Tapping into New and International Markets

This document discusses the global business environment, threats and opportunities for SMEs, advantages of international trading blocs, and various tariff and non-tariff barriers. It also explores different methods for SMEs to tap into international markets. The document is relevant for students studying business and international trade.

Unit-43
Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Explaining the global business environment in which small and entrepreneurial businesses
operate.........................................................................................................................................1
P2 Analysing the threats and opportunities that face SME's 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...................................................................4
Provide evidence based on analyses of the global business environment in which small and
the entrepreneurs business that operates ....................................................................................5
Critically analyse the implication of threat and opportunities that face SMEs in an
increasingly competitive global environment.............................................................................6
Evaluate the advantages of international trading block and agreements and their implications
for SMEs.....................................................................................................................................6
Apply the appropriate import and export process to an organisation and make
recommendation on how they could be applied in an international context...............................7
Evaluate the difference method of SME can use to tap into various markets with application to
a small business or entrepreneurial venture. ..............................................................................9
Compare and contrast various ways SMEs can tap into international markets with pros and
cons of each method ...................................................................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International market includes the wider interaction of all the people, organisation,
business that belongs from a particular region or country. The activity through which company
tapped into the new and international market is trading overseas (Cantwell, 2013). It is the
methods that are applied by the business with the objective to gain the higher advantage in the
global platform. This report includes Marshfield bakery that is the family founded bakery and
they distribute the handmade goods all across the UK and Europe. This report is based on the the
import and export process of the company and different ways through which SME can tap into
international market. Furthermore, includes the international environment that generates a lot of
opportunities and threats for the business and benefits of international trading agreements as
well.
PART 1
P1 Explaining the global business environment in which small and entrepreneurial businesses
operate.
UK has a lot of stability but besides that they are currently gone through the face from
where it is quite tough for them to maintain the economic balance within the country. As Brexit
has negative impact on the international trade and also impose the export and import business
that resist the growth and development of lot of SME's that wants to expand their business in
order to achieve more sales (Hilmersson, 2012). As UK government always try to be developed
and enhances the different circumstances for the businesses by which they get more success as
because the growth of SME has larger impact on the economy generation of the country. SME's
has huge contribution towards the betterment of the country as it generates a lot of employment
and also raises the GDP of the country. UK has the strongest economy and counted on 6
positions and it is because of the private sector and has a contribution on GDP of about 80%.
SME's operates their function in a very limited space or a spread their business to a limited
regions. In context of SME's they provides the employment of about less than 50 employees in a
single company and works with the turnover of about 10 million pounds. Whereas, the medium
business provides the employment of about less than 250 employees and have a turnover of less
that 50 million pounds. These kind of organisation operates their business in global environment
in which they import the products and services from different areas or countries and export the
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own goods and services to another country. SME's has a great support of the organisation in
which they standardise the service production of the country. The SME's has covers the 98% of
the populations of UK by which government spends 1 pound to the welfare and support of sme's
and that is third part of the total revenues generated by the companies (UK’s global business
environment, 2011). Most of the sme's of UK operates their business in France, Spain, and
Netherlands and too many more places as well. It is because of the factor as it reduces the overall
transportation cost of the business and also pays the minimum interest rate on exports.
SME's has expended their services in the international environment and they start trading
their products and services in Asia, Africa and to America as well. This helps the business to
gain even more growth and larger market and profit shares that directly promotes the GDP and
income of the country.
P2 Analysing the threats and opportunities that face SME's in an increasingly competitive global
environment
Global business environment and the influence of key global drivers
Global business environment has a lot of diversified changes that is affected as from macro
environmental factors and it has direct impact and influence on the performance of the company.
But the global environment has recently faced a lot of challenges that is due to the brexit
whereas, UK provides the opportunities to all the sme's to perform their function on global level
as well and develop some differ strategies and policies that supports the growth of sme's. UK
governance provides the adequate path to all sme's and offers reliable interest rate and the
exchange rate as like import or export (Khan, 2018). There are different factors that drive the
success of sme's while operating their business in an international business. There are different
drivers that are as labor force, investments, stakeholders, government policies and many others
too. Labor force defines the number of people those are working for to develop and gain high
competitive advantage as they perform all the operations in an effective manner. It helps to
reduce the unemployment of the country as provide job to all the level group as from staff, labor,
and manager and higher level as well as per the educational qualification, experiences and
knowledge. UK labor cost is quite higher thus sme's selects and collects the labor from the Asian
countries that work with minimum cost and it has direct affects the revenue generation of the
company. There some global level drivers as well that is as investment, profitability and
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productivity that based and affects as per the efforts that is applied by the company in order to
gain success and growth.
Rationale for SME's to expand their business internationally
SME's expands their business on international level as to increase their growth and gain
more market share that has direct influence on the performance on the company that further
helps to gain higher sales and more profit (LiPuma, 2012). SME performs or manages their
functions on global level is due to secured the cost of production and that is because they get the
cheaper labor from the Africa and Asian countries.
Threats and opportunities in competitive global environment
SME'S works with the limited number of staff and also gains the certain amount of
revenue thus get some major challenges while operating or expanding their businesses on global
level. One of the major challenges is a minimum or lack amount of resources as like financial
funds, knowledgeable labour, market knowledge that acts as a resistance that stops the
profitability factor of the company. There are some other challenges as well as like economy of
scale as most of the sme's are not able to perform all of their work with more sufficiency and
doesn't able to manufactures the perfect amount of products. SME has a less network by which
while operating the business on global level it is difficult for them to overcome from competition
and maintain the sustainability in the market.
In addition to this, as from the above challenges there are some opportunities as well that
is gained by the sme's. UK governance also takes a lot of initiatives in terms of policies by which
sme's get help to operate their business with less taxes and government also offers the loan of
lowers discount. SME also get opportunity from the international market as it allows then to
manage their business without paying the customs rate.
P3 Determine and analyse the advantages of international trading blocs and agreements
Trading blocs is the agreements of inter governance in which there is no limitations and
restriction for the sme's to perform their trade in an effective manner (Ramsingh, 2018). It also
eliminates the different rules and regulation that opposes the participation of the company. It is
the contract that is conducted in between the different country that states that sme performs their
function without getting affected the level of participation and provides Free State to them. Thus
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it develops or improvised the state of improvement and up-gradation of economic values of the
country.
Trade blocs and agreement alleviates the areas or the particular region for to perform
trading in different areas without any load of paying tax. As after the Brexit, UK developed or
signed different memorandums to the other countries in order to prevent the smoother and
strongest platform to the sme's. CARIFORUM-UK economic partnership agreement includes
the trade bloc and with the help of it, sme's are able to work with more efficient manner and
freely perform trading in Barbados and Bahamas with those other countries too.
The other trade agreements are named as SACUM-UK economic partnership agreement
(EPA) in which sme's of UK works with the southern part of Africa. As these areas generate
more natural factors and with the help of it UK imports their goods and services without paying
any tax and that reflect the cost saving process for the company. After Brexit, UK performs their
trade under World trade organisation (WTO) and it has the agreements with the other 163
members as well as it results in better and fair prices (UK trade agreements, 2019) .
Stimulation of global growth for SME's
International blocs and agreements helps the SME's to trade under the reasonable prices
that support that companies to measure more growth and no tax policies imparts more positivity
in the company as it enlarges the profit share of the company.
P4 Explain the various tariff and non-tariff barriers
Global business environment has the integrating process of all the different policies and
regulations of the different countries that affects the trading process of each all. In include two
barriers as like tariff and non-tariff in which tariff includes the revenues that is generated as from
the custom duty and the interest rates (Steiner, 2019). Whereas, the non-tariff includes the import
and export of different kind of goods and services. It has the restriction that resist the trading of
different products as under this company has to pay the high taxes and heavy interest rates as like
licensing requirements and control of prices etc. SME's also have to pay the custom tax as well
that is the biggest barrier for the growth and development of sme's.
There are some non-tariff as well that also restricts the trade business on global level
while it is not too related to the earning as from the taxes and the revenues. It includes some of
the example as like restriction on quantity, administrative process, subsidiaries, labelling of
products and many other too. Thus these both have a lot of influence on the performance of
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sme's. These barriers work to make the earning as from the trade and also helps to restricts the
export and import of different products with adequate quality. This has been performed to gain
the stability and sustainability in the legislations of the country as like from unemployment law,
licensing, health and safety law etc.
Provide evidence based on analyses of the global business environment in which small and the
entrepreneurs business that operates
The global business environment defines the environment that has the common platform
for all the different business that works on an international level. It could be defined by the
PESTLE analysis that is as defined below as:
Political factor: There are different factors that could be affected by the government
policy that might adverse and diverse the growth of the Marshfield bakery. It could be depend on
the taxation policies, trade bodies, governmental stability and many others. There is the basic
consideration as on the different factor that could be affect the working environment of SME.
Economic factor: It has the direct impact on the competitive behaviour of the SME and it
defines the different situations that are as like the spending of the government, taxation rate,
inflation rate, interest rate and subsidy rate as well (Del Vecchio, 2018). Marshfield bakery gets
the better support from the other government to expand the business at global level.
Social factor: It is the factor that defines the better growth of the people as it concern
about the lifestyle, CSR activities and many others. It supports the Marshfield bakery in this they
could insert the better and valuable input by providing healthy food and bakery products.
Technological factor: It is the advancement that induces the up gradation and for this
Marshfield bakery induces the better and fresh products that will be developed with the help of
different machineries to build more advancements (Rissanen, 2020).
Legal factor: It is the rules and regulations that are published by the government and for
this Marshfield bakery measures the health and safety procure. They manufacture the products
while managing better supply of food products by maintaining healthy ingredients.
Environmental factor: It includes the different factor that has been generated with the
link of environment. For this Marshfield bakery didn’t uses the plastic products and recycled and
reuse the covers in order to prevent the carbon footprints.
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Critically analyse the implication of threat and opportunities that face SMEs in an increasingly
competitive global environment
There are different threat and the opportunities that are faced by the SME that are as
defined below as:
Threats
 Inadequate access and marketing platform: It is due to the different uncertainties that
are faced by the company when they are entering in the newer global environment. SME
doesn’t have much availability of resources and having the less productivity. It is must
that business will be conducted the marketing and it is not easy for the c to access the
better marketing strategies (Liébana Cabanillas, 2018).
 Lack of credit: The SME has the less amount of credit and for this they didn’t manage
the better and sufficient resources. It adverse the impact of the SME and resist the growth
as well.
 Lack of access to new technology: There is the less availability of the technologies as
the SME will be more advanced in terms of creativeness and uniqueness while it is hard
for the SME to manage the better source to insert the technology.
Opportunities
 Leveraging the e-commerce trend: Marshfield bakery works on the digital platform as
well and provide their services to the customer as from the online source. There is the
intense competition and for that they adopt the digitalisation and they manage the better
effectiveness.
 Taking advantage of government schemes: There are the different schemes that are
published by the government as they support the SME while they are the economic
generators of the country. Thus Marshfield bakery must adopt the benefits from the
government policies and gain better advantage.
Evaluate the advantages of international trading block and agreements and their implications for
SMEs
There are lot of advantage of the international trading block as the Marshfield bakery
creates a lot of opportunities in the market in terms of job that enhance the growth and
development of the economy (Baccini, 2019). In the global trade they induce the vast
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advancement and more expansion that could be implied by the SMEs. There are some of the
advantages of international block and agreements that are as defined below as:
Growing interconnectivity: It is the factor as through which the strong connection will be
developed while making the trades and the agreement. The connections will induce the better
and effective development of the SME and provides more growth and development. The SME
also provides the lot of jobs in the market and also provides the adequate economy in the market
place.
Trade effects: As the different tariff will be reduced while the cost of import will get
decreased that is more helpful for the Marshfield bakery. It is the biggest support of the SME
while they induce the better support to the SMEs to measure the higher sales and more success.
Apply the appropriate import and export process to an organisation and make recommendation
on how they could be applied in an international context
Import process is the method though which the goods and services will be purchased
from the foreign countries. The trade rate will be varied as from the country to country and it
depends on the different import policy. While the export process is the methods in which the
SME will be sale out the different products and services to the different countries. In this the
different order will be governed as from the receipts and it is performed by making the
agreements while producing and procuring the products and the goods in the shipments. It could
be applied in the international market while in this the Marshfield bakery will provide the
different support while making the global and international support. There is some of the
advantage of the import process as is increase the income source of the company and brings the
competency in the market. While there is some of the disadvantage as well and in this it include
a lot of documentation and the procedure that is more typical for the new SME (Tidd, 2018).
Pros and cons of importing:
Pros Cons
In this Marshfield Bakery has gained more
advantage in terms of revenue and profit
generation.
The company has to pay tax from the import
goods and services by which fair trade is
managed (Simoncelli, 2020).
Marshfield Bakery has expands its profit share
and working potential by which they have also
The company has face unemployment as well
by which certain amount of loss is measured.
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save the tax amount as well.
Pros and cons of Exporting:
Pros Cons
In this business operation is expanded along
with this customer based also enlarged thus
long term sustainability in attained.
The product value and image of Marshfield
Bakery also get affected in negative manner in
profit is not managed.
In this employment is also provided to the
worker by which economic growth also
maintained.
The payment methods of the business is being
shifted as per the country currency thus profit
is shifted.
To get secure a deal of importing and exporting it is vital for the business to attain sustained
growth and for this Marshfield Bakery has analysed different condition of profit generation. To
secure a deal business has fixed the dealing as by measuring and analysing more sales (Sun,
2018).
Merchandise and service of import and export of Marshfield Bakery is being used to enlarge
the customer base and it is as illustrate below as:
Basis Merchandise imports and exports Service imports and exports
Concepts Merchandise could be feel and touch
by the business as it is in the form of
tangible benefits.
The services are in the form of
intangible benefits in which they have
maintain more focus to satisfied the
demand of customers.
Valuable It has quite lesser values. It has moderate level of values that is
developed as product is import and
export from different countries
(Connelly, 2019).
Managea
ble
It defines the higher costing within
which costing and other financial
benefits is measured.
It has lower impact on the manageable
favoured and also include minimum
amount of financial resourcing.
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Evaluate the difference method of SME can use to tap into various markets with application to a
small business or entrepreneurial venture.
There are some of the different methods that helps the SME to tap in to various new market
and that are as described below as:
Franchising: It is the method to expand the business in newer market as in this Marshfield
bakery give the franchise of their brand to the other parties. It develops more and more sales at
higher profit by the maximising the brand image.
Licensing and Franchising: It is the process through which Marshfield bakery provides the
license to the other party under which they could sale their products and services in other market.
As from this they get the benefit as the licenser provides the adequate amount to the Marshfield
bakery on monthly basis.
Creating Joint ventures: It is the different aspects that through which the Marshfield
bakery make the joint ventures with the other business in order to develop more share and better
profit. It increases the maximum number of resources by which the revenue generation of the
bakery (Dratler, 2020).
Compare and contrast various ways SMEs can tap into international markets with pros and cons
of each method
Joint venture: It is a method that is used by the Marshfield Bakery and in this they have
easily tap into the international market. The company has worked on to enhance higher return of
the investment so that long term balance is maintained. In addition I have make effective
utilisation of resources so that better profit margin is attained so that largest market share is
developed.
 Pros – It helps to earn more profit as while reducing the manufacturing cost in which
flexible benefits are attained such as risk, expenses and profit share.
 Cons – In this distribution of products and services is harder to managed so that it is not
used by Marshfield Bakery.
Licensing: It is a method that is used to enter into the global market as in terms of
business expansion. In this more of the profit is managed by which Marshfield Bakery has take
license from other companies that is existed in foreign so that more of the customers are
attracted (Harris, 2018).
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 Pros – It is a better way to get enter into international market so that higher amount of
benefits are attained and in this revenue generation also get enhanced as while expanding
customer base as well.
 Cons –It is not essential that all the legal formalities are protected and in this local
competitors are worked over to developed a substitute products by which value of
business is negatively impacted.
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CONCLUSION
It has been concluded from the above report that while working with the global level
sme's has faced a lot of competition and challenges as they have to follow the different rules and
regulations of the country that acts as the resistor that resist the performance of the company.
SME's get the help from the trade agreements and blocs as it imparts free trading and also
improvised the tax free policies for the sme's. Furthermore, concludes that there are two different
types of trade barriers that restrict the international trade.
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REFERENCES
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Baccini, L., 2019. The economics and politics of preferential trade agreements. Annual Review of
Political Science, 22, pp.75-92.
Cantwell, J., 2013. Multinational corporations and innovatory activities: Towards a new,
evolutionary approach. In Technological Innovations, Multinational Corporations and the
New International Competitiveness (pp. 33-70). Routledge.
Connelly, B.L. And et. al., 2019. Shareholder influence on joint venture exploration. Journal of
Management, 45(8), pp.3178-3203.
Del Vecchio, P. And et. a;., 2018. Big data for open innovation in SMEs and large corporations:
Trends, opportunities, and challenges. Creativity and Innovation Management, 27(1),
pp.6-22.
Dratler Jr, J., 2020. Licensing of intellectual property. Law Journal Press.
Harris, L.E., 2018. Licensing digital content: a practical guide for librarians. American Library
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Hilmersson, M. and Jansson, H., 2012. International network extension processes to
institutionally different markets: Entry nodes and processes of exporting SMEs.
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Khan, Z. and Lew, Y.K., 2018. Post-entry survival of developing economy international new
ventures: A dynamic capability perspective. International Business Review. 27(1).
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Liébana-Cabanillas, F.and et. al., 2018. A global approach to the analysis of user behavior in
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LiPuma, J. A., 2012. Internationalization and the IPO performance of new ventures. Journal of
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Ramsingh, B., 2018. Liquid gold: tapping into the power dynamics of maple syrup supply
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Rissanen, T. and et. al., 2020. The role of home market context in business model change in
internationalizing SMEs. European Business Review.
Simoncelli, F., Red Hat Inc, 2020. Importing and exporting virtual disk images. U.S. Patent
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Steiner, A. and Fan, S., 2019. Rural revitalization: Tapping into new opportunities. IFPRI book
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Stiglitz, J. E., 2014. Tapping the brakes: Are less active markets safer and better for the
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Sun, J. and et. al., 2018. Importing food damages domestic environment: Evidence from global
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Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
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Online
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<https://ccbjournal.com/articles/uk-business-environment-positive-and-forward-looking>
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UK trade agreements. 2019. [Online]. Available through: <https://www.gov.uk/guidance/uk-
trade-agreements-with-non-eu-countries-in-a-no-deal-brexit>
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