Opportunities and Challenges in Global Business Environment for SMEs

This report discusses the environment of global business where small and medium enterprises operate. It assesses the threats and opportunities faced by SMEs in the global competition. It also evaluates international trading blocs, tariff and non-tariff barriers, and methods for SMEs to tap into international markets. The report provides insights for SMEs like Davison Canners Ltd. that are planning to expand to Asian countries.

Tapping into the world

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain the environment of global business where small and medium enterprises operates.
................................................................................................................................................1
P2 Assess the threats and opportunities in competition in global environment faced by SME .2
TASK 2............................................................................................................................................3
P3 Evaluate international trading blocs with advantages.......................................................3
P4 Assess various tariff and non-tariff in international trading environment........................4
TASK 3............................................................................................................................................5
P5: Advantages and disadvantages of importing and exporting with a secure deal...............5
P6: Difference between merchandise and service imports and exports.................................7
TASK 4............................................................................................................................................8
P7: Evaluate various methods in which SME can tap into international markets..................8
P8: Compare and contrast various modes of SME can tap into international markets, assess
pros and cons of each method................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International expansion is defined as process where business organisations are willing to
focus towards planning, pricing, promoting and further expanding their products range to a new
country across international borders with an aim of achieving higher market share & increased
profitability in the business. It is a tool that is based on the objective of enhancing the multi level
strategic plans for establishment of a global presence and enhances the level of profitability.
Present report is based on a SME organisation David canners Ltd. That is having presence in
Craigavon. UK and is part of the fruit & vegetable processing industry. They are presently
having 90 employees across this location & are generating 16.26 dollar million sales (DAVISON
CANNERS LIMITED, 2021). David canners Ltd. is willing to expand themselves to Asian
countries such as China, Malaysia. The report is based on making a analysis of global business
environment by evaluation of the threats & opportunities to determine the benefits of
international trading agreements (Najmaei and et. Al, 2017). Further there is analysis of tariff &
non tariff barriers. There is evaluation of methods that can assist SME brands in tapping in such
international markets by comparing various modes.

TASK 1
P1 Explain the environment of global business where small and medium enterprises operates.
Global business environment means changes in organisation due to fast change
technology, effect of globalization that impact on social, economic and political. These three
words define the nature of trade in international and also defined different sovereign countries in
business environment that influence decision on use of resources and their capabilities. They are
classified into internal and external business environment. In context to Davison Canner as they
are operating in UK have to take decision according to global changes effectively. In Small
enterprise provide contribution and can also earn revenue whereas in large enterprises they use
resources and funds in this way SME can achieve target in particular time this help organisation
can operate smoothly and flow of goods and services (Gilman and Salder, 2020). In reference to
Davison Canner have to expand their business in Asian countries they will engage in global
environment can be benefit for organisation or sometimes can be risky because due to changes in
global environment they affect the performance of small and medium enterprises. These
countries develop the economy of state that gives growth in SME, as GDP is good that give
opportunities to organisation to create a job opportunities. These contribute towards the economy
of country to assist the political that acknowledge political. These types of organisation stimulate
to different economy in effectively and in appropriate manner. In other words, global business
environment means resources and capabilities is linked with decision of secular nation. Those
organisations operating their business in UK in SME have to take decision and analyse the need
of global with limitation and small enterprises gives contribution can earn revenue whereas large
organisation can take benefit by funds to attain the objectives in stipulated time period. Global
business environment helps small business entrepreneur in operating its business in different
culture, belief, locations, rules and regulation which spread their brand image all over the world.
Global business environment includes culture and environment of different countries which
brings much opportunity for growth of small business. In context of selected firm, global
business environment brings many opportunities which increase their revenue and brand image.
Different culture of countries helps selected firm to innovate new products for satisfying needs of
customers.
PESTLE analysis:

PESTLE analysis is used as a tool of making evaluation of various external forces that
are affecting present functioning of organisations. In present scenario David Canners is willing to
expanding its market share across international borders that are Asia countries. For this external
analysis is mentioned below:
Political factors: There are some of the political factors that include the stability of
government based on rule of law, corruption and effectiveness of government policies. All these
political aspects are affecting the present functioning of David canners. BREXIT situation has
also created lot of uncertainty in recent times. All such factors are affecting present functioning
of David canners and are also going to help them in their future expansion plans.
As per the different statistics that are published by statistics research department in year 2021.
58% of the British people are now having an approach that is willing to leave European Union
that is 39 % of British adults. There is increasing threat because of complete changes in the legal
policies and regulations. This might possess impact in present expansion strategy of David
planners because the European Union will have application of trade agreements since 1st January
2021.
Economic factors: There are some of the economic factors that include the present GDP
trends that are ranging at 2.744 trillion UK dollars. The diverse economy is adding value to the
customer’s lives and helping in creation of high demand in the market.
The present situation of covid-19 is creating many economic issues that is present GDP of UK is
at 5% that is below the requirement of fourth quarter in the year 2019. There have been many
efforts that are reduced because of the emergency measures and situation at is arising because of
covid-19 pandemic. For David canners, there is a major issue that is in the coming time period
for low projection growth. Another major issue can be because of the reducing purchasing power
of customers as their over disposable income has also declined with time. This is creating
opportunities as different business segments can be approached by David canners for the purpose
of expanding across international borders.
Social factors: David canners has always been working on development of a social
approach where the organisation is working towards expanding of their business into new
diversified areas such as hot eat desserts so that they can develop new dessert range. As per the
preferences of changing needs of customers there can be investment in new facility and

exploring of new markets for their potential and present customers. This approach will be taken
forward to their new target Asian markets where David canners are willing to expand their
market share.
The present situation of covid-19 has been one of the major issues that are helping the industries
to work according to the changing nature of the customers. David canners can utilise the overall
opportunities that are being generated because of this situation where customers are shifting
towards online purchasing and e-commerce platforms. David canners can make use of
opportunities that are generated through such platforms and having more low cost options to
expand the present loyal customer base. The present customer base can also be used for the
purpose of having indirect marketing approaches to enhance the market share.
Technological factors: David canners are a brand that is continuously working towards
reviewing the existing business models for expanding in new areas. They are using latest
technological support in form of internet up-gradation and other technological measures for
diversification of business with new product range.
Technological advancement can help organisations in having more shifting towards opportunity
to have complete transformation of the business. The present situation is also providing
opportunities to David canners where there can use of drone deliveries as one of the latest
technologies for the purpose of approaching their customers in a more innovative manner. It is
one of the technological advancement tools that can be used as part of capital intensive approach
as compared to present labour intensive approach.
Legal factors: All business organisations have to follow employment act 1996 operating
in UK. Such legal laws and regulatory framework are different as per different geographical
locations. In David canners there is need to focus on all legal impactions that will be taking place
while David canners will be entering in their new target Asian countries for the purpose of
achievement of higher market share.
Environment factors: There are some of the factors that have to be considered by David
canners. Such as, it includes serious environmental issues. As a grown family business David
canners have always been passionate about achievement of laid objectives of the organisation.
They are working towards protection of environment and not harming it with any type of raw
materials that can damage the present sustainability of environment (Davison Canners launches
new own brand range as business reaches into new markets, 2020).

Organisations can move towards more sustainable approaches by using recyclable products and
eco friendly packaging. There can be availing of opportunities that can help organisations for the
purpose of expanding themselves in more sustainable measures. David canners can plan to focus
on reduction of use in plastics and other non biodegradable substances so that the organisation is
able to for the main contribution towards sustainable development of environment (UNITED
KINGDOM: ECONOMIC AND POLITICAL OUTLINE, 2020).
From the above mentioned PESTLE analysis it can be said that there are many different
opportunities that are available for small businesses so that they are able to expand themselves
across globe. For this there is requirement to emphasize the global context for entrepreneurship
and small business that can lead to presentation of more opportunities for search entrepreneurial
businesses. Some of the ways that can be used in context of David canners is by expansion
opportunities include expansion of sales life of existing products and services by developing new
markets for selling them. There can be reduction of dependence on the existing markets by
enhancing the market share there can be use of price penetration as a strategy to approach new
target segment of customers.
There can be exploitation of more opportunities that are part of corporate technology by
focusing on demand cycles and seasonal changes by tapping into markets that are different and
also who are having less counter cycle fluctuations.
A small business can also work towards exploitation of new corporate technology and
know-how by entering of a global marketplace. So, that they are able to compete against other
foreign brands and then battle with them on different grounds.
P2 Assess the threats and opportunities in competition in global environment faced by SME
Small and medium enterprises have lot of opportunities of growth in business
environment in regard to creation of job and technological advancement. These sectors face
many challenges and opportunities in increasingly competitive environment. In other words, it is
important for organisation to grow and operate their business in other countries that increases the
standard of living and employment. In reference to small and medium enterprises challenges or
issues and opportunities faced by organisation are discussed below:-
Challenges for SMEs:-

They face many challenges, where first challenge is that they have inadequate market
facilities and SME have less support from government, this threat is challenging as there is low
budget which limit their growth because of marketing their goods and services. Second challenge
includes limited number of workers as this affect to operate business globally in competitive
world. The third challenge is lack of credit and resources available to SME, it affect the
performance of business as there are various situation such as sanctions of loans or high rate of
interest on loan skilled workers and finance (Hartland-Thunberg, 2019). Last challenge that deal
by SME is shortage in economies of scale. Davison canners is going to face many challenges to
expand their business in other international market because of global environment they do not
have much employees to work in competitive world, policies that affect performance of
organisation or they can also face resources problem that affect to operate their business. These
all threats can be faced by Davison canners when they will start their business in Asian countries.
Threats:
Local and global competition:
One of the major challenges that can be faced by David canners s that are willing to
expand across border is related to the presence of high amount of global and local competition.
Increasing local competition is leading to additional problem because there are dynamically
growing labours that are expanding across new territories because of the success achieved in
domestic countries.
Notable diversity is also a very crucial aspect that is part of local and international
brands. Small and medium enterprises have somehow disappeared in some of the early years
because they do not possess the right amount of ability to respond and understand the challenges
that a part of global competitive environment. The definition of small and medium enterprises is
different in each country and there is need to evaluate it according to the prevailing
circumstances of the target intern country.
Globalisation is a major factor that is main reason for high amount of competition and economic
turbulence that are part of external environment.
This aspect of globalisation has affected the high amount of competition and economic
turbulence in the external marketing environment. There is also a difficulty in accessing to new
markets, new technologies, formation of strategic alliances, transferring of knowledge and
Capability

Opportunities for SMEs:-
The main opportunity is e-commerce, by making their presence in digital world. Second
advantage that SME can gain at global level that increases in the revenue by increment in the
field of consumer that organisation will directly gain profit of organisation. By increasing their
sales in market the firm where they produce a particular product can offer their services in
expanding nation, this will benefit Davison canners to expand their business internationally. It
will help them to capture market in large in limited period of time. The advantage will be
diversifying market by dividing the products in different market.
Virtual shopping carts: it is a technique that is based on using it as a tool just like the
physical shopping cart. In this items are hold for the purpose of buying and shopping it is one of
the best techniques of shopping cart software that is very important for a growing business.
Online payment systems: there has been complete shift in the way new payments are
made through online systems it includes the way customers can purchase favourite brands from
any part across world. This technique can be used as a part of expansion strategies by various
small and medium enterprises, such as credit card as a payment system where the money is not
deducted from the payers account immediately is one such method. Another method is by paying
securely through debit card that is also a secure and inexpensive way of making online payments.
In this amount is directly deducted from the account. There is zero liability protection debit cards
are also very helpful in securing of online transaction that is their 24 hours fraud monitoring
services that leads to detecting of suspicious activities. Further there have been other third party
payment systems that includes Google wallet, skrill, payoneer that are secure methods of online
payment.
Social media presence: local and small medium enterprises can focus on using of social
media as a very effective tool for the purpose expands across international borders. In case of
David canners it is to use such methods where there can be use of social media as a tool to
effectively approach some new international market segments. For this there is need to follow
some of the aspects that includes setting of social media goals, researching the competition,
conducting of social media audit, finding of inspiration and further creating of social media
calendar.

TASK 2
P3 Evaluate international trading blocs with advantages
Trading bloc is defined as intergovernmental agreement, where different countries
international trade are eliminated on participating states. This means they can trade with other
nation and there is no restriction to trade in other country. There is contract between nations that
can freely trade but they will set some barriers that will impact to global and competitive world.
This will help exporter as they have new opportunities of international trade whereas they are not
liable to pay taxes (Lake, 2018). United Kingdom was member of European Union so they have
benefit to trade in European nation and their region but when after implementation they are
separated from European Union and have signed with other trade agreement. This trade
agreement means where they can easily trade in other nation. CARIFORUM-UK is trade block
of partnership agreement. Small and medium enterprises can easily trade in other countries or in
different 11 nations. Second trading agreement is SACUM-UK economic partnership agreement,
this means they can trade in different southern countries.
Advantages of trading bloc
 The advantage is for foreign direct investment, it develops economy for long time and
by reducing cost so that medium enterprises can afford as it increases investment and
overall size of firm.
 Trading bloc increases economic leverage that decrease the production cost.
 It increases competition because it remove tariff that create choice for customers.
However, it increases incentive by reducing cost.
It reduce the trade effect by importing goods and improving goods, it increases the demand of
consumer by lowering the product cost and demand of that product increases.
Trade creation and trading blocs:
Trade diversion is a major switch from a lower cost for and supplier’s source that is
outside of a custom union towards a high cost supplier that is part of custom union. Diversion is
regarded as a feature of a country that is willing to join custom union there can be free trade
taking place between the customer union and also a common external tariff. The concept of trade
creation is part of trading bloc that is occurs when a country enters a free trade area and is part of
custom union where there can be free trade among the members that are part of common external

tariff. It is one of the most effective methods that can be adopted by organisations for the purpose
of sharing their losses and dealing with higher amount of regulations.
Trade diversion can help an organisation to part of common external tariff that might
sometimes increase the cost of importing. At the same time it is one of the most important
aspects that can lead to words low-cost suppliers and part of third party nation.
Trade diversion may sometimes to decreasing in rate because there can be formation of trading
block along with non-trading block members that has to be replaced by trade with relatively high
cost reading block members. On the other hand has a trade that is taking place between member
countries so that there can be expansion of formation of trading bloc. It is generally related to
removal of trade barriers that can help in increasing specialisation and higher competitive
advantage. For David canners it can help in dealing with rises that are falling and expansion of
trade.
Regional trade agreement:
Regional trade in agreements are regarded as a treaty that is signed by two or more
countries for the purpose of encouraging free movement of goods and services across different
members who are part of their members. The agreement as part of internal rules that member
countries have to follow while they are dealing with non member countries there are some
external rules that have to be followed.
Some of the types of regional trading agreements are mentioned below:
Preferential trade areas: preferential trading agreements require low level of
commitment that is there is reduction of trade barriers to member countries is not eliminating the
barrier among them.
Free trade area: in case of free trade agreements all the trade barriers are eliminated so
that there can be free movement of goods and services. Further dealing with non-members is a
different scenario.
Common market: common market is a trading agreement where members can work
towards removing internal trade barriers and adopting common policies while they are dealing
with non members it allows movement of resources in a freer manner.
Benefits of regional trade agreement: Regional trade agreements are very helpful for
organisations that are willing to expand across Nations because it helps them in encouraging free

movement of goods and services across borders. Such type of agreements is also helpful in
having free trade union and full integration.
Boost economic growth: Defined member countries are benefited from trade agreements as there
is induction of more job opportunities proper market expansions and lower employment rates.
Volume of trade: Organisations like David canners can enjoy great incentives to trade in new
markets and there are attractive trading conditions that are part of policies in these agreements.
High quality and variety of goods: Trade agreements are opened for many large businesses are
helping in gaining access to new markets so that competition can be dealt with more intensity.
When organisation like David canners will be working towards dealing with competition there
will be more production of high-quality product so that there can be improvement of present
customer satisfaction level.
Examples of trading blocs:
Some of the trading blocs include:
European Union (EU): that is accustoms union a single market with a single currency in
European free trade area (EFTA)
North America free trade agreement that is between Canada, USA and Mexico
Mercosure: a customer’s union between Argentina, Brazil, Paraguay, Uruguay and Venezuela
Association of Southeast Asia nations (ASEAN) Free trade area (AFTA).
Common market of southern eastern and southern Africa (COMESA)
Pacific alliance 2013: that is a regional trade agreement between Colombia, Chile, Peru and
Mexico.
Trade creation is basically a movement between higher costs of output source that is moving
towards lower course of supply because of joining a trade agreement. Trade creation is taking
place when a country enters a free trade between members that are part of external tariff.
P4 Assess various tariff and non-tariff in international trading environment
International trade means the trade that is carried by governments and businesses they
deal with economic transactions between countries. It includes products that are traded such as
consumable goods which include clothing, raw material and machinery whereas another
transaction includes services. These barriers are charged for various reasons such as protecting
consumer for welfare of the country, protecting jobs, retaliation where these agreements help to

trade free in countries, to help infant countries by increasing price of imported goods and by
protecting the national security in the country. International trading bloc agreements is a form of
intergovernmental agreements where various regional barriers over international trades are
actually reduced amongst differing involved states which enable them to trade with each other in
most comfortable manner. They are implemented through trade creation with issue of same token
which will help them to communicate in effective manner. This way it will become easier for
geographically attached countries to trade freely. Davison canners will also import or export their
products then they have to pay the charges which are levied on them because they want to
expand their business that's why they have to pay the tariffs and if they have imported more than
the quantity as described in licence they have to pay fine or penalty (Ormazabal and et. al.,
2018). The two barriers are tariff and non-tariff which are discussed in detail below:-
Tariff Barriers
Tariff is a tax or custom imposed on imported goods or products across nations by the
government. They are charged on per unit basis such as per new shoes, per new care or per barrel
of oil and value of products can be on basis of percentage like 9 % of a $9,00,000 shipment of
clothing. Imported products are costly because of tariffs so it can be less competition on
domestic products where they are used to control export and import in goods and services.
Protective tariffs are those where import goods are more attractive to domestic products than
imported goods. Some of tariff barriers are transit duties, export tariff, import tariff are as
follows:-
 Transit duties: This is main barrier for small and medium enterprises that trade at the
level of international. It is charge on goods or services from one country to another and
charged by government.
 Export tariff:- These duty are generally applied on agriculture and mineral products.
These tariffs are imposed on products that are export by exporting country.
 Import tariff:- The import tariff are imposed on the country where goods are imported.
In other words, the custom is levied on imported country on goods and services. It is
generally charged in order to protect domestic industries and raise revenue.
Non-tariff barriers

These restrictions are non tax such as government roles and procedure that affect trade in
overseas and rules and regulation of government (Wang and Wang, 2020). These are in type of
subsidies, the imported goods have certain type of limit on the quantity and imported quota. The
non-tariff barriers are voluntary export restraint, quotas and subsidies discussed below:-
 VER (voluntary export restraint):- This means the country fixed a quota that what
maximum quantity to be produced that is imported in other nation. Exporting country fix
the quota that is requested by importing countries.
 Quotas:- These quantity is fixed on the basis of licence of organisation they set a number
of limit that is for import or export of commodities during a particular period of time.
They have to pay fine or penalty when the importer import more than the quantity
specified in licence of firm.
 Subsidies:- It tends to compete against foreign goods because government gives payment
to the producer of domestic products. These include government equity, grant of cash and
subsidy prices.
 International trading block agreement:
International trading block is a intergovernmental agreement that is part of removing all
the different types of regional barriers that can occur while organisation is willing to work
towards international trade.
 Implications:
The overall implications of trading block are related to elimination and reduction of
different types of tariff and non tariff barriers. It has many advantages as it leads to
elimination and reduction of participating countries and allowing them to treat with each
other with high amount of Ease. With it there is better is and higher flexibility as there are
free trade agreements that lead to positive impact on economic growth of a country. Also,
David canners will be able to freely expand and sell two different international countries.
Another positive implication of free trade agreement is the aspect of most favoured nation
where some countries are receiving this as a status to create a situation where different
countries are treated equally. There is reduction of tariffs and the trading privileges applied
to one particular country are applied to all countries that are part of the favoured nation
status.

TASK 3
P5: Advantages and disadvantages of importing and exporting with a secure deal
The process and operations of bringing products and services from domestic to another
international market or country is regarded as importing or exporting. Foreign trade is carried in
different goods & services that consist of exports, imports and balance of foreign trade that is
presented separately for products and services. Davison canners Ltd. is present in Craigavon UK
and belongs to fruits & vegetable industry (Bedon and Fragiacomo, 2019). Presently the
organisation is willing to expand to other international markets that include some developing
Asian countries such as china, Malaysia. For this purpose there is critical analysis of the
exporting & importing functions as mentioned below:
Importing:
It is a concept where goods & services are bought in one country that has been produced in
another country. It is important concept of international trade. In case if import exceeds the value
of exports then a country has a negative trade balance is considered as a situation of trade deficit.
Advantage of imports business:
 Extending the profitability margins. Davison canners can expand their profit margins by
covering international markets without having any physical presence.
 Importing & exporting can be beneficial for a business as importing can assist Davison
canners in creation of high demand by focussing on attracting a new target market (Ali
and Loona, 2019). Davison canners can achieve a competitive advantage as they can achieve a leadership
position in the industry by manufacturing of some new & improve products as compared
to their competitors.
Disadvantages of imports business:
 There is an issue of sudden change in the currency exchange rate that may result into
suffering a loss of falling in value.
 Political risk can be a hindrance as government of the prospective country may suddenly
impose tariff in products that are being imported by Davison canners. It may lead to
driving of unexpected cost enhancement and reduction in overall profitability margins.
Advantage of importing for David canners:

1) Importing lead towards introduction of new product in the market because much business
is willing to expand themselves in other countries and this aspect leads to creation of
further opportunities for expansion.
2) Importing of products is associated with reduction of cost as major benefit of importing is
dealing with the high manufacturing cost.
3) Importing is an aspect that is very important for the purpose of strengthening of local
economic opportunities in business and dealing with the high unemployment rate. It is
very crucial for the purpose of maintaining balance through use of international Trade
especially in case of small and medium enterprises as developing organisations rely on
international imports and exports.
Securing an export and import deal: In David canners, there can be focus on using of
important or exporting deal as a process of expanding to the target developing countries of Asia.
Through importing there can be use of exclusive deals that can lead to higher amount of cost
effectiveness. On the other hand exporting is one of the ways that will lead to words properly
expanding to other countries where there are opportunities of achieving higher market share.
Exporting:
Exporting is a concept where a domestic production of a country is being send to other
countries across international borders. Exports facilitate the process of international trade and
further stimulate the domestic economic activity by creation of production employment nd
revenues
Advantages of Exports:
 Davison canners can take benefits of larger economies of scale and high profitability
margins There will be less dependency of Davison canners on markets of UK
Disadvantages of exports:

 Davison canners have to deal with higher administration costs that is rising because of
higher export regulations while the company is trading outside European union There is need to focus on managing of remote relationships that is there is need to
develop understand of the markets, local culture of the target countries of Asia which are
being targeted.
Importing and exporting situation involves a scenario where there may be high
associated cost because of high taxation, extra prices that can lead to high burden on Davison
canners. All such factors have to be considered before expanding to new international markets.
P6: Difference between merchandise and service imports and exports
Merchandise exports are regarded as products leaving statically territory of a particular
country. Merchandise imports are regarded as country's stock of material entering a statistical
territory. Statically territory of a country is generally coinciding with the economic territory as
part of general trade system. It correspond to area where goods can be traded freely and comprise
of particular part of economic territory. Davison canners Ltd. will be focusing on adopting this
technique of merchandising of products. They are having a background of harvesting Bramely
apples over a time period of 40 years (Zhong, 2020). Throughout all these years this brand has
been able to meet the demands of their customers and achieved an effective product
diversification to stay ahead of all the food trends prevailing across UK. Different products range
that will be basically imported and export across new Asian international markets includes the
fruit compotes, jams, and sauces syrups, processes apple product, dessert range, fruit compotes.
While working towards innovation they are focussing on new product development by using of
apple as the major ingredient.
Where as
Service export & import is regarded as services that are offered by one county to other
nation. It is generally very important in the emerging markets. There are different types of
industries that are part of the service industrious and are assisting countries in earning of higher
foreign exchange. It includes industry such as software, tourism, Consultancy, hospitality, health
care. There can be selling of services across different international markets apart from their
home country. Davison canners is dealing in a broad range of products hence there will be no use
of service import or export as a medium but there will be mercantile export and importing of
products and services across new internationality markets (Singh and Delios, 2017)

Import & export is a type of business mechanism that is associated with international business
those posses’ legal boundaries, taxation requirement of logistics that is essential for moving of
product & services to a new international, marketplace. Pricing decisions are also changed
according to the adopted criteria of exporting & importing of business.
TASK 4
P7: Evaluate various methods in which SME can tap into international markets
There are different types of methods that can be used by organisation for the purpose of
expanding into international markets that can lead towards enhancement of their profitability &
the present market share. Organisation have to consider a specific medium that can helps them in
achievement of a higher effectiveness in their process of expand and tapping to new international
markets. For this there are some of the methods that can be adopted by Davison canners as
mentioned below:
Franchising: It is regarded as a type of agreement that is formed between two associated
parties. In this a contractual agreement is taking pale between the franchisee and the franchisor.
Here franchisor authorized franchisee to sell their goods, services, products that provided a right
to use their trade markets & specified brand name. Franchisee has to pay on time commission,
fee, revenue (Alaaraj, Mohamed and Bustamam, 2018). There is development of a contractual
relationship between both the parties where franchisor is obliged to maintain a continuing
interest in business and different areas of training & know how. Franchisee also operates under a
common format, trade and a procedure that is controlled by franchisor.
Licensing: Licensing is another mechanism that is used by organisation for the purpose
of entering into new international markets. It is granted by one party to as a element of
agreement between both the parties. It is issues buy government by formation of a specific
agreement that is in written form. It grants official recognition of relationship between two
parties to engage in a activity that is subject to prosecution and permits the licensed party if there
is something done it may lay to violating the rights of licensing party.
Joint venture: It is a business entity where two or more parties are willing to pool
resources together for the objective of achievement of specific business tasks. In these ventures
each participant is responsible for all the profits, cost and losses that are associated. Venture has
their own entity that is separate from participants of business interest (Keller-Bacher and

Zerfass, 2019). This is one of the most suitable methods for Davison canners that can be used
for the purpose of entering into Asian markets. There can be use of this method where there will
be advantages of the brand name of a established organisation belonging to the similar industry
to which David canners belongs that is a wide range of products that include fruit jams, fillings,
sauces, apple products and other dessert range.
Establishing outlets/branches abroad: It is also one of the methods that can be used by David
canners where there can be expansion by opening of outlets across new countries where they are
not having presence. It can be very helpful interest of better access to technical skills and
regional knowledge it has many benefits in terms of opening up of access to new markets or
development of product and services. For example European Union is one of the largest and
sophisticated markets that can lead to higher consistency and ease in travelling for people across
different parts of the world.
Partnerships with larger organisations: It is also one such way that can be used for the
purpose of expanding across borders. In this strategy organizations can work towards forming
alliances or connections with already established large scale organisations in their target country.
It is one of the most effective methods as there can be sharing of risks and losses at same time
David canners will be able to take advantage of the established brand name of such established
brand.
From the above mentioned different mediums it can be said that the most suitable
medium to enter into Asian countries like Malasiya, china is to use this approach of forming a
joint venture with the established successful brands.
P8: Compare and contrast various modes of SME can tap into international markets, assess pros
and cons of each method
Franchising Licensing Joint ventures
Cons
Franchisee may not be able to
manage properly the
employees according to
requirement as there can be
There is loss of control and
there is complete relying on
the licensee’s ability to
commercialize the patent.
In some situations objectives
of joint venture are not clear
that may lead to not matching
of expertise level it may also

different objectives of
franchisor depending on a
particular condition. The
recruitment process in a
franchise can be less efficient
and slow as compared to
normal recruitment process in
organisations.
There can be a poor quality
management which might lead
to further damaging the
reputation of brand or product.
pose a barriers in form of
management styles and
differences in cultures. Such as
David canners may be dealing
in products that are developed
according to the preferences
and taste of people in UK.
There is always focus on the
local culture by this brand
while they are developing jams
& desserts. But while they are
expanding in new international
markets there is requirement to
make a market research in
order to understand the taste
preferences of prospective
customers in such international
markets.
Pros
There can be easy expansion
by use of franchise as a
method for achievement of
success in a organisation.
Franchisors are relatively
making less financial
investment as compared to
franchisors that leads to easy
process.
Licensing creates a
opportunity of passive income
as there can be creation of
passive revenues (Gundolf,
Jaouen and Gast, 2018). There
is less risks as compared to
other business types that are
related to product
development, distribution,
market testing and
manufacturing. It is one of the
Joint venture provides the
basic opportunity of gaining
new expertise and insights,. It
leads to towards developing a
detail understand of benefits
that a existing business can
provided a newly
organisations. In preset
scenario David canners can
avail the opportunity of
establishing successfully in

best arrangements that can be
used of launching products in
new foreign markets as tariff
barriers to entry can be
avoided because domestic
brand is is making use of an
intellectual property right.
There is also a freedom of
developing of a unique
marketing approach by use of
this method.
such international markets that
is going to benefit them in long
run. It is a flexible way as
there can be entering and
leaving of joint venture
according to demand of
particular situation.

CONCLUSION
From the above made analysis it can be concluded that the selected small & medium
enterprise is willing to expand their business to new internal markets, globalisation has lead to
creation of lot of opportunities that can help in achievement of success in terms of higher
profitability because of increasing market share. There are many different types of barriers that
can arise in the process of expansion that has to be dealt by selecting the best course of action
according to suitability level. Joint venture is regarded as one of the suitable methods as it leads
reduction in the overall complexity of expansion procedure.

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Online
Davison canners Ltd., 2020 [online], Available
through<ttps://www.buynifood.com/suppliers/davison-canners-ltd>

DAVISON CANNERS LIMITED, 2021[online], Available
through<https://www.dnb.com/business-directory/company
profiles.davison_canners_limited.7ade3f774e3c67d6eed09b6852be553f.html>
Davison Canners launches new own brand range as business reaches into new markets, 2020
[online], Available through<https://www.newsletter.co.uk/business/davison-canners-launches-
new-own-brand-range-business-reaches-new-markets-969839>
UNITED KINGDOM: ECONOMIC AND POLITICAL OUTLINE, 2020 [ONLINE],
AVAILABLE THROUGH<https://santandertrade.com/en/portal/analyse-markets/united-
kingdom/economic-political-outline?url_de_la_page=%2Fen%2Fportal%2Fanalyse-markets
%2Funited-kingdom%2Feconomic-political-
outline&&actualiser_id_banque=oui&id_banque=0&memoriser_choix=memoriser>