Tapping into New and International Markets

This document discusses the opportunities and threats faced by small and entrepreneurial businesses in the global business environment. It explores the advantages of international trading blocs and agreements for businesses looking to tap into new and international markets. The document also provides a case study of River Island, a London-based fashion brand, and its expansion into Europe.

Unit 43 - Tapping into
New and International
Markets

Table of Contents
Table of Contents.............................................................................................................................1
INTRODUCTION...........................................................................................................................2
Task 1...............................................................................................................................................2
P1 Explanation of global business environment in which small and entrepreneurial businesses
operate..........................................................................................................................................2
M1 Evidence based Analysis of Global Business Environment.................................................4
P2 Analyse of threats and opportunities that face SMEs to increasingly competitive global
environment.................................................................................................................................4
M2 Critical analysis of implication of threats and opportunity...................................................5
Task 2...............................................................................................................................................5
P3 Determine the advantages of international trading blocs and agreements.............................5
P4 Explanation of various tariff and non-tariff barriers that exist in the international trading
environment.................................................................................................................................6
M3 Evaluate the advantages of international trading blocs and agreements and their
implications for SMEs.................................................................................................................7
Task 3...............................................................................................................................................8
P5 Determine the advantages and disadvantages of importing and exporting and how to secure
a deal............................................................................................................................................8
P6 Explanation of differences between merchandise and service imports and exports..............8
M4 Apply the appropriate import and export process to an organisation and make...................9
Task 4.............................................................................................................................................10
P7 Evaluate the various methods in which SMEs can tap into international markets...............10
P8 Compare and contrast the various ways SMEs can tap into international markets..............11
SMES’s can tap in to international market for this comparison and contrast are as defied by
stating advantages and disadvantages of entering methods:......................................................11
M5 different methods can be used by SME’s to enter in to market..........................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15
1

INTRODUCTION
Tapping in to international market means to enter in to a new market out of the national boarder
that can help to run a business. In business environment different organisations are running that
wants to integrate and connect with global economies and nation by growing opportunities.
Growing and developing technologies along with reducing and liberalizing trade barriers and
regulation makes it harder and more affordable for companies to grow internationally and work
on the international market (Yeung, 2017). To understand about this River Island company has
been selected that is London headquarter high street fashion brand, that is operating business in
worldwide market. Thus organisation is set up in 1948, by Bernard Lewis and his brother in
London. This is privately owned company that deals in fashion, textiles and clothing helps to
organise the business activities effectively. This report covers opportunities and threats for
organisation exposed to increasing global environment, advantages of trading blocs and
importing and exporting process that practicalities involved. Moreover, this involves different
ways where SME can tap into international markets.
Task 1
P1 Explanation of global business environment in which small and entrepreneurial businesses
operate.
Small businesses are those business which are operated at small area and level in order
fill people’s needs and wants that helps to make feel them happy and satisfied. All organisations
whether small, entrepreneurship and larger companies should have courage to take risk and
increase their organisational performance.
River Island is a fashion, clothing and textile industry that is operating business in UK
and near by nation after understanding their needs that help to provide kind of products and
services. Quite recently, such organisation has decided to expand its business by entering in to
international market. So, to expand business and growing continuously River Island is expanding
business into new market that is Europe particularly in Malta that will help to increase business
activities and profitability prominently.
Globalisation - Globalization is a process of integration between people, companies and
different nation which are useful in international trade and added to information technology.
Every business is focusing on their activities which they want to increase in out of the border.
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This process has effect on culture, political system and economic development which helps to
run a business all over the world.
Why to go international - The reason to go international is business concern wants to
increase their operations by entering into international market and generate more revenue. This is
important for all people to have market knowledge and people needs when a business is going to
run outside. This can help to increase the business activities by exapnding functions. Small
business has opportunitis to expand their business in international country so it can ngrow and
increase the brand image. Global business environment refers as business process that helps to
run business in international market. To enter in to international market there is need to evaluate
the various factors such as political, environmental, social, economical, technological and legal
that are important to run business and increase business profitability. River Island is expanding
business in to international market by analysing all factors and evaluating them. This helps to
increase the market growth by adopting technology and competition in global market.
International rules to expand business-
 The knowledge about international trade and political system.
 Availability of resources, capital and human resource which can help to maintain. A
business effectively.
 WTO and principles of good standardization, regulatory and conformity assessment
 Practices
 The relationship between national legal system and international that helps to run a
business out of the national border.
 Good relation with people who are living outside the country.
Small and entrepreneurial business operates in global business environment such as
Increasing customers – Small business are providing products in domestic area by
involving customers. It operate business at global level by porving better quality of products and
services by expanding business and having knowledge of marketing. For instance, River Island is
running its business by increasing number of customers globally that helps to increase revenues
and resources.
Brand expansion – The amother reason of entrepreneurs is to expand their brand in
competitive environment by promotion and advertising thta can help to attracts customers and
increase profitability. The mnager of River Island company is expnading its brand by using
3

promotion and advertisement that attracts people and suit their lifestyle. This helps to increase
the business performance by satisfying customers and providing better quality of products.
M1 Evidence based Analysis of Global Business Environment
Global business environment is states as activities which are established st small areas and
domestis level by using different resources and capital. Such as River Island was started from
small level it uses different sources and capital that can help to imrpove the business activities.
The manager of organisationa nd employees have contributed widely as using new technology,
capital, good relations with country, needs of people and international regulation which has
impacted positive. Therefore, by using all evidence chosen organisation has become global
business by operating functions and actions at international market.
P2 Analyse of threats and opportunities that face SMEs to increasingly competitive global
environment.
It has mentioned that to enter in to international market is not easy and cakewalk because
there are several factors which should be consider by organisation while carrying a business sand
going to expand in to new market. There are different factors in relation to global business
environment that arises at the time of entering new market that are as defined:
Political factor – In this, organisations need to follow the rules and regulation which are
formulated by government. Europe is a developed country where government has formulates free
trade policies that has impacted favourable on company to expand their business and operation
by entering in to new market. River Island is getting business opportunities by following foreign
direct investment that stated it can operate business in new nation easily.
Economical factor – This factor consider economic condition of a country which helps
to state the performance of company. Due to Brexit UK is still struggling that is facing higher
competition due to which businesses are not growing. This decreases the value of pound and
inflation enhancement that lead low cash flow. River Island is tapping in Europe for expanding
its business that is quite sustained country where inflation rate is low. Therefore, River Island
can establish its business through easily accessible in nation. Due to low inflation rate it can
attracts customers and run business effectively (Tapping and Shuker, 2018).
Social factor – This factor provide education about customer preference, taste, needs and
wants in relation to society that helps to run a business and increases customers interest. For
instance, River Island understand the needs of taste of people and deliver that kind of products
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which help to increase the value of organisation. After entering in Europe, this organisation also
started to understand what people wants according to their culture and tradition that helps to
provide kind of products and services (Mori, 2018).
Technological factor – Due to changing needs, digitalisation, trend, lifestyle and
transportation Europe has acquired new technologies from the world that has good favour on
organisation. For example, River Island has adopted new technology to entering new market and
distributing the products easily by using a app that will help customers to place order, payment
online and receive order faster that all are possible through new technology. Therefore, this has
good effects on business operation in global business environment. Moreover, AI also help
chosen organisation to provide security from international clients and helps to compete with
others (Rottig, 2016).
Legal factor – One factor which covers all rules and regulation for the betterment of
employees is considered legal factor that are important to follow by organisation as it is running
business by employing number of employees. In Europe, there are special rules and regulation
for employees that can help to make feel good and motivate them to work more. River Island is
the example of successful organisation that is following all rules and regulation that are
important to run business and motivate employees so they can work. In case of not following,
operating business in Europe will not be success.
Environment factor - Environment is consider as main element that states organisation
who are running business should follow legal standard in relation to environment which helps to
operate business. In Europe, government formulated tight regulation for all companies as to
revaluation, proper repairing equipment, reduction carbon footprint, green plantation and other
that can help to make clean and healthy environment then only organisation can run business.
River Island can getting chance to enter and expand business as it is following all standard that
helps to run business (Arapova, 2017).
To understand this SWOT analysis is the best tool that states opportunities and threats of
River island business who is going to enter in to Europe that is defined as:
Strength:
● Different types of products and services are provided by River Island.
● Focus on customer taste and preference.
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● Having good reputation and large customer bases
Weakness:
● Poor retention rate.
● Large cost in warehousing and maintaining the inventory.
● Changing needs and wants of people who are living in other countries.
Opportunities:
 Entering in to international market such as Europe where is great opportunities for
organisation.
 E-Commerce taht is a tool for entrepreneurs and small business to go global.
 Using websites with e-commerce capabilities e.g. virtual shopping carts, secure online
payments and social media presence).
 Introduce of new technology and products according to country culture and tradition.
 This provides environmental friendly items.
 Up gradation in technology.
Threats: \
● Growth of local and global competition. The rise of the ‘born globals’.
● Market saturation which can affect business growth.
● Inflation rate and global recession
● Competitors having strategy.
● Treat of political and legal factor.
SME are those business which are providing products and services in local market and
seek to increases it in other market by growing opportunities. For example, River Island is
associated with local and global risk by operating business. This organisation is following
differentiation strategy in which it deliver different types of products and services in new market
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that increases business opportunities which helps to maintain the high production and
profitability. On the other side, this organisation is creating job opportunities for people.
M2 Critical analysis of implication of threats and opportunity
The dynamic global environment also has a positive effect, as it encourages the
development of state-of-the-art and advanced technologies for River Island, makes its activities
and functions more effective and also contributes to better prospects for expansion in various
emerging world markets such as Malta, a rapidly growing European nation. As a result, the
global environment provides an opportunity for River Island to expand its business operations
across different locations around the world, resulting in improved market share and consumer
base enhancement to earn higher profits. For example, River Island organisation has get
opportunity to run business out of border by using all resources and e-commerce that helped to
improve productivuty. The manager of such organisation needs to overcome the threat for
expanding business in Europe and other countries with the help
Task 2
P3 Determine the advantages of international trading blocs and agreements.
Trade bloc – This is a type of international agreement that is followed by regional
intergovernmental organisation. This helps to reduce the barriers and elimination of trading in to
international market. Support is provided to organisation who are establishing business in
regional and global market.
Customs union- This is a type of trade block which offers opportunities to organisation
to trade freely with members in a common unified tariffs. For instance, trade block’s member
can negotiate with third parties for trading in international market. In this, all trade barriers are
removed only for members and for other it remain continuously (Friedrichs, 2017).
Common/single market – This is another type of trade bloc where an organisation
integrate with other nation by removing all barriers in trading internationally. This supports
companies to transfer goods, services, capital and labour effectively so business can grow.
Prudential trade area – This helps to organisation to enter in ti new market by reducing
the barriers and lower down tariff barriers.
The advantages of Trade bloc and agreement are as:
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 It helps to increasing the FDI in country, this facilitates in building the large markets for
suppliers and buyers that reduce the manufacturing and retailing cost (de Oliveira and
Rottig, 2018).
 As it helps to reduce the cost product, River Island can increase its production.
 This organisation is having ample opportunities who are from different region by
interacting and competition with others.
 A business can establish in to new market that manage activities and functions
effectively.
 Market efficiencies has been improved and uncertainties are eliminated by trading bloc.
 This helps to increase the organisational productivity and growing the opportunities.
 Trade blocs eliminate all tariffs and non tariffs barriers that provides opportunities to
handle the customers.
 In this, country removes all regulations and agreement of trade which are barriers.
Analysis of advantages of international trading blocs and agreement
From the information it has defined international trade is a activity which is run by
business concern in order to expand business in foreign and other international country for the
purpose of making profits. It is beneficial for organisation to take the competitive advantages by
establishing business and increase the product as well and brand image. For instance, River
Island is expanding business in Europe by offering different types of products and services that
can help to increase the business profitability. by using international trading blocs such
organisation is increasing foreign investment as it participate in making high economy. This
provide growing business opportunities by removing all restriction and increase the brand image.
P4 Explanation of various tariff and non-tariff barriers that exist in the international trading
environment.
Tariff and non- Tariff barriers are consider as sort of restriction which are imposed on
trading between two countries and nation. While running a business there are different barriers
such as job and local economy protection, retaliation, national security and unfair trading that
can limit the organisational effectiveness. For instance, River Island is operating business in UK
and tapping in to Europe in order to increase organisational productivity. To enter in to
international trading environment it is facing tariff and non tariff barriers that are as defined:
8

Tariff barriers – This involves fees, taxes, custom duty, import duty and export duty
that are imposed to moving the products out of the boarder. These charges are collected by host
country where organisation is going to establish business and paid by company for entering and
moving the products. River Island has to face the such barriers at the time of selling and moving
the products in Europe. This involves two type of tariffs such as:
Specific tariffs – This means a duty and fee is levied by government on unit of imported
goods. In this, legislations are formulated as per weight and measurement physically.
Ad valorem tariffs – In this, duty and taxes are charged on percentage of good that are
tradable. This is barriers on organisation to pay extra charges for moving good that can reduced
the productivity and profitability.
National security – This means countries enforce tariff barriers to protect the security of
nation. This can be challenge for organisation to maintain the national security.
Transit duties – This duty is levied on commodities that originate in one country, cross
another for selling the products. River Island has to pay such duty which is levied by country
through good passes.
Currency control – Government may imposes restriction on currency convertibility then
it may be barrier for organisation to trade in international country.
Non- Tariff barriers – These are considered as non tax restrictions that involves policies
to having control and check the overseas trade. Non- Tariff barriers in international environment
are as defined:
Quotas – They are as limit which put on the amount of product quantity and allowed to
import and export. Therefore, a fixed amount and quantity of products are allowed by
government to import and export (Minkman and van Buuren, 2019).
Licences – This is basic permission which is required by organisation from government
to move the good and deal with international market. In case of no licence is taken while running
business in to international market then it become difficult to operate business(Kolo, 2017).
Subsidies – This is consider as payment which made by government to domestic
producer so it can compete against foreign goods. It can be cash grant, subsidized input prices,
government equity participation etc.
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M3 Evaluate the advantages of international trading blocs and agreements and their implications
for SMEs.
International trading bloc are consider as agreement which helps to run a business by eliminating
barriers. This is important for organisation focus on such barriers so a business can be operate
effectively. By using different trading bloc River Island can increase their foreign direct
investment and improving the organisation productivity. This helps to maintain the good relation
and follow the government regulation which are followed to enter in to international market and
maintain high productivity. Moreover, market efficient can be improved by reducing trade
barriers that improve organisational image (Gabor, 2018).
Task 3
P5 Determine the advantages and disadvantages of importing and exporting and how to secure a
deal.
Importing – This means buying foreign goods and services by people, businesses and
government of a country. In this, products are buying from other country.
Exporting – This means goods and services which are produced by one country and purchased
by another country. In this, products are produced domestically and sold to foreign country.
Advantages of importing and exporting for River Island organisation
 Importing and exporting of good will increase the market place of company that also
increases income.
 Importing and exporting allows River Island to tap in to international resources and
investment (Minkman and van Buuren, 2019).
 This helps to improve the competency of organisation in the market.
 This organisation can satisfy their customers and increase the market share by expanding
business in other country.
Disadvantages of importing and exporting for River Island organisation
 To import and exporting the products there is require of great investment and resources in
international market that is difficult for River Island to operate business in other country.
 The importing and exporting is require to follow long procedure and documents for
executing the plans (Reimer and Zhang, 2018).
 In trading internationally payment is major issues that need to pay in foreign currencies.
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 There is required good relations and culture of people in other nation where organisation
is going to introduce business (Friedrichs, 2017).
How to secure a deal
For securing the deal in international market there is need of knowledge of market,
customer choice and way to reach them. For securing deal, management of RiverIslan should
focuses on secure payment mode and make delivery of products and services so customer feel
happy and maintain high performance. Therefore, it has defied that River island should focus on
import and export of good by following a procedure. For this, it needs to make plans properly
and maintain good interaction with people that helps to run business and increase organisational
productivity.
P6 Explanation of differences between merchandise and service imports and exports.
Merchandise is the practices which involves sales of products and services to retail
consumer. This is a kind of trade where products and services are purchased and sales in order to
run a business effectively. In this, variety of products and services are available to customers by
following all procedure. For instance, River Island is high street fashion brand that is operating
business in worldwide market. Managers of such organisation are dealing with international
trade practices which are important to run and expand business in other market.
Difference between merchandise and service import export
Basis Merchandise Import export Services import export
Definition This is consider as process which is
connected with sale and transferring of
tangible goods across the border.
This is the process which is
associated with sale and transfer of
intangible products and services out
of the border.
Class of things
sold
This only consider tangible products
and services that are sold and
transferred between countries.
Under this import and export of
intangible class of things which are
associated to transfer and facilitate
services.
Example T.V, appliances, clothes, groceries,
textiles, consumable goods.
Sale of such as accounting, medical
services, investment options,
banking services etc.
Measurement In River Island the measurement of The contribution of services in
11

merchandise can be identified in
balance of payment of country.
import and export can be measure
and analysed in the GDP of country.
Ownership Merchandise or good trade includes
transfer of ownership of product
which is sold.
In services, people get benefits
from the actions that are taken by
service provider.
M4 Apply the appropriate import and export process to an organisation and make
Import means to purchase the goods and services from other countries where as export is the
process of selling the domestic products in other country and nation that helps to increase the
organisational productivity and profitability. River Island is export its products and services by
going in to Europe that will help to increase the business profits and market efficiencies. Export
process involves different process that helps organisation to enter in international market such as:
Letter of credit – This is written document which is provided by bank to buyers’ that
ensure seller to male payment on fixed time and date (de Oliveira and Rottig, 2018).
Packing list – This is detailed document that helps to shipping the products and services
effectively (Arapova, 2017).
Commercial invoice – It is also legal document between importer and exporter that shows
clearly information about selling the products. This helps to enter in to international market by
creating the invoices.
Term of payment – Such process is used to make the payment in different modes by using
different sources that helps to maintain the business (Gabor, 2018).
Task 4
P7 Evaluate the various methods in which SMEs can tap into international markets.
SMEs are types of business which provides different types of products and services in
order to maintain the high productivity and profitability. Small and medium enterprises are
setting aim to enter in to international market by expanding products and services so customer
can attracted and buy products effectively. In SMEs, there are different methods that are used in
tapping in to international market that are as defined:
Licencing – SME’s organisation can operate their business by giving licence to other
organisation who can help to it continue in other country or across the border. Small companies
can adopt this method to run business and increase the organisational productivity which helps to
12

increase brand image and profitability. River Island can opt this method for increasing goodwill
and brand image of their organisation by providing licence to other organisation or person who
helps to operate and continue it effectively (Kolo, 2017).
Exporting – This is the process of producing the products and services in domestic
country and shipping to other country across the border line. By using this method, any SME’s
organisation can enter in to international market. River Island can adopt this method to enter in
to international market by exporting the products and services (Rottig, 2016).
Franchising and Licencing – This is the process and procedure in which one
organisation allow some other organisation in new country to operate their business effectively.
Under this, the owner organisation charge fees from person who is going to operate business in
other country. In other words, franchise give rights to other organisation to operate their business
in other country. This helps to improve the organisational productivity and business image. River
Island has an opportunities to give franchise to other business by charging fees that can help to
improve organisational productivity.
Joint venture - Joint venture is another method for SME,s where tow organisation can
arrangement and agreement to run their business optimally. In this, both parties share their profit
partition in a certain ratio or percentage that helps to improve organisational productivity and
profitability. In other words, a process and procedure where two and more than two parties agree
to run business and increase organisational productivity. by using this method, SME’s can enter
in to international market (Mori, 2018).
Partnership – This is the another way to go international as make good relation and
partnership with other brand so all activities can be performed and organisation can get higher
sales and profitability. River Island can enter in to partnership with other sports brand so its sales
can be continue and attracts the customers effectively. This can help to enter in to international
market and increase the sale as well as profitability by increasing brand.
From the above discussion it has analysed that Exporting is the beneficial option for
SME’s businesses that helps to increase the productivity and expanding business in to
international market that helps to increase brand image and product range. There is no
requirement of spending extra cost and investing high money to enter in to international market.
This can help to expand business in global environment.
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P8 Compare and contrast the various ways SMEs can tap into international markets
SMES’s can tap in to international market for this comparison and contrast are as defied by
stating advantages and disadvantages of entering methods:
14

Methods to tap in
to international
market
Advantages Disadvantages
Exporting Exporting is effective method that
leads to enhancement in productivity
and profitability by selling the
products and services in global
market.
This helps to having better exposure
new ideas that helps to run business
and maintain good performance.
This can increase the cost in
relation to administration and
legal formulation that needs to
deal in exporting.
Need of product modification is
faced by SME’s that can
hamper domestic market.
Franchising and
Licencing
Low capital requirement and high
return on investment is provided by
licencing that helps to run business at
global market.
Responsibility and risk of success in
relation to product and services are
offered by SME’s.
Violation of copyright and risk
of duplication is over
intellectual property of SME’s
is high under this method
(Tapping and Shuker, 2018).
Joint Venture This facilitates new insights and
expertise to SME’s that leads to
operate a business function at global
level.
This is the process of agreement
between two and more than two
parties that increase business activities
and foreign exchanges effectively by
operating business.
In joint venture there is chances
to conflicts in relation to
corporate culture and business
decisions.
Flexibility of SME’s can be
restricted which is difficult to
keep a balance and maintain a
proper coordination among
people.
Partnership This can help to go international and
increase the brand image by selling
the products and services. River island
This not always appropriate
because there is chances of
conflicts between partners who
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can get benefits by increasing brand
image and becoming global company
in competitive business environment.
agree to share their profits and
loss ratio.
M5 different methods can be used by SME’s to enter in to market
From the above discussion it has evaluated that there are different method such as exporting,
franchise, joint venture, licencing and other are used to enter in to international market and run
business effectively. Exporting method provide a simple method and ways to SME’s to operate a
business in other market. This helps to take the competitive advantages. On the other side,
franchise and licencing is other methods that are used in running business internationally by
investing capital and resources effectively. Moreover, joint venture is a good pool in order to get
foreign exchange by assessing in to international market (Yeung, 2017).
CONCLUSION
From the above report it can be concluded that to tapping in to international market is the
process of running a business and expand it other country. If a person is going to run a business
then it needs to be aware from global business environment that can help to get knowledge and
insights to run their business in new markets. Global businesses represent different facts that are
available surrounding the firm that influences sustainability and organisation growth. In business
environment different factor can arises while entering in to international market that are
important to consider. This helps to evaluate the strength, weakness, opportunities and threats
that is related to internal activity. In business tariff and non tariff barriers are needed to remove
so a business can be operated across the border. Moreover, different ways that can be used to
tapping the market by getting opportunities and maintaining higher profits.
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