Trading Overseas: How to Start Up an Exporting Business and Tapping into New and International Markets

This report by Desklib provides insights on how to start an exporting business and tap into new and international markets. It covers topics such as the global business environment, trading blocs, and the advantages of specific trading agreements. The report also evaluates the opportunities and challenges of global growth for SMEs.

Tapping into New and
International Markets

Table of Contents
Part 1................................................................................................................................................3
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Introduction to the chosen country and region.......................................................................3
Critical analysis of the global business environment and the influence of key global drivers
specifically..............................................................................................................................4
The rationale for SMSs to expand their business internationally...........................................5
Evaluate a range of trading blocs and agreements and examine the advantages of specific
trading agreements that would have a direct significance for your region and country.........7
Critically evaluate how these stimulate and generate global growth.....................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Part 2..............................................................................................................................................11
INTRODUCTION ........................................................................................................................11
Main Body ....................................................................................................................................11
Evaluation of different types of exporting processes ..........................................................11
Difference between merchandise and service imports and exports......................................12
Documentation required for exporting ................................................................................13
Assessment of different ways of tapping into new markets ................................................14
Justified recommendation ....................................................................................................15
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17

Part 1
INTRODUCTION
Every company aims to expand their business well to improve their productivity and
profitability. It is essential for companies to analyse the market size and customers preferences
toward their products and services before targeting any international country to expand their
business. Q5 Partners is a consultancy service company which is founded in the year 2009 and
help the clients to solve their business issues with appropriate suggestions and strategies for
growth. It is headquartered in London, UK and it has 47 employees (Q5 Partners, 2022). the
following report covers introduction of chosen country, analysis of global business environment
and reason for SME to expand internationally. It also includes trading blocs and agreement and
advantage of specific trading agreement and evaluation of stimulate and generate global growth.
Main Body
Introduction to the chosen country and region
Europe is the second smallest continent which is located in the Northern and Eastern
hemisphere on the globe and also recognized as portion of Eurasia. It covers near 10.18 million
km sq. of the Earth that is 2%, Europe is divided into 50 states and the total population of Europe
is about 746 million which is 10% of the population of world, Russia is the most popular and
largest state of this country which acquire 15% of its population and 39% of its surface. The
climate of Europe is highly affected by temperate climate, the culture of Europe is based on
western civilisation and more than 100 languages are spoken in it. Currently the economy of
Europe is highest and it is the wealthiest region in term of assets on earth the business
environment of Europe is free for all types of business whether it is large, micro and small
businesses.
In Europe every business have freedom to buy and sell their goods and services to others
sates members with no extra taxes charged by the government with in the country or union
(Guercini and Milanesi, 2018). Every person of the country have rights and freedom to move
from one state to another state for their livelihood and work and government of Europe formed
one set of rules for operating and exporting in more than one European country and various set
of laws of consumer rights, employment rights and property rights so every business should

operate their work with in these law to assure safe and fair practises with any party and customer
of their business.
EURO is the single currency of Europe and it is easier for small business to operate their
business in Europe because it is less risky and more price effective to exchange their goods and
services without any cost involved in exchanging currencies which make more easier to analyse
and compare different prices of country and raw material are available at low cost so they sell
goods to consumer at low prices.
Critical analysis of the global business environment and the influence of key global drivers
specifically
Global business environment refers to a factor in which business of different countries
operate their business with external and internal forces defining the dynamics and nature of
global transaction and global business related to increasingly coordinated environment,
competitive dynamics, technology changes and advancements and intercultural or social
effectiveness are main drivers to conduct or doing global business.
 Political factors: These factors is determine the political interference and influences of
government policy of the country that affect the business operations and cost such as tax,
environmental policy and trade policy which government posses on the business
(Arensberg, 2018). The government of Europe provide and encourage peace, freedom,
democracy and security at international level so Q5 partner have freedom to operate their
services globally and also spread their business at international level.
 Economical factors: These are those factor which show how economic situation of a
country can effect on the operation and success of a business. In Europe there is single
market in which every business have freedom to move their goods,services, labour and
capital in all over the union without any restrictions and administrative liabilities to make
easier for all business to operate and run their activities more efficiently at low cost. Q5
partners start their business at low cost of registration and provide their consultancy
services in all states at low cost without any additional tax.
 Social factors: these factor are related to the social norms and ethical values of the
country such as health and safety of people, population growth, employment and career
attitudes which can affect their business norms (Wright, 2020). Europe is rich in cultural
heritage and works to support and help to the citizens. The union allow its citizens to

work, travel and settle in any place with in the country to help them for build and learn
their skills from different sub cultures, generate employment opportunities and reduce
income inequalities. The Q5 partners provide their consultancy services to help people to
develop their mindsets and learn various skills to achieve their goal more efficiently and
help various companies to hire capable employees and generate employment.
 Technological factors: It refers to the technological changes and advancement which
affect the growth of business in dynamic market such as digital marketing, automations,
online payment and software development. Europe contributes highly in generate science
and technology and expand their market globally and use various technology such as
digital marketing, E business and online mode of payments and many more also Q5
partners also provide their services online, sometime they give live session for urgent
queries to their customers and also accept online payments for fast transactions.
The rationale for SMSs to expand their business internationally
After globalisation many small and micro business expand their business globally because they
want to expand their operations for acquiring more revenue, many investment opportunities,
increase their sales, hiring new talents and reducing their production cost. Some times
government also give subsidy and tax rebates to these companies to contribute in their GDP.
1. Increasing profit margin: it is the most common motive of SME for entering in global
market (Ngamcharoenmongkol, 2018). When a business man can operate their business
successfully on national level then they want to expand their business at international
level to increase their customer base which lead increase in their sale and profit also.
Doing business internationally means make contact and conglomeration with various
international supplier which help them to reduce their product and production cost.
2. Diversifying the business: The global expansion helps a business to diversify its
business and line of product in different countries. If a business develop and make new
product and services or want to introduce and enters into new market of multiple
countries to reduce its economical risk and also gain huge profit, customer faith and huge
market share to compete in competitive market with various dynamic factors.
The opportunities and the challenges of global growth
opportunities

 Accession to new culture: After globalisation it is easier for people to move freely in
any country and choose and acquire foreign civilization including music, food, art. Also
businesses can conduct their operation in multiple countries and new markets which
means increasing customers base, good market perception and develop their brand on
international level.
 The spread of innovation and technology: Another advantage of global growth is
sharing of knowledge, values, technology, information and cultural norms across the
world (Mian and Sufi, 2018). So, many country connected with each other through their
business practises which means knowledge, technological and scientific advances transfer
quickly between them.
 Access and diverse new talents: Globalisation allow businesses to hire specialised and
new job candidates across the world. Any business choose their employees according to
their protocol , skill sets, nature of adaptability and their background or experiences
which will help them to change, develop and grow their businesses at height and bring
new innovation and wealth for prosperity of business.
Challenges
 High investment: Generally global expansion are very expensive for small business. It
require huge investment to expand their business internationally such as finding resources
for designing and applying strategies for impressive globalisation, setting and starting
new business in other country for it hiring new candidates, paying taxes and making
contracts with many parties and agencies which require huge capital, time and research.
 Cultural differences : It is very difficult to understand the cultural of many countries
such as taste or preferences of customers, demand in the current market or market
condition of particular area. some times when a strategy works at domestic market it does
not mean that works on international market too (Savchina and et. al., 2019). So proper
strategy and communication skills with many business parties and customers is required
to understand their demands and culture.
Evaluate a range of trading blocs and agreements and examine the advantages of specific trading
agreements that would have a direct significance for your region and country
Trading blocs are the intergovernmental agreements which is signed by two or more
states of a country to mitigate their barriers of trading activities (What is a trading bloc?, 2016).

Such kinds of agreement are also used for mentioning the rules and regulations and terms of
trading between more than one country. It consist of member countries where the countries
mentioned in this agreement have the benefit to share their goods and services without any
charges and restrictions.
Types of trading blocs-
 Free- Trade Area- This is the type of trading bloc agreement where the member
countries are having no restrictions and barriers for their import and exports (Lehtonen,
2018). For example NAFTA.
 Customs Union- This is the agreement which consist that all mentioned countries will
follow same rules and regulations for their trading activities.
 Common Market- Here, all barriers related to movement of labour and capital goods get
removed among member countries.
 Economic Union- Here, the member of this agreement establish common institution and
policies for managing their trading activities in a unbiased manner. For example, EU.
 Monetary Union- In this trading bloc, member countries adopt a single currency for
exchanging their goods and services.
In context of Q5 Partners, they can Economic Union type of Trading Bloc for exchanging
their services from UK to European Countries. The main advantage for adopting this trading bloc
is that it will help to monitor activities in a unbiased manner. A common institute will keep their
eyes upon all activities related to sharing of goods and services from one country to another
(Yuting, 2018). In case Q5 Partners will provide few employees to any company based in Europe
to mitigate their business issue to lack of skilled employees than this Europe Union trading bloc's
institution will keep their eyes and make sure that the employees send from one country to
another should not be exploited. Hence, this will help the company to expand their reach to their
selected country Europe for the main aim of growth.
Critically evaluate how these stimulate and generate global growth
It is critically evaluated from the above information that external business environment of
Europe can be helpful for Q5 Partners to expand their business in Europe. For example, their
political factors such as low corporate tax can be helpful for Q5 Partners to establish their
business in Europe. Secondly, their economic factor states that their each market in Europe
follow common currency which will further reduce the risk of currency fluctuations. The

population of Europe are more focused to gain quality products and services. The companies in
Europe are having more concern to mitigate their business issues as soon as possible so that it
will not impact upon organisational growth. Hence, they also opt consultancy helps with various
consultancy services. Therefore, it is the opportunity for Q5 Partners to expand their business
well in Europe. Trading bloc also helps the companies to maintain discipline and monitor the
trading activities between UK and Europe for exchange of services related to Q5 Partners.

CONCLUSION
It is essential for every organisation to focus on their internal and external business
environment to analyse their opportunities and defend threats for organisational growth. PESTEL
analysis is used to analyse external business environment of a company and the ways in which
these factors can impacts the company. There are various reasons for SME to expand their
business internationally such as increasing customer base, improving productivity and
profitability, gaining competitive advantage and many others. There are various kinds of
opportunities and challenges for global growth of a company which they must analyse well.

REFERENCES
Books and journals
Arensberg, M.B., 2018. Population aging: opportunity for business expansion, an invitational
paper presented at the Asia-pacific economic cooperation (APEC) international
workshop on Adaptation to population aging issues, july 17, 2017, Ha Noi, Viet
Nam. Journal of Health, Population and nutrition, 37(1), pp.1-11.
Guercini, S. and Milanesi, M., 2018. Understanding changes within business networks:
evidences from the international expansion of fashion firms. Journal of Business &
Industrial Marketing.
Hutzschenreuter, T. and Harhoff, P.L., 2021. The accelerating effect of institutional environment
unfamiliarity on subsidiary portfolio expansion in a new host country. International
Business Review, 30(3), p.101793.
Lehtonen, E., 2018. Expansion of a business to the United States and its tax implications: a
private equity firm’s perspective.
Levykin, V. and Chala, O., 2018. Method of automated construction and expansion of the
knowledge base of the business process management system. EUREKA: Physics and
Engineering, (4), pp.29-35.
Mian, A. and Sufi, A., 2018. Finance and business cycles: the credit-driven household demand
channel. Journal of Economic Perspectives, 32(3), pp.31-58.
Ngamcharoenmongkol, P., 2018. Central Food Retail: Business Expansion and Brand
Architecture Strategy. Asian Case Research Journal, 22(01), pp.199-218.
Savchina, O. and et. al., 2019. Assessment of financial stability and business expansion of JSC
statoil in the context of economic instability. J. Advanced Res. L. & Econ., 10, p.1929.
Wright, R., 2020. International Business Expansion: The Roles of Affiliation and
Ownership. International Journal of Business, Economics and Management, 7(6),
pp.427-441.
Yuting, L., 2018. Language in International Business: The Multilingual Reality of Global
Business Expansion.
Online-
Q5 Partners, 2022 [online]. available through <
https://www.zoominfo.com/c/q5-partners-llp/353182076>
What is a trading bloc?, 2016 [online]. available through <https://opentoexport.com/article/what-
is-a-trading-bloc/>

Part 2
INTRODUCTION
International expansion and exporting is complicated activity and succeeding in
international expansion and exporting requires understanding of benefits as well as limitation of
different related techniques and processes (Adjibolosoo, 2018). The company selected for this
essay guide is UK based multinational bank HSBC. This guide provides information about steps
which support export and expansion of a business. Exporting processes and ways of enterprise
new markets are evaluated in this guide. Merchandise and service important export are
differentiated in this guide along with information about essential exporting documentation.
Main Body
Evaluation of different types of exporting processes
The primary two main classification processes of exporting are direct exporting and
indirect exporting. These classifications of exporting processes are evaluated below:
Direct exporting
In this exporting processes there is no need for a middle man or agents as the task of
transporting and selling goods in an international market is complicated by the exporter. There
are many ways to engage in direct exporting process which includes establishing corporate
export provision in the company, enlisting an international sales representative of the company,
collaborating with retailers from the foreign market or state trading corporation and starting
overseas sales branches.
Advantages
 The primary advantage of direct exporting for HSBC is that the company will be to be
dependent on external parties for reaching audiences in the target foreign market and will
gain complete autonomy on the exporting processes.
 The respective institution will be able to attain higher profits as profit given to
intermediaries during the exporting process will be removed (Born, 2020).
Disadvantages
 The high costs associated with direct exporting is the main disintegrative because it also
increases the financial risk of the business endeavour.

 HSBC is a service company and will face more challenges in direct exporting in
comparison to exporting a product because exporting service has more elements than
single range of physical goods.
Indirect exporting
Sales intermediaries and agents are involved in indirect exporting and given the task of
sending the products or service to the foreign market (Günthner and et. al., 2021). This
exporting process is common for small businesses who do not have the time investment and
manpower to engage with direct exporting processes. Some common intermediaries who are
required for indirect exporting process are commission agents, export agents, domestic
merchants and export management companies.
Advantages
 The main advantage of indirect exporting is that HSBC will be able to focus on other
important aspect of entering foreign markets by giving responsibilities of exporting
process to intermediators.
 The company is able to gain expertise from intermediators who specialize in exporting
goods which minimizes risk of exporting (Vahlne, 2020).
Disadvantages
 HSBC will face the difficulty of loss of control because of indirect exporting.
 Indirect exporting also has the disadvantage of lack of communication and interaction
with foreign market consumers which is not effective for decision making and strategy
formation.
Difference between merchandise and service imports and exports
Merchandise export and import involves tangible goods sent to a foreign market for
example retail clothing products, toys, home care products and self-care range (Lahiri,
Mukherjee and Peng, 2020). Some businesses engage in manufacturing as well as exporting and
importing merchandised goods in a foreign market while other businesses engage in importing
and exporting goods which are purchased at wholesale. In compression to this service imports
and exports generate no-product international earnings. Nail salons, hotel and accommodation
establishment offer services and when an American consumer stays at a Hotel in London the
consumer is receiving service exports. Service exports and imports are non-tangible which
complicates whit imports and and exports as there are several variables associated with ensuring

that consumer in the foreign market receives high quality service in comparison to simply
sending finishes tangible good to foreign market audience.
Documentation required for exporting
 Letter of credit: This is an important document which acts a financial instrument
provided by banking institutions which represents the allegiance of the bank in the name
of the importer about payment completion to the beneficiary which is the exporter. The
commitment of the payment remains from the bank only under meeting the specified
terms and conditions apply (Mittelmeier and et. al., 2021).
 Packaging list: This refers to a commonly used shipping documentation during imports
and export of goods. The packaging list describes the components of the gods being
exported and is pasted outside the freight of exported goods. This is an important
exporting document because it acts as an evidence of inland bill of landing and can be
used as material safety data sheet in case the good are damaged.
 Commercial Invoice: This document is issued by the exporter to the importer in
occurrence of a international transaction which acts as the evidence of sale between the
buyer and seller. This is an important exporting document because it is required for
import clearance processes and essential for facilitating international trade.
 Terms of payment: The conditions related to part of sale are defined as terms of
payment. Different terms of payment can be used in international trade and exporting
such as open account and documentary collection in order to reduce risk involved with
recovery of invoice amounts (Nambisan, Zahra and Luo, 2019). Open account payment
involves buyer making the payment within agreed credit period to exporter after
receiving the goods. Banks of both exporter and importer are involved in collecting
payment in case of documentary collection.
 Customs document: This involves the list of documents which is required for gaining
export customs clearance. In case of the customs document needed in UK, customs
declaration, dangerous goods notes and certificate of value and origin are the chief
costumes documents required.
Assessment of different ways of tapping into new markets
Franchising: This method of entering international markets involves an independent
organization refereed to as the franchisee operating outlets of the company in foreign market by

acquiring IP of the business or franchisor. The franchise provides the franchisor initial free and
royalty in exchange of IP rights and business model. Benefits: HSBC will gain the benefit of entering an international market without much
initial investment. Owner of the franchisee is responsible for investing in growth of the
business after acquiring franchising rights (Rosado-Serrano, Paul and Dikova, 2018).
 Limitations: The limitation of franchising is that the is potential conflict and failure of
one franchisee can affect growth potential of the brand in the foreign country.
Joint venture: This method of entering a new market involves partnering with a local
organization in order to enter the foreign country with own products and services. This is one of
the low risk method of entering market as risk is divided between two companies with equal
responsibility and accountability. Benefits: he benefit of joint venture for HSBC is that the company will gain guidance
from expertise of local company in the market and will be able to avoid mistakes made
by other international rivals.
 Limitations: Joint venture reduces control of the company and autonomy in decision
making which is not suitable for achieving business objectives in the foreign market.
Foreign direct investment: The interest in a company in the foreign market is acquired
by an organization beyond its geographical borders under foreign direct investment (Watson and
et. al.., 2018). Businesses engage in FDI in order to acquire or gain some shares of growing
company in a foreign country. In this they are able to invest in growth opportunity in the foreign
region easily. Benefits: The main advantage of foreign direct investment is that it enables the company
to enter a foreign country easily in comparison to to other methods which involves many
different variables.
 Limitations: FDI can lead to inflation in economy which is not beneficial for the growth
of an organization in foreign market.
Justified recommendation
 HSBC is recommanded to ensure that all the documentation requirements regarding
exporting are completed in order to ensure that there is no delay in exporting process. In
addition to this it also supports lawful completion of business activities.

 It is reconnected that the respective company engage in indirect exporting because it will
reduce the responsibilities of the company so that appropriate strategy can be created to
gain chitinous success in the international market. The disadvantage of overhead costs
will be negligible if HSBC is able to successfully establish itself in international market
and earn large amounts of profits.

CONCLUSION
From the above report it is determined that the process of exporting goods and services
can be completed with the help of different approaches and requires finishing various tasks.
Indirect and direct exporting process have various advantages and disadvantages which needs to
be understood in order to to select the appropriate exporting process. In addition to this,
documentation such as letter of credit and customs documentation are needed to complete the
exporting process without barriers. Joint venture, FDI and franchising are suitable methods of
tapping or international markets but have different limitations such as loss of control and
possibility of conflict.

REFERENCES
Books and journals
Adjibolosoo, S. Β. Κ., 2018. Tapping into and Benefiting from the Forces and Agents of
Globalization: Creating an Integrated Vehicle for Global Participation and Gain-
Sharing. In Globalization and the Human Factor (pp. 27-47). Routledge.
Born, G. B., 2020. International commercial arbitration. Kluwer Law International BV.
Günthner and et. al., 2021. Tapping into market opportunities in aging societies-the example of
advanced driver assistance systems in the transition to autonomous
driving. International Journal of Automotive Technology and Management, 21(1-2).
pp.75-98.
Lahiri, S., Mukherjee, D. and Peng, M. W., 2020. Behind the internationalization of family
SMEs: A strategy tripod synthesis. Global Strategy Journal, 10(4). pp.813-838.
Mittelmeier and et. al., 2021. Conceptualizing internationalization at a distance: A “third
category” of university internationalization. Journal of Studies in International
Education, 25(3). pp.266-282.
Nambisan, S., Zahra, S. A. and Luo, Y., 2019. Global platforms and ecosystems: Implications for
international business theories. Journal of International Business Studies, 50(9),
pp.1464-1486.
Rosado-Serrano, A., Paul, J. and Dikova, D., 2018. International franchising: A literature review
and research agenda. Journal of Business Research, 85. pp.238-257.
Vahlne, J. E., 2020. Development of the Uppsala model of internationalization process: From
internationalization to evolution. Global Strategy Journal, 10(2). pp.239-250.
Watson and et. al.., 2018. International market entry strategies: Relational, digital, and hybrid
approaches. Journal of International Marketing, 26(1). pp.30-60.