Tapping into New and International Markets

This document discusses the global business environment for small and entrepreneurial businesses, the threats and opportunities they face in a competitive global environment, the advantages of international trading blocs, and the various tariff and non-tariff barriers in the international trading environment. It also explores the advantages and disadvantages of importing and exporting and how to secure a deal.

Unit 43 - Tapping into New
and International Markets

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1Explain the global business environment in which small and entrepreneurial businesses
operate.........................................................................................................................................1
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment.................................................................................................................................2
P3 Determine and analyse the advantages of international trading blocs and agreements.........3
P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment.................................................................................................................................4
P5 Determine the advantages and disadvantages of importing and exporting and how to secure
a deal...........................................................................................................................................5
Advantages of Importing ............................................................................................................6
P7 Evaluate the various methods in which SMEs can tap into international markets................7
P8 Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method...............................................................................................7
CONCLUSION................................................................................................................................9

INTRODUCTION
In the globalised era, organisations are aiming towards continuous expansion of their
business at international platforms in order to gain access and advancements of internal market
opportunities. International process allows companies to ensure higher profitability and growth
within due course of time (Azad, 2020). Organisations by taking advantage of different types of
expansion methods can emerge out as profitable business entity while assuring large base of
consumers attention. It lead companies to generate higher revenues, business growth and
profitable incomes. Present report has been conducted on Ella's Kitchen which is a small scale
company engaging in the business operations of making organic toddler and baby food with
natural ingredients and packaging that appeal attention of little ones. Company was established
in the year 2004 by Paul Lindley (About Ella's Kitchen (Brands) Ltd. 2020). Ella's Kitchen is
performing their business operations with 70 employees those who are working together to fulfil
company main mission which is to offer high quality baby food.
In this report formative discussions has been conducted in global business environment
within within small and entrepreneurial businesses in conducting their business operations.
Along with this, report includes opportunities as well as threats that are being facing by SMEs in
competitive global environment, benefits of international trading blocs and agreements and
different non-tariff and tarriff barriers existing in international trading environment. Along with
this, difference among service importance, merchandise and exports are also included in present
report.
LO1
P1Explain the global business environment in which small and entrepreneurial businesses
operate
UK is being selected as the country, as in this nation large number of SMEs are
performing their business operations. This country is offering wide range of benefits as well as
growth opportunities to SMEs through which entities performing in this sector can assure their
long term growth and profitability (Krefting and Prince, 2020). It has been evaluated that, United
Kingdom government is offering many business opportunities to this sector, as SMEs are major
source of country revenue generation which also lead country to ensure higher GDP. This has
been determined that SMEs offers wide range of job opportunities to local individuals within
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country which is also increasing their standard of living. In addition to this, companies those who
are operating their business role in this sector are also offering high quality products and services
to customers in affordable rates which is enhancing their level of satisfaction and trust towards
SMEs. With having quite stable economic conditions United Kingdom acts as great platform for
SMEs to perform their business operations while assuring higher profitability.
Along with this, it has been determined that due to less political interruptions and
consistent rules and regulations SMEs can conduct their activities with less complexities. It has
been identified that SMEs are contributing about 80% in country gross domestic production
(Hollinshead, 2020). They are also acting as major source through which many local and
medium scale individuals can assure their regular income. SMEs are offering individuals with
wide range of alternatives through which they can have their regular income. SMEs are
backbone of UK economic stability and growth which can also been seen by taking example of
BREXIT. In this situation, SMEs acted as major strength for country economic growth. Thus,
there is significant importance of SMEs and entrepreneurial businesses in UK market through
which entities operating their business services in this sector can gain number of advantages.
Threats and opportunities that face SMEs in an increasingly competitive global environment
It has been evaluated that due to increase in competition organisations specially those
who are conducting their business services in small scale industry is facing many threats in terms
of lack of financing, lack of access to management and technology and many rules and
regulations enforced by organisations. However, it has been identified that SME’s are vital part
of UK economy thus in order to support them government of country offered many tax relations,
flexible policies and other relieving options in order to support them in effective manner. With
the help of this opportunity SME’s can ensure more growth and sustainable business operations.
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P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment
Global business environment is defined as, existence of various sovereign countries. In
this there are different types of factors which is having high influence upon productivity and
profitability of business organisations (Herre, 2020). It has been evaluated that global business
environment include different types of external factors that are having significant impact upon
business organisations functioning. It is in accordance with the environmental conditions of UK
that firms take key decisions regarding diversification to execute effective overseas trading. If it
is talked about small scale organizations, they hire 50 employees and aim to earn amount for the
purpose of livelihood. It has been identified that in United Kingdom SMEs are contributing
about 60% in country overall GDP. These organizations are also major source for UK revenue
generation which is also offering large base of employment opportunities to individuals. Within
the confines of UK, small business give important contribution to generate an overall revenue of
11 million pounds. In the same way, medium sized enterprises generate approximately 50
million pounds (Segarra-Oña, Peiró-Signes and Verma, 2020). Due to globalization there are
various institutions those who are offering support to SMEs in operating their business
functioning in smooth way in United Kingdom. This lead entities within this sector to perform
their business services with low cost of transportation, low operation cost and limited tariff
barriers which increases income generation rate of these SMEs. Irrespective of the uniform or
consistent policies and legislation of United Kingdom, it is seen that this nation encounters
market dynamics (Wansleben, 2020). It can be determined by example of BREXIT that poses
number of restrictions upon trading conditions. Before this, organizations were performing their
business activities without facing any restraints. But after BREXIT situations of trading for
organizations changed and there are now number of restricts and tariffs (Butzbach, Fuller and
Schnyder, 2020). Further it has been evaluated that there are various factors like technological
advancements, skilled labor force, investment opportunities and more that are having significant
impact upon entities business operations specially for SMEs in UK.
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LO2
P3 Determine and analyse the advantages of international trading blocs and agreements
Trading blocs is defined as formal form of agreement that is basically developed with an
aim to displace obstructions of trade between at least two nations and territories. There are
diverse range of agreements and trade alliances with the help of which organisations can perform
their business activities in productive and effective way. Trading blocs can be determined that a
bunch of nations which is basically developed in declared areas in order to oversee and advance
diverse range of exchange activities. Common market, incorporate free trade area, monetary
associations, and customs association are include in trade blocs and agreements. It is essential for
an organisation to have proper understanding of agreements and trading blocs in order to execute
their business practices in effective way. Mentioned below there are some certain advantages and
disadvantages being defined:
Inflate economic development:
With the assistance of agreements and blocs, organization can gain advantage to
maximize their economy growth. In addition to this, entities can also conduct their business
activities with great efficiency while ensuring successful outcomes. Facilitated commerce among
different nations allows nations to effectively upgrade their financial development of economy.
Technology transfer:
Agreements as well as trading alliances provide innovative and unique techniques to
corporate associations. This acts as most important benefit for organisations, as by taking
assistance of technologies organisation can perform their business activities with great
effectiveness. Within this, as a result if free commerce, techniques and modern innovations
would be quickly transmitted from one place to another is more quicker way.
Improvement of exchange:
It has been seen that with the reduction in strategies and exchange limitations
organizations can see significant improvement in their exchanging capacity. Exchange coalitions
effectively offer organizations an advantage of conducting their business practices in confined of
various nations all across the world (Pardos-Prado, 2020). This will lead entity towards assuring
higher sales as well as profitability.
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P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment
Organisations while conducting their business operations on global scale faces wide
range of barriers (Prashantham, Zhou and Dhanaraj, 2020). In relation to this, it is essential for
companies to effectively evaluate and examine different types of tariff and non tariff barriers.
Some of the barriers are being defined below:
Tariff barriers
Transit duties: This form of barrier is mainly subjected to taxation, it is mainly charge
by authorities of government on products that get transferred from one geographical location to
other. It is a major barrier that organisations face while performing their activities in global
trading environment.
Specific duty: This barrier is having impact upon organisation profitability as well as on
sale. This has been evaluated that, specific duty is a form of taxation which mainly imposed on
goods that flows from one particular nation to other (Tangires, 2020). With this charge
organisations face increase in their overall business operations.
Import tariff/duty:
This form of tax is basically known as custom duty which is being mainly imposed by
importing country for example this tax is basically being imposed upon goods.
Non tariff barriers
Import policy barriers: These barriers are defined as non tariff barriers which is having
influence upon performance of business in adverse way. Further it has been evaluated that, it is
essential for entities to effectively overcome these barriers in order to effectively conduct the
process of commodities importing.
Service barriers: Within this different types of barriers are included that has been
enforced by government authorities upon service and product distribution across the international
boundaries (Studart and Ramos, 2020). These barriers is inclusive of legislations and rules that
has been place on provision of facilitates to another nation.
License:
It has been evaluated that this is a form of tax which has been granted to business by the
government and allows the business to import a certain type of good into the country.
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LO3
P5 Determine the advantages and disadvantages of importing and exporting and how to secure a
deal
It has been evaluated that there are different types of economists and governments who
have believe that importing and exporting goods involves many advantages as well as
disadvantages. In relation to this, mentioned below there are some certain form of advantages
and disadvantages is being given along with the manner with the help of which deal can be
secured:
Advantages of Exporting
Increased competitiveness:
With the assistance of exporting organisation can allow themselves to undertake
advantage of new form of management practices, ideas, marketing techniques and other essential
aspect through which they can assure their long term growth. With the help of this, they can
place themselves effectively in both national as well as in international market.
Increased Sales:
One of the most important of exporting is that with the assistance of this organisation can
assure high sales. In addition to this it has been determined that it facilitate entity to expand their
business in new market segment and satisfy large base of customers.
Disadvantages of Exporting
Extra Costs:
It is one of the major disadvantage of exporting, as it has been evaluated that organisation
in order to successfully place themselves in international market segment required more time that
automatically enhances costs. This cost can be in terms of development of new marketing
materials, assigning new personnel and more. It requires company to have access to more
number of financial resources which is especially hard for small scale firms.
Cultural Differences:
This is also a major disadvantage of exporting, as in this it has been evaluated that every
nation is having different set of culture, language and practice. This makes new arrivals hard to
adopt in limited period of time that affect their profit generation capabilities in number of ways.
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Advantages of Importing
Cost Savings and Expanded Revenue:
It has been evaluated that importing from other countries allows much cheaper compared
to domestic products especially in terms of raw material. It has been seen that some countries are
offering very cheap rate of raw material with the help of which organisations can perform their
business functioning in cost effective manner while assuring higher profitability. It is one of the
most important advantage of importing through which SMEs can gain maximum benefits.
Introducing new products to a market:
With the help of importing organisation can introduce new services as well as products
from abroad to consumer at home. In addition to this, importing also allows entity to assure
higher competitive advancements compared to other rivals in same industry.
Disadvantages of Importing
As per according to the evaluation, it has been identified that importing some time lead
towards facing issue which is related to erosion of domestic market that can have major adverse
impact upon SMEs. Further it has been identified that importing also lead towards conflict in
domestic value because of the acceptance of social values.
Thus, as per according to the above mentioned analysis it has been evaluated that
importing and exporting is having different types of advantages as well as disadvantages that are
required to be effectively understand by organisations. In terms with SMEs it is essential for
owners to have proper understanding of these factors in order to take advantage of available
opportunities.
It has been determined that a deal can be secure with the assistance of preparing well
developed plan while evaluating risks. In addition to this, it is also essential to take use of
strategies. In addition to this it is also essential for an organisation to abide all the rules and
regulations of government to secure deal in effective way.
Concept of differences between merchandise and service imports and exports
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LO4
P7 Evaluate the various methods in which SMEs can tap into international markets
There are wide range of methods available through which organisations can tap into
international markets. Main aim behind this is to expand business growth, development and
profitability at great extent. Market expansion strategy is basically depend upon size of the
market in which organisation is looking forward to expand (Kong, Swallow and Thomson,
2020). Mention below there are some effective methods that allows business to expand their
business functioning.
Accessing markets:
This is mainly defined as analysis of new business idea or market. In this evaluation is
being conducted by undertaking comparison of different factors of business like risks, market
trends, opportunities and trends (Gupta, 2020). Proper assessment of markets in an essential step
which is required to be done by organizations before tapping into new international market. With
the help of this they can effectively allow themselves to have proper knowledge related to target
consumer, market environment, trends and more. It allows entity to strengthen their market
position as well as long term sustainability. Apart from this, there are wide range of limitations
associated with this factor, as if entity misidentify factors of market in which they are expanding
then it will lead them to face many disadvantages that will result in business loss.
Financial support:
Finance is lifeblood of business operations through which they can assure smooth
business operations. Entities can acquire adequate funds from different types of financial sources
such as crowdfunding, bank loans, investors, financial institutions etc (Gatignon and Capron,
2020). By assuring proper finance organizations can make sure that business operations will
accomplished in given time period and with proper resources. However, there are certain
limitations that can affect business growth in international market. In this if proper funding is not
done with adequate financial resources then it will lead towards business failure.
P8 Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method.
While entering in new international market organisations can face advantages as well as
disadvantages that can affect their expansion process (Dangi and Narula, 2020). In this, it is
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essential and entity to undertake advantage of different types of methods in order to successfully
enter in international market segment while assuring positive growth.
Joint venture:
In this method, two organizations agreed to conduct their business functioning while
sharing losses and profit (Apte and Kapshe, 2020). In this, business entities conduct their
activities with different skills and aim to fulfill a common objective.
Pros: Most important benefit of joint venture is that, it facilitate organizations to combine
their resources, technologies, experts and more through which they can assure accomplishment
of business objectives with more efficiency.
Cons: It restricts flexibility of involved organizations that can further lead towards
creating imbalance.
Exporting Directly:
Direct exporting mainly include exporting directly to consumers those who are interested
in buying products rather than to a third part distributor.
Pros:
Most important advantage of this method is higher profitability as direct exporting
eliminate intermediaries (Mutemberezi and Mbabazi, 2020). In addition to this entity can also
have advantage to know marketplace better with having better protection of their copyrights,
trademarks and patents.
Cons:
In this method, entity is required to make investment of more money and energy which is
major disadvantage. In addition to this, overall accountability is held by company.
Concept of differences between merchandise and service imports and exports
In terms which merchandise exports these are defined as tangible form of products which is
being basically sent out of country. In addition to this, if it is talked about merchandise imports
these are basically those goods that are bought into a nation. Merchandise is mainly defined as
physical form of goods.
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CONCLUSION
According to the above mentioned report it has been concluded that, growth is an
essential element for each and every organisation irrespective of their size, scope and sector. For
higher growth and development tapping into new international markets offer wide range of
success opportunities to organisation through which they can assure maximised profitability. In
addition to this it has been evaluated that trading blocs and agreements plays essential role for
SMEs, as it provide aid in making reduction on trade restrictions and further facilitate SMEs
towards free trade at global scale. Along with this, it has been determined that with the help of
various modes SMEs can gain access into new international markets while assuring higher
growth and profitability. However, these methods are having advantages and disadvantages
associated with them that are required to be effectively understand by organisations as to ensure
successful international expansion.
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Online
About Ella's Kitchen (Brands) Ltd. 2020. [Online]. Available
through<https://www.b.co.uk/company-profile/?99184>
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