Sheep Group to globalise their business in better
manner(Xiao, Lew, and Park, 2021). There corporate tax is low, highly developed financial
service sector and technological industries that also assist them to sell their effective products in
order to gain maximum profit.
In global business environment, many aspects are exist that provide benefits and
problems to the SMEs while entering in international market. In context with Green Sheep
Group, PEST analysis is used for identifying the aspects of international market that affects the
decision of its management in order to enter in foreign country are described below:
Political Factors- This is used to analyse those factors that has direct link with influence
of the government of the country. The political factors of Switzerland, that affects the decision of
Green Sheep Group management in order to globalise their business are direct democracy, stable
political environment as well as membership in International Monetary Fund and World Bank.
Economic Factors- The factors that affects the business environment due to the changes
in economic condition of the country(Prashantham, Kumar, and Bhattacharyya, 2019). The
economic factors of Switzerland that affects the decision of Green Sheep Group management is
highest GDP, low unemployment rate, highly skilled workforce, highly developed infrastructure,
low tax rates as well as strong purchasing power of people.
Social Factors- It is used to analyse the factors that affects the business environment due
to effects of the society within a country. The factors that makes management of the Green
Sheep Group to enter in Switzerland are changing habits, rapid modernization as well as cuisine
of people. There are more factors of the society that affects their decision are discrimination, an
ageing population as well as poverty.
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Technological Factors- As there are daily changes and innovation occurs in technologies
that affects the business environment of the company(Zhang, and Tse, 2018). As Switzerland is
the most advance countries as well as their government also focus on developing highly
developed infrastructure as well as new technologies that helps in expanding their business in
international market in effective manner.
P2 Analysing the opportunities and threats that faced by the SMEs in an increasingly
competitive global environment
When SMEs enter in an increasingly competitive global environment they have to face
certain threats which also provides them opportunities in order to gain various benefits as well as
enhance their growth in effective manner. In aspect of Green Sheep Group, the threats and
opportunities faced by its management for globalising their business in Switzerland are described
below:
Economic Relation between Switzerland and UK- There is a good economic
relationship between Switzerland and UK with the help of five signing agreement. The signing
agreements are Tariffs, non-tariff measures, tariff rate quotas and service mobility agreements.
All these agreements provides opportunities to the management of the Green Sheep Group to
trade their products in Switzerland effectively(Papastathopoulos, Kaminakis, and Mertzanis,
2020). It helps in making strong demand of their product in market of Switzerland.
Political and historical situation- This help foreign companies to enter in Switzerland
effectively because there political situation is more consensus as well as stable. The government
of Switzerland has strong commitment to the neutrality with the European Union which also
provides many benefits to the foreign country company to sell their products and service in
Switzerland in effective manner.
TASK 2
P3 Determining and analysing the advantages of international trading blocks and
agreements
Trading Blocs describes to a method in which two and many countries are combined in a
group through trading agreements. There are many trading agreements which is mutually signed
by different countries. This trading agreements allows within a group countries to trade freely
their goods, capital, labour and services effectively. Different type of trading agreements with
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their advantages that help Green Sheep Group is to trade freely in international market are
described below:
Preferential Trade Areas- It refers to a crucial kind of international trading blocs and
agreements that makes members countries of trading blocs to reduce as well as eliminate tariff
barriers so, it become easy for the countries to import their goods and service. Its advantages that
help management of Green Sheep Group are that lower prices and more varied products as well
as larger market. This is because the reduction in tariff barriers help different countries company
to sell their products in lower price as well as provide more variety of products to their target
customers. It also makes the larger market that assist Green Sheep Group company to increase
their sales and provide variety of goods to their target customers in lowest prices.
Free Trade Area- It is known as an agreement in which more than two countries agree
together to reduce and eliminate the barriers which countries faces in trading good in other
countries. There are many advantages of using this method that are this free trade area ensures
free environment in between different countries and this way helps the companies to trade
products and services effectively and in free manner(Mic, and Eagles, 2019). In Green sheep
group it had worked effectively as they are allowed to trade freely in Switzerland. IT helps is
expanding the trade in multiple countries and also benefits in internal investment which increases
the opportunity of trading the various countries. Green sheep group make a strategy with
management to achieve various external advantages from it which may increase the sale,
expands the customer base and also gives an competitive advantage.
P4 Analysing various type of tariff and non tariff that exist in the international Trading
environment.
International trade is known as exchanging different kind of products and services worldwide in
order to gain external benefits and competitive advantage in an industry. There are number of
tariff and non tariff obstacles which Green sheep group is facing are described below.
Tariff Barriers
These are the barriers in the form of taxes which become a barrier while importing or exporting
any kind of goods by crossing an national boundary. These taxes are imposed by the government
of each country according to their economy(McCormick, and Somaya, 2020). There are three
tariffs which becomes a barrier while crossing of products from one country to another. First in
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import duties that are known as the charged taxes which is imposed by the government and
companies pay while transferring the products from one country to another. Green sheep group is
is struggling in transferring the goods to Switzerland as this country had increased the tax rate
and it is becoming challenging to this company to trade in Switzerland. Another tariff is special
tariff in which individual country government has set a fixed fee per unit to import any product
internationally. The tax fees also varies according to nature of product which is importing. Green
sheep group company is paying an fixed amount which is imposed by Switzerland in order to
import there good to that specific country and due to these tariff rates is increases the rate of an
product which is paying by the end customers and the company which is importing(Luo, 2021).
Ad Valorem Tariff is the another kind of tariff in which the tax is paid as per value of product
which is trading across the boundaries. This tariff is in fixed percentage and this also affects in
the overall rate of the product and it also affect the quantity of the product which is trading
across the country to Switzerland.
Non Tariff barriers
These are the barriers which is imposed by the country government and it restrict the products
from importing and exporting across the world. These barriers are also faced by Green sheep
company while expanding the business in Switzerland that are protectionist barriers these
barriers are also imposed by country government and it protects the country from various
engagements of countries which are imposing worldwide. These barriers are import deposits, anti
dumping duties, licensing requirements and allocation of quotas. Green sheep company had
struggled in establishing the business in Switzerland as these barriers works as a obstacle and
delays in business operations as while licensing it take a long time and due to which it delay in
each procedure. Assistive policies is also considered as Non Tariff barriers as this policy protects
the country from restricting to expand trade in different countries around the world. This barriers
involves technical standards, custom process, norms, sanitary and packaging and labelling
requirements(Li, and Fleury, 2020). These sometimes affect a lot to a company who is expanding
their business to a new country.
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TASK 3
P5 Analysing advantages and disadvantages of importing and exporting and how to secure
a deal.
Importing
In importing the products and services which are produced by one country and is bought by an
home country through exporting it. It has its own advantages and disadvantages, the advantages
of importing any product in other country is It helps in introducing the product of company in an
new market. As by importing the sale of Green sheep group company will increase and it will
also enhance the customer base of this company. Importing also reduces the overall cost of the
product as it also benefited the end customers they receive the products in comparative lower
price(Huang, and Liu, 2019). Green sheep group company may cause some loss by importing
products due to currency fluctuation in the countries and it also has some legal risk which can be
imposed by foreign country and it might create confusion in the engagement.
Exporting
Exporting is in which goods and services are produced by one country and then later sell it to
other countries in foreign. It also has its advantages and disadvantages, its advantages are it helps
in increasing the sales and by exporting it to new country it increases it customer base and which
also leads in increasing the profitability rate of an organisation(Farrell, and Newman, 2020). But
exporting also has disadvantages that the company profit can be affected due to changes in the
foreign exchange and can impact negatively on Green sheep group while expanding the business
in Switzerland.
P6 Analysing difference between trading and service imports and exports
Merchandise export and import: Importing and exporting is known as the process in which
products and services are exchanged in between two or more countries and trading is done at
international level and this helps the organisation in increasing their customer base and profit of
the organisation. It involves merchandise import and export in which importing is bringing the
internal country products to the home country and exporting is expansion of home country
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products into international market. Green sheep group is trading with Switzerland in order to
achieve profit.
Service export and import: In this import of service is the amount which is paid by the home
country while trading with foreign country. In this exporting is the amount is paid by he foreigh
country while trading with home country(Dwyer, and Vongvisouk, 2019). While trading both
Green sheep group and Switzerland are paying some amount by exporting and importing the
goods.
Difference between merchandise and service imports and exports.
Basis Import and export merchandise Import and export of service.
Scope It main scope is to helps in
retailing and manufacturing to
expand the business
internationally as Green sheep
group is expanding their
business in Switzerland.
Its main scope is to provide services
worldwide as it is the trade between
two countries which is exchanging
their services. As Green sheep group
is providing services to Switzerland.
Nature It exchanges tangible products
between different countries as
Green sheep group is expanding
their business in Switzerland by
importing and exporting
tangible goods.
In this it helps in exchanging the
service amount between two
countries who are trading with each
other.
TASK 4
P7 Analysing various methods in which SMEs can tap into international market.
Exporting: By exporting the product and services from one country to another is known as
exporting and it can expand the business to an new extent by increasing its customer base there
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are mainly two things are required while exporting that is bill of lading which is a legal
document and allows one country to trade in another easily(Bodolica, Spraggon, and Saleh,
2020). While exporting commercial invoice is also important to be considered as it is known as a
contract of sale and which involves all the information related to the product which is trading.
Franchising: This is in which right of an company is sold in an international market as an
production techniques, trademarks and patents. If Green sheep group chooses this method that it
make allows to use company's right by Switzerland and it also involves some important
documents that are franchise discloser document and franchise agreement which is considered
important to make an franchise engagement between two companies.
P8 Analysing pros and cons of various method in which SMEs can tap into international
market.
Different type of
methods of tapping
in international
market.
Pros Cons
Exporting This will help Green
sheep group to expand
their business in
Switzerland effectively
and efficiently and this
will also increase there
customer base and they
can also explore new
operational and
marketing techniques.
This can also cause a
risk of transportation
and can sometimes
create problem while
exporting products
and services
internationally.
Franchising This helps Green sheep
group to expand in
international market. It
also reduces operational
This sometimes
creates various
problems and it also
needs large amount of
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risk. This creates various
network beyond the
countries.
investment when
franchising the
business
internationally.
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CONCLUSION
This report concluded that when an company expands and tap into international market it gives
various benefits to the company as it is expanded and increases its customer base which leads in
high productivity and profitably level. It also gives an competitive advantage while expanding or
making engagement with the countries which are across the boundaries. Free trade area and
preferential trade is known as the important trading agreements which results useful later. While
trading companies also faces some tariff and non tariff barriers which are important to be
considered for the smooth flow in trading. This report also concluded that there are various
methods like franchising and exporting methods which help the companies to expand
internationally.
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REFERENCES
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Huang, X. and Liu, C.Y., 2019. Immigrant entrepreneurship and economic development: a local
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Zhang, E.Y. and Tse, T.S., 2018. Tapping into Chinese luxury travelers. Journal of China
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(Bodolica, Spraggon, and Saleh, 2020)(Dwyer, and Vongvisouk, 2019)(Farrell, and Newman,
2020)(Huang, and Liu, 2019)(Li, and Fleury, 2020)(Luo, 2021)(McCormick, and Somaya,
2020)(Mic, and Eagles, 2019)(Papastathopoulos, Kaminakis, and Mertzanis, 2020)
(Prashantham, Kumar, and Bhattacharyya, 2019)(Xiao, Lew, and Park, 2021)(Zhang, and Tse,
2018)
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