Tapping into New and International Markets

This document discusses the importance of tapping into new and international markets for SMEs. It explores the contribution of small and entrepreneurial businesses in the global economy and the threats and opportunities faced by organizations in competitive markets. It also examines the benefits of global commerce blocs and analyzes various traffic and non-traffic barriers in international trading environments.

Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Contribution of small and entrepreneurial businesses in global economy......................3
P2 Threats and opportunities face by organisation in prevailing competitive market ..........4
TASK 2............................................................................................................................................6
P3 Determine and analyse the benefits of global commerce blocs and concords..................6
P4 Explain various traffic and non traffic barriers that exist in international trading
environments..........................................................................................................................7
SECTION 3.....................................................................................................................................8
P5 Advantages and disadvantages of import and export including a secure deal..................8
P6 Distinction between service imports and exports as well as merchandise.......................9
SECTION 4...................................................................................................................................10
P7 Analysing Various methods in which SME can tap into international markets.............10
Recommendation .................................................................................................................12
P8 Compare and contrast various modes of SME can tap into international markets, assess
pros and cons of each method..............................................................................................12
CONCLUSION.............................................................................................................................14
REFERENCES..............................................................................................................................15
Books and journals...............................................................................................................15
Online...................................................................................................................................16
·

·INTRODUCTION
Tapping into the new international market is the best process or opportunity for the
SME company's. Through this organisation can explore their businesses and growth effectively
by performing at international business activities with the aid of different tools and techniques
of international market development. Organisation can meet the effective growth and achieve
huge profit by satisfying the international customers demand. The Furniture Practice Limited is
the Small enterprise located in the London. Total number of the employees in this company is
72, that is having four branches of company, it deals with the wholesale services of furniture
goods. In this report is including the analysis of international business environment along with
the consideration of environmental force and its impact. There is the consideration of non-tariff
and tariff barriers along with the study of import and export advantages, disadvantages in terms
of services and merchandising. Different techniques and process of international market access
is also going to be evaluated in this report in context SME.
·TASK 1
· P1 Contribution of small and entrepreneurial businesses in global economy
SME are said to be those companies which run over a comparatively small platform than
large organisations. Such enterprises require lesser amount of capital to run their operations to
establish profits. According to world trade organization, there are over 90% of business
population being presented by SME sector which provides 50-60% employment and total of
55% of GDP development. Hence SMEs are representing maximum amount of global economy
(Arnold, 2019).
The Furniture Practice Limited is one of leading furniture based organisation which
provides services to architects as well as designers in relation to corporate customers. It believes
in regular innovation and motivation to staff members to increase its productivity. Though the
organisation is operating in UK and not worldwide, it seeks to tap in the international market to
gain real profitability. Globalisation is the process of interconnection between between different
nation which offers the opportunities of trading and cultural exchange, it offers the opportunity
to increase the products of goods and services along with the development of various small scale
organisation at international level and through this employment and economy of the
interconnected organisation grow.

Importance of going international
there are the various factors which represent the importance of developing into the
international market. Such as the positive effect of international development in the form of
increasing revenue. Developing new customers, opportunities of diversification, company can
achieve competitive edges.
Different way to get enter into the global business
Company can analyse and adopt different ways of international penetration as there are
the various method's to go international such as the exporting, partnership, joint ventures,
piggybacking, licensing and franchising. It depend on the type of organisation size of
organisation and their financials ability to chose on of them. The Furniture Practice Limited can
prefer direct exporting and licensing in order to step into the international market.
Rules and regulation of globalisation
Their are the various laws and legislation for globalisation such as global environment
sustainability management, according to which in environment have to be protected from the
bad effects of the organisation practices and in other hand there are some other rules and
regulation w facilitate and prevent the trading that is the trading blocs and trading barriers.
Along with the other employee's law which influence the global development of the
organisation.
l壱P2 Threats and opportunities face by organisation in prevailing competitive market
Most of the organisations operating worldwide are small in size, but their contribution in
overall development of economy is massive (Singh and Srivastava, 2018). They might face
threats as well as get opportunities in order to increase their existing market. It can improvise its
operations by providing better living standards and improvisation in employment rate for overall
development of organisation.
Opportunities for SMEs: In SME segment there are various opportunities in the
prevailing new market. These opportunities can be new favourable environment policies, new
technology, economic support, e-commerce utilization, increased cash inflows and so on. The
Furniture Practice Limited can grab these opportunities by implementing these elements which
will be significant for company's overall growth. These factors plays vital role in creating
potential revenue opportunities by sticking with the prevailing market changes. Selected

organisation can grow intentionally by the aid of new e-commerce techniques and networking
techniques through which they can virtually manage the customers and their international
employee's.
Threats for SMEs: There are several threats for new entrants in a new market segment
which will hinder their opportunities to earn profits in the long term (Hånell and et. al., 2018).
This may include higher costs for primary resources which may hamper company's efficient
productivity, unprotected intellectual property rights due to arrival in new market, other
government regulations. The Furniture Practice Limited needs to establish sustainable operating
environment which will help it to grow in new market. Due to above mentioned threats,
company can face trouble while establishing its operations that will be undesirable for
company's growth and profitability. ‘born globals’ is one of the competitive threat for all other
developing SME. Because it has reached on of the best position as global company. The
Furniture Practice Limited this can be threat as the global business competitor and in order to
meet this comparative edges organisation have be more strategic and creative then born globals.
In order to perform in global market, an organisation is required to analyse its macro
environment by which it can outgrow from their drawbacks and limitations. By keeping in mind
this factor, PESTLE analysis is conducted for The Furniture Practice Limited to analyse its
surrounding external environment which might affect its operations. These forces are analysed
in the given manner:
Political Factors: This includes government related influence over company's operations
(Lecerf and Omrani, 2020). In context with The Furniture Practice Limited, it has to make sure
that it adheres to policies and guideline being formulated by different governments across the
world. As per current situation of Covid-19, company is expected to organise its operations by
complying with all the relevant guidelines by ruling authorities.
Economical Factors: It includes factors related to economic policies like, inflation rate,
interest rate, foreign exchange and so on. The Furniture Practice Limited by keeping in mind
growth rate, foreign exchange rate and interest rate of a market it can forecast its growth as well
as respective profitability in this regard. If such rates are stable then company will be able to
perform effectively.
Social Factors: Here all demographical factors are considered to evaluate company's
level of productivity in a respective area. The Furniture Practice Limited can grow its market in

international areas by analysing population trend of the selected area, customs and reforms being
followed by such people as well as literacy rate. This way company will be able to adapt with
the requirement of customers.
Technological Factors: It is considered as enhancing factor which has been upgrading
every day (Eniola, 2018). Therefore, organisation needs to keep up with the changes in relevant
technologies to survive in market for longer period. It can produce its products and services with
the use of e-commerce which will help it to create major impact over the new areas.
Legal Factors: It involves legal framework which is implemented by officials to provide
protection to intellectual property rights of a company. Here, the organisation needs to comply
with various laws such as data protection, IPR, consumer protection act, e-commerce and so on.
This will help it to manage its operations in a systematic manner with increased efficiency.
Environmental Factor: It considers all existing environmental factors which may
influence company's working conditions. Therefore, respective company needs to evaluate
prevailing market conditions such as weather, climate conditions, pollution laws, etc. before
entering into new place. This will help it to sustain in new area for longer period.
·TASK 2
·P3 Determine and analyse the benefits of global commerce blocs and concords
Global Trading blocs and agreement is the most beneficial part of the international
government which support the international trading organisation, by reducing most of the
trading barriers between the participating country's (Osano, 2019). This is the process under
which different country's with their interest and trust to participate together for the intraregional
trading of the products with the agreement of removing possible barriers of trading. This
legislation is can be beneficial for The Furniture Practice Limited in order to develop their
business at participative country's.
Brexit is one of these process effective for Britain as it allow to explore businesses at 163
countries according to come legislation of WTO.
Preferential Trade Area- This is the trade bloc which facilitate the tariff barrier free
trading for some selective product and services from on nation to another.
Free Trade Area- This is the trading bloc which done between some selective country's
which facilitate the tariff free import and export of every type of products and services.

Custom Union- This is the trading bloc which facilitate negotiation for tariff free
trading. Between members and non members.
Common Market- This is the trading bloc under which organisation of the participating
company can trade their products and services without any non tariff and tariff barrier's (Gereffi,
2019). The Furniture Practice Limited should first enter into the common market bloc.
Various benefits of trading blocks are provided below:
Foreign Direct investment
This aid to develop economy by developing the different SME through foreign
investment, this helps to offer the lowers cost products with the best quality due to the lower tax
charges on those services and through this most of the customers can be satisfy and aid to
increase profit.
Effect of commercial activities: This positively effects the commercial activities, such
as it aid to offer cost effective products along with the good quality, to the customers by import
and export of services between the participative nations without paying extra tax (Thota and
Wang, 2017).
Development of SME: trading blocs are the best opportunity for the development of
SME at participating nations (Ismoilov and et. al., 2020). As it offer them options to grow at the
international market with barriers free import and export.
l壱P4 Explain various traffic and non traffic barriers that exist in international trading
environments
Traffic barriers:
Transit duties: This is the barrier apply to the products and services which trade
thorough the costume area from one country to other. This imposes the particular tax charges on
trading which pass through costume areas. So the government of different country charge the
specific tax for trading according to their trading law. The Furniture Practice Limited and other
SME have to cross this barrier in order to tread their product at international level.
Export traffic: This is the barrier which involve the different responsibility of the
export incharge, which involve the management and checking of the freight (Molan and et. al.,
2019). In order to analyse the legality, smuggling and all. Such as it involves the proper

management of resource's and along with the collecting all tax payment. Exporting nation apply
this law on importing company.
Import traffic: This is the barrier which apply to the export company and products in
order to protect the home industry from loss (Hamilton and Webster, 2018). As this give huge
profit marketing to domestic company in comparison to imported products by charging the
effective tax rate to those product of the export company.
Non Traffic barriers: This is another kind of legal barrier which is non tax process but manage
and restrict the trading according to some legislation such as Quotas embargo and subsidies.
Quotas: This involve the restriction of export above then the selected Quotas for
particular export according to the national legislation. This include the selective quantity rules
for the import and export.
VER ( voluntary export restraints): That is the barrier where company can not export
more then their voluntary export quantity taken by the special permission of the government.
Company can export maximum quantity of products by getting the voluntary permission.
Subsides: This government legislation of import company can make more
competitiveness for export company as a barrier by giving the subsidy amount to the domestic
company through which they can compite with imported products in terms of pricing.
·SECTION 3
·P5 Advantages and disadvantages of import and export including a secure deal
Importing is considered as an outflow of money by purchasing products and services
from foreign country rather than domestic country. While exporting is referred to sale of goods
and services from domestic country to foreign nation. It means inflows of funds to ones own
country from other countries (Lee and Cheong, 2017). In regard with above techniques it is
important to secure a deal by applying above methods in appropriate situation. There are various
advantages and disadvantages of importing and exporting which can be evaluated as follows:
IMPORTING
Advantages: Importing provides access to unfamiliar products of foreign country in
home country. The Furniture Practice Limited being from foreign state can facilitate other's
home country with exclusive products and services which will assist company to attract more
customers by increasing overall profitability and goodwill. Also in current times, boycott china

was trending across the world thus it created major opportunities for other countries to import
their products replacing Chinese products with their more reliable products.
Disadvantages: On the other hand importing includes risks of piracy, political scenarios,
legal risk and so on. Thus it is necessary for foreign products to have full legal protection in
order to protect their product from piracy risk, IPR related risks and other relevant factors. The
Furniture Practice Limited might face such issues if their products does not include protection
from privacy. A company might also need to go through all compliances procedure again if it
imports its products to other country which will be complex in nature.
EXPORTING
Advantages: Exporting a product from home country to foreign country will generate
advantages like creation of goodwill, higher profit margins, actual demand identification, export
incentives and so on. If given company wants to operate in a foreign country might enjoy above
mentioned benefits in the respective furniture industry. This will provide company higher profit
margins, more customers and beneficial exposures.
Disadvantages: Exporting can be a demerit as it may face various foreign exchange rate
fluctuations which could affect profit margins immensely (Kerremans and Switky, 2018). Also
economic instability in foreign countries will prevent exporting company to retain their
customers in long term. This may also include various political factors, regulation up-gradation,
rivalry nations, credit risk and so on. The Furniture Practice Limited needs to consider these
factors if it operates in a foreign country in order to achieve a level of profitability and long
lasting exposures.
HOW TO SECURE A DEAL
This process of securing the deal is done by the help of different steps, such as it start
from the preparation of the export quotation, then followed by the export process phase 1which
involve the negotiation and security of the deal importer, then evaluation of the quotation by
buyers related to the cost, then it finally complete with the production requirements, lead time
management, by analysing the sellers financial stability.
l壱 P6 Distinction between service imports and exports as well as merchandise
Service companies are said to be those companies which does not sell tangible products
in order to earn income rather it provides services related to specific expertise or strength they

inherent. Whereas Merchandising companies are subject to resale of tangible products or
inventory to the ultimate buyer. These businesses incur expenses such as labour, material and
overheads in order to sale their products.
Merchandise ImportMerchandise ExportService Import Service ExportIt is said to be resale
of tangible inventory whether in a retail market or wholesale market from foreign country to
home country. It is described as a resale of inventory either retail or wholesale market from one
home country to foreign country.Service import is known for providing services from foreign
country to home country.Service export is described as service provided from home country to
foreign country. For example:
Purchase of furniture by India from UK. (UK being foreign country )For example:
Sale of furniture by UK to India. (UK being home country)For example:
Professional consultation services taken by India from UK. (UK being foreign country )For
example:
Professional consultation services
from UK to India. ( UK being home country) Recommendation
·SECTION 4
·P7 Analysing Various methods in which SME can tap into international markets.
In context to the SME tapping into the international market organisation have to develop
the effective development plan along with the selection of appropriate taping method. There are
the various types of method for international asses explain below in context to the The Furniture
Practice Limited international development.
business planning
Vision- The Furniture Practice Limited is to become the worlds best provider of the
furniture goods to international customers according to their ethical and trending requirement.
Mission- Is to get enter into the international market with innovative and creative
products ideas which can help to satisfy the customers and develop brand value.

Potential markets- Potential market of the selected organisation is home renovation socio-
corporate company along with the creativity furniture loving customers,
Financial support- For Furniture Practice Limited financial support is their profit and
business turnover along with the government financial support.
Distribution and transportation channels- This involves the various transportation facility's
which help to transport row material from suppliers to manufacturer and from manufacturer to
the wholesaler, to retailer. Furniture Practice Limited can use dual distribution channel and
reverse channels.
legal considerations and international regulations
Their are the various legislation and regulation and legislation according to which
organisation have to develop effective and sustainable business structure, documentation and
proper management of the employee's health and safety.
Franchising: This is the most effective and usual process of international market
penetration, which involves the management of company at different nation by giving the
franchisee to other individuals business men who want to earn more profit by running the others
organisation (Bismark and et. al., 2018). In this process company name product and services
rights is given to the individual to use it and sell the services with the exchange of come profit
margin to franchiser.
Licensing: With the aid of this method company can develop their other manufacturing
organisation at international level. This is the process where company can apply for the business
licensing through which they can get right to use international resource's for their business
development and management at that level (RAO, 2020). The Furniture Practice Limited should
use this method for international development, this is time taking and costly but it can aid to
achieve huge profit in future.
Joint ventures: This is the method in which agreements is done between two and more
international partners in order to enter into the international market with the appropriate sharing
of the business resources along with the equal sharing of profit and loss. The Furniture Practice
Limited can use this methods to develop their company at international level.
Piggybacking: That is another method of tapping into the new international market, in
which two organisation of different nation can work as a partner, for cross selling their product
throughout their representative country's. The Furniture Practice Limited can use this method in

order to grow their business internationally by selling their products into the new international
market by the help of international partners in the exchange of selling their products into the
home country.
Exporting: This is the method through which company can growth their business
internationally without any extra investment on new organisation establishment and
manufacturing of the products at different nation (Perera, 2017). Such as The Furniture Practice
Limited can enter into the international business through direct-selling of their product, from
home country to other through exporting of the product with the aid of trading facility's.
l壱Recommendation
From the (Michael) point of view there are the different mode to get enter into
the new international market which should be selected after the proper market
research and analysis of the global environment in context to the selected
organisation. So on the basis of The Furniture Practice Limited environmental forces
and financial stability, they should use both direct exporting for some country's and
Licensing for some nation by analysing their registration charges, licensing charges
and potential market. They can develop their business into India by the help of
Licensing, because through this company can get right to use the business
essential resource's.
l壱P8 Compare and contrast various modes of SME can tap into international markets, assess
pros and cons of each method.
There is the various method's to get enter into the international market such as
exporting, licensing, franchising, joint venture and so on. All of theses method's have their own
cons and pros along with their techniques of implementation. Brief explanation of the porns and
cons is given below.
Franchising Joint ventures Licensing PiggybackingExporting Cons This is the risky because
improper management activities of franchiser can effect the brand value. Is all the rules and
precess of the company is not followed by the franchisers then it can reduces brand value and
customers satisfaction.This process is can be bad in terms of conflict and management problems
due to the different behaviour and equal share of loss.For licensing company need to do long
terms process of documentation along with the huge investment on License and its non payment

rule for royalty is bad for company. This method is can be bad in terms of businesses
management at international level by other organisation as they can cheat, so there is the
chances of fraud and huge finical loss. This method have chances of huge investment on trading
tax due to the different tax charges on different products according to the various trading law of
different country. Pros This process is can be beneficial due to the lower investment of company
and easiest process of the international partitioner and there is no need to conduct market
research. With the aid of this method company can effectively manage their project due to the
opportunity of resource's and knowledge sharing and risk management. Legal process helps to
use different resource's of the Licensed country for businesses. Company can earn huge profit
and market-directed with lower risk. This can be beneficial as it reduce the cost of other
marketing function for international marketing and product development. That is beneficial in
terms direct selling without the needs of other parents and assets at different nation.
Recommendation
Every method have their own advantages and disadvantages in terms of cost,
trust, value and management and for the The Furniture Practice Limited Licensing
will we best option as it provide the rights to get enter into the international market
along with the permission of resource's use and management with legal permission
and through this company can earn passive income with reducing the chances of
partnership sharing and extra transportation charges, reduction in the extra chargers
of resource's.
·CONCLUSION
It can be reflected from above report, that it is extremely important for an SMEs to
analyse international markets before entering them. Prior analysis will increase their overall
efficiency and productivity. This will help them to generate optimum profitability with
sustainable environment. Also organisation needs to analyse various traffic as well as non traffic
barriers which may influence company's smoothing flow. Various manner to enter international
market are franchising, licensing as well as joint ventures. The above mentioned modes are
selected as per company's external factors, level of operations and type of operations

·REFERENCES
Books and journals
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the community hospital group-Ghana Limited. International Journal of Research in
Business, Economics and Management. 2(3). pp.94-113.
Eniola, A. A., 2018. SME firm characteristics impact on the choice of sources of financing in
South-West. Nigeria. International Journal of Business and Globalisation. 21(3),
pp.344-366.
Gereffi, G., 2019. Global value chains and international development policy: Bringing firms,
networks and policy-engaged scholarship back in. Journal of International Business
Policy. 2(3). pp.195-210.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hånell and et. al., 2018. Pursuing Innovation: An Investigation of the Foreign Business
Relationships of Swedish SMEs. British Journal of Management, 29(4). pp.817-834.
Ismoilov and et. al., 2020. The Essence Of Small Business And Private Entrepreneurship And
The Theoretical Basis Of Its Development. The American Journal of Applied
sciences. 2(08). pp.45-50.
Kerremans, B. and Switky, B. eds., 2018. The political importance of regional trading blocs.
Routledge.
Lecerf, M. and Omrani, N., 2020. SME internationalization: The impact of information
technology and innovation. Journal of the Knowledge Economy. 11(2). pp.805-824.
Lee, C.S. and Cheong, I., 2017. Regional contents in exports by major trading blocs in the Asia-
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Molan and et. al., 2019. Modeling traffic barriers crash severity by considering the effect of
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Osano, H.M., 2019. Global expansion of SMEs: role of global market strategy for Kenyan
SMEs. Journal of Innovation and Entrepreneurship. 8(1). pp.1-31.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
RAO, S.P., 2020. International business environment. HIMALAYA.
Singh, S. and Srivastava, S., 2018. External Factors Affecting Indian Hand loom Industry: A
Paradigm Shift. International Journal of Business Insights &
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global value chains under industry 4.0 trend: Case study of textile industry in
Taiwan. Journal of Global Information Technology Management, 22(2). pp.120-145.

Thota, M. and Wang, K.W., 2017. Reconfigurable origami sonic barriers with tunable bandgaps
for traffic noise mitigation. Journal of Applied Physics. 122(15). p.154901.
l壱Online
The Foundation for Economies Worldwide Is Small Business[online] available through <
https://www.ifac.org/knowledge-gateway/contributing-global-economy/discussion/foundation-
economies-worldwide-small-business-0>