Tapping into New and International Markets

This document discusses the global business environment, threats and opportunities in international markets, advantages of trading blocs, tariff and non-tariff barriers, and methods for SMEs to tap into international markets.

Unit 43 Tapping into New and
International Markets
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Table of Contents
INTRODUCTION ..........................................................................................................................3
P1 Explain the global business environment in which small and entrepreneurial businesses
operate..........................................................................................................................................3
P2 Analyse the threats and opportunities that Captify face in an increasingly competitive
global environment......................................................................................................................3
P3 Determine and analyse the advantages of international trading blocs and agreements..........4
P4 Explain the various tariff and nontariff barriers that exist in the international trading
environment.................................................................................................................................5
P5- Advantages and disadvantages of exporting and Importing.................................................6
P6 Explain the differences between merchandise and service imports and exports....................7
P7 Evaluate the various methods in which SMEs can tap into international markets.................7
P8 Compare and contrast the various ways Captify can tap into international markets,
assessing the pros and cons of each method................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
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INTRODUCTION
Every business need to expand a global level so that they sustain for long term. For that it
require to analyse market and then develop strategies accordingly. However, there are various
challenges which is faced by SME in international market (Falahat. and Migin, 2017).. An
international marketplace is considered as any geographical region where a firm conducts
business outside their boundaries of a firm's home nation. In contrast to that domestic
marketplace is in the boundaries of their home nation.
The report will lay emphasis on global business environment in which small and
entrepreneurial businesses operate. Also, it will be described about threats and opportunities that
Captify face. Moreover, advantages of international trading blocs and agreements and tariff and
nontariff barriers are explained. Besides, pros and cons of exporting and Importing and
differences between import and export will be discussed. At last various methods in which
Captify can expand is mentioned.
P1 Explain the global business environment in which small and entrepreneurial businesses
operate
It is found that there are different elements in which business environment operate. Any
change in this highly impact on growth of business. They are not able to enter in new market.
Small enterprises requires to be upgrade their management skills as well as their capacity in
order to gather he data as well as technology base. Government requires improving SME such as
Captify in order to access to financing, international markets and information infrastructure. It
also provides legal ,regulatory as well as financial frameworks in order to conduct
entrepreneurship as well as small company start up.
P2 Analyse the threats and opportunities that Captify face in an increasingly competitive global
environment.
Within the foreign marketplace, firms must fully focus the environment of abroad within which
they plan to operate. Cultural differences, Politics as well as economic environment can focus
both threats and opportunities within the market (Falahat. and Migin, 2017)..
Also intense nationalism can also lead to the difficulties as within this it can boost the
interest as well as culture of one nation over other nations. Iran and New Guinea which are
strongly nationalistic nations also discourage investment through foreign nations.
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Language is considered as also vital aspect of culture as marketers also take care within selecting
products names as well as translating slogans so that it can not convey wrong meaning. Such as
Coca Cola within Chinese character means bite the wax tadpople.
Each nation has its own traditions as well as customs that focuses the business practices and also
impacts negotiations with foreign consumers. Within many nations personal relationship are
considered as most vital as compare to the financial considerations. Also, within Mexico can also
lead to the lost sales. In addition to this Negotiations within Japan also includes long evenings of
drinking, dining as well as entertaining that presents some culture dos and don'ts.
Economic development level varies
Business opportunities are also better within nations that have economic infrastructure
within plabite the wax tadpole. Infrastructure is also considered as basic institutions as well as
public facilities within the development of economy depends. It also involves the banking and
money system that gives the major investment loans to country's business, the education system
that aids out to be more incredible varieties of basic research as well as skills that can run
actually the production line of the nation such as communication systems and extensive
transportation like airports, telephones, interstate highways, postal systems all of them link each
and every piece of geography into more than one marketplace.
P3 Determine and analyse the advantages of international trading blocs and agreements.
Advantages
This leads to tariff removal which leads to more of trade creation as a result brings more
of business opportunity as a result builds with job opportunity in marketplace for individuals.
This leads with lowering prices for customers and increased opportunity for exporters.
By this it helps in enabling increased specialisation which leads with effectiveness of
activities, hence as a result implies with economies of scale which ascertain with lowering cost
of average from the increased output.
It is also of advantage as of catch up effect where countries joining with rich trading
blocs can advantage from investment which is being inward and increase with opportunities of
trade. It leads with various economic and cultural ties. This helps in giving small countries to a
greater say in various global trade agreements.
Increased competition – The removal of tariffs helps in creating greater choice for its consumers,
where domestic and local companies have greater incentive to cut cost to be competitive.
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Modern trading Blocs are not wage wars on non members such as Hanseatic league and still they
are considered as controversial. As per the critics of bloc say free trade can be worldwide thing
as well as favourite particular nations distorts the natural flow of goods all over the world. Here
the counter argument is that the advantages regarding trading blocks for member nations are
considered as too good in order to pass up.
It is also considered as good deal for the costumers as these foreign goods becomes more widely
available at the lowest prizes (Gouel, and Laborde,2021).
Competition also decreases prices providing consumers better purchase for their money as here
the prices go down costumers can purchase more that can aids within the boosts the economy.
Several nations have several strength for example educated workforce, access to lots of
farmland. Partners within a trade bloc can specialise in what they can do best as well as also
know how to sell better their inputs to the other countries.
Specialisation allows big firms in order to develop economies of scale that makes them more
efficient as compare to others.
The growth within trade as well as sales can also leads to the growth within jobs.
P4 Explain the various tariff and nontariff barriers that exist in the international trading
environment
These are considered as restrictions that are imposed on the movement of goods between
several nations. These are imposed for several reasons that are mention below
National security- Nations enforce tariff and non tariff barriers in order to protect the nation's
security.
Tariff Barriers are considered as a custom or tax which can imposed on goods that can moves
across the several borders. These are considerably interchangeable.
Import tariff- It is known as the custom duty imposed through importing nation. Such as tax
imposed on goods imposed (Gouel, and Laborde,2021)..
Export tariff- It is also known as the duty imposed on several good through exporting nations on
its exports as these are agricultural as well as mineral good are taxed.
Transit duties- It is imposed on commodities that originate within one nation, cross rare as well
as consigned to other. Transit duties are levied through nation by which the products pass. The
outcomes here in enhanced cost of goods as well as decrease within the amount of commodities
that are traded.
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Non tariff barriers
These are considered as non tax restrictions such as government procedures that impact the
overseas trade and government regulation as well as policies. These can be within the form of
subsidies, quotas as well as embargo and many more (Falahat. and Migin, 2017).
Quotas -It is considered as the numerical limit on the quantity of goods that can be exported or
imported during particular time period. Here the quantity can be stated within the firm's license.
Here the importer imports more than the particular amount as one has to pay a fine or penalty.
VER ( Voluntary export restraint)- It is consider as a quota on exports that can be fixed through
exporting nation on the request of the importing nation. The exporting nation fixed a quota that
are associated the maximum amount of quantity that will be exported to the country.
Subsidies- It is considered as the payment that can be made through government to the domestic
producer in order to compete against the foreign products. It can be subsidized input prices, cash
grant, government equity participation and tax holiday and many more. It aids within a local
organisation to decrease cost as well as gain control over the marketplace.
P5- Advantages and disadvantages of exporting and Importing
It has been identified that there are certain pros and cons of export and import. They are
described as follows
Limited market- Selling products only within own nations is difficult as here the market is
limited through size of one's local market (Falahat. and Migin, 2017). Exporting products
outside the nation provides limitless opportunities of market. Here the market is very huge and
SME like Captify should plan properly for its sales. Due to the high competition the products
prizes on the local market are lower as compare to the foreign markets. Because several nations
have several climates as well as conditions.
DISADVANTAGES OF EXPORTING
The right product and right market- It is hard to find out the right good regarding particular
market. The difficulty within one market will not be same within other market.
Relationship with partners- Most of the business performs several stages of export and import
as it will lead to lot of time as well as have difficulties from the partner. So that pay attention to
establish and maintain good relationship alongside professional partners such as consumer
services, cargo transportation, consumer services and many more.
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Financial capability- Various Exporters have not been properly aware regarding the importance
of prices within global market as there is low competitiveness. Most of the prices relied on the
competitor's prizes. The exporters are not the one who are really active within researching the
requirement of market in order to formulate the strategies of prizes.
Advantages of importing
Firm can expand their profit margins around the world choose to import good that can used to
extend their profit margins such as wage minimums, high taxes as well as material cost within
certain nations that can be more useful for the imports goods from a nation where wages, fees as
well as material cost is very lower.
Cheaper goods or materials- It is consider as one of the primary reason for importing as it is
indeed most true that one can get items for a fraction of prices here.
Higher quality- It is possible to recognizes the items of better quality foreign as well as sourcing
several high tech goods (Sibiya, and Kele,2019).
Disadvantages
Political Risk- There are several scenarios where this can be considered as hindrance such as
government suddenly impose a stiff tariff on the various goods that are importing.
Foreign exchange risk- It is considered as one of the danger as there can be sudden change
within the currency exchange rate and hence result within suffering a loss.
P6 Explain the differences between merchandise and service imports and exports
Merchandise exports are considered as products that are tangible and goods that are sent
out of the nation. Merchandise imports are goods that are brought within nation.
Service exports as well as import generate non product international earnings as the firm is
paying in order to making service import. Such as when a German tourist stay within a hotel in
London, the hotel stay is consider.
P7 Evaluate the various methods in which SMEs can tap into international markets.
There are various ways that are used by the small and medium side organizations to take
entry into the internal market and expand their business within the various market. Here are some
strategies that are mostly use by the Small medium-sized organization to take international
market entry and show their presence internationally (Schneider. and La Hoz Theuer, 2019).
Franchising
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Franchising is one of the most popular and easy way for the SME's to take entry within
the international market. In this concept Franchiser distribute or give their legal rights and
business models to the other businessman within the other market for the fixed amount of profit
sharing. Enfranchise use the business model of the company ad they have to give a initial fee and
additional charges to the company. It is the best way to expand their business without investing
the money within the market.
Joint venture
Joint venture is the best and less risky strategy that is used by the small and medium-
sized organization within their business. Two companies joint their business together and take
entry within the new market. Both invest equal amount of the investment within the business and
share the losses equally (Zihare. and Blumberga, 2017).. It is less risky and effective method
because small business required huge amount of capital to open their venture on the international
level and by collaborating their business they can have strong financial positions, and they can
easily expand their business. It is also less risky stage because companies invest the less amount
because other party also invest ad if the fail to succeeded on the business in international market
then they have equally pay the losses.
Direct exporting
Direct exporting is the strategy that is helpfully for the small medium enterprises to start
their business international from their own country. They export their product and services sin
the other country by identifying the client within the other country. It is most effective way to
expand the business internationally because company does not need to open their venture on the
international market. It is necessary for the small companies to have the knowledge of how to
export their product and services on the international market otherwise they can get the fake
client ad they can do fraud with the company, so they should take knowledge of export, so they
can use this strategy and expand their business within the market.
P8 Compare and contrast the various ways Captify can tap into international markets, assessing
the pros and cons of each method.
There are certain methods by which Captify can enter into international market. It is as
follows :
Benefits of Franchising
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 Product as well as services will already have a market share which is established thus
there is no requirement regarding market testing.
 The franchisor provides support such as complete package that involves training, help to
set the business as well as ongoing advice.
 A franchiser allows a small business to compete alongside big business.
 Financing the business can be easier as banks are sometimes more likely to lend money
in order to buy a franchise that have a very good reputation within marketplace.
Disadvantages
 It can be difficult to sell one's franchise as one can only send it if it can be approved
through franchisor.
 All types of profits known as a percentage of share are share alongside franchisor.
 The franchisor can go outside the business.
 Cost may be higher.
Joint venture
Advantages
 It is only a temporary arrangement between one firm and other as it cannot be committed
for long term.
 Even Joint Venture has only particular goal as such move allow creating long-lasting
business relationship (Schütze, 2017).
 Better Resources- Forming joint venture will provide to access to better resources as one
have specialized technology and staff. All the capital and equipment that one required for
project that can be used.
 Both parties share cost and risk- Within the case of the Joint group when the project fails
one cannot alone to bearing its failure cost as because two partners share the expenses so
both of them support losses.
Disadvantages
Restricted Flexibility
 Within a joint venture there are times when flexibility can be restricted as when it
happens, participants required to focus on the joint venture as well as suffer within the
process of businesses (Schneider. and La Hoz Theuer, 2019).
Clash of cultures
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 As there is clash of cultures as well as management styles results within poor co-
operation as well as integration. Individuals with several tastes, beliefs as well as
preferences can get within way big time if it can be left unrestrained (Schütze, 2017).
Limited outside opportunities
 It is very often for Joint venture contracts in order to restrict outside actions of participant
firms while working on a venture project.
Direct exporting
Benefits
Full control over the product
It has the full control over the product in order to be priced within foreign marketplace. The
exporter also examines about terms of scale as per the competitive trend that can be prevailing
within the foreign marketplace.
Good reputation
The exporter have an effective control over their product as such good quality products are also
offered lower prices comparatively in order to increase the manufacturer within foreign
marketplace.
Disadvantages
There can be lots of efforts needs in order to build strong consumer base so that's why it is time-
consuming.
As there are various feedback as well as comments from the consumer as it can be hard to handle
them (Nemkova, 2017) .
In some cases if product includes technological changes as for that one required to have a
training section as well as convince consumers' requirements.
CONCLUSION
From report it is summarised that Captify faces various challenges in global market such as
lack of infrastructure, political instability, etc. also, it is evaluated that pros of international blocs
is tariff removal which leads to more of trade creation as a result brings more of business
opportunity. The tariff barriers are Import tariff, Export tariff etc. and Non tariff barriers are
Quotas, VER, subsidies, etc. besides that, there are some pros and cons of exporting and
Importing. Here, Captify can enter in global market through various methods such as
Franchising, Joint venture, Direct exporting, etc.
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REFERENCES
Books and journals
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Schneider, L. and La Hoz Theuer, S., 2019. Environmental integrity of international carbon
market mechanisms under the Paris Agreement. Climate Policy, 19(3), pp.386-400.
Falahat, M. and Migin, M.W., 2017. Export performance of international new ventures in
emerging market. International Journal of Business and Globalisation, 19(1), pp.111-125.
Gouel, C. and Laborde, D., 2021. The crucial role of domestic and international market-mediated
adaptation to climate change. Journal of Environmental Economics and Management,
p.102408.
Kaartemo, V. and Pelto, E., 2017. Translation Mechanisms of International Market Shaping: The
Transformation of the St. Petersburg Bread Market from 1997–2007. Journal of East-West
Business, 23(3), pp.260-282.
Mutcherson, K.M., 2018. Things That Money Can Buy: Reproductive Justice and the
International Market for Gestational Surrogacy. NCJ Int'l L., 43, p.150.
Nemkova, E., 2017. The impact of agility on the market performance of born-global firms: An
exploratory study of the ‘Tech City’innovation cluster. Journal of Business Research, 80,
pp.257-265.
Samiee. and Chirapanda, S., 2019. International marketing strategy in emerging-market exporting
firms. Journal of International Marketing, 27(1), pp.20-37.
Schütze, R., 2017. From International to Federal Market: The Changing Structure of European
Law. Oxford University Press.
Sibiya, V. and Kele, T., 2019. Barriers and public policies impeding SMEs’ international market
expansion: a South African perspective.
Zihare, L. and Blumberga, D., 2017. Market opportunities for cellulose products from combined
renewable resources. Environmental and Climate Technologies, 19(1), pp.33-38.
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