Tapping into New and International Markets

This document discusses the global business environment, threats and opportunities for SMEs, advantages of international trading blocs, tariff and non-tariff barriers, and the advantages and disadvantages of importing and exporting. It also explains the difference between merchandise and service imports and exports.

UNIT 43 TAPPING INTO
NEW AND
INTERNATIONAL
MARKETS

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P 1 Global business environment in which small and entrepreneurial businesses operate.........3
P 2 Threats and opportunities that face SMEs in an increasingly competitive global
environment.................................................................................................................................4
P 3 Analysis the advantage of international trading blocs and agreement..................................5
P 4 Tariff and non- tariff barriers in international trading environment......................................6
P 5 Advantages and disadvantages of importing and exporting..................................................7
P 6 Difference between merchandise and service imports & exports.........................................8
P 7 Methods through which SMEs can tap into international market.........................................9
P 8 Pros and cons of each method and comparison...................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
All businesses have to make sure that there is effective working and performance so that
the business will be able to expand themselves in the international market. There is a lot of
threats and opportunities which are present in international market which have to be analysed
and effective measures must be taken. Oak Cash and Carry is located in United Kingdom which
is trading in the British market since 2000 and the total asset of the organization is £321,395. The
report is going to consist of measures, methods and techniques so that there are going to be
higher investment which the firm can have in the international market as well which is going to
be a great factor for the overall performance.
MAIN BODY
P 1 Global business environment in which small and entrepreneurial businesses operate
Global business environment is going to have a huge impact on the operations of a small
and entrepreneurial business which is going to be discussed with the help of a model so that there
is going to be higher understanding that is going to be present.
 Political Factors
There are a lot of laws and regulations which are present in the market which have to be
considered by SMEs and entrepreneurial so that there is going to be higher achievement which is
going to be present. The operations are going to be dependent on this factor because the trade
laws would differ from place to place which has to be understood and worked upon accordingly
(Lam and et.al., 2019).
 Economic Factors
There is a lot of investment which is going to be required for the business to be able to
expand themselves in the market so that there would be higher operations. The company will
have to invest a lot in making sure that they are globalizing themselves effectively so that there is
going to be higher consequences that are present.
 Social Factors
Oak Cash and Carry which is a small business operating in United Kingdom has plans to
expand, and they have to be well considered which is going to be a great factor for the overall
operations and stability in the market. Trends and demands of the customers is shifting, that can

be a great opportunity for Oak Cash and Carry to be able to make sure that they are fulfilling this
factor.
 Technological Factors
Technological aspect takes a lot of investment which is required so that there is going to
be higher productivity and performance can be increased which is going to be a good factor
(Gebauer, Haldimann and Saul, 2017). Technology is going to help in making sure that there is
going to be effective functioning and processing which is going to take place. New markets have
to be involved which is going to make the company be able to have higher stability in the
market.
P 2 Threats and opportunities that face SMEs in an increasingly competitive global environment
There are a lot of threats and opportunity which SMEs have in the market to be able to
compete in the global environment which has to be well analysed and worked upon. The
following report is going to discuss the threats and opportunities which are present so that there
are effective measures which can be taken.
Threats
 Culture differences
It is due to the differences between the people who have migrated and the people who
stay in the country are going to be different which has to be well analysed so that there are higher
consequences which would be present (Verougstraete and Aras, 2019).
 Inexperience
SMEs are not very experienced and do not have the right knowledge of the international
factor which is going to be a great factor. Business has to be make sure that they are taking the
right actions in order to make sure that the portfolio and branding is not getting affected
negatively but positively only.
 Investment
There is a use of a lot of technological aspect in the company which has to be invested
within so that there are higher outcomes which is going to be present. The economic factor is
going to be invested in globalization of an organization which has to be well maintained so that
there is good working.
Opportunities

 Ideas generation will be higher in the company
There are different employees which are going to get in higher understanding of the
customers so that there is good working and that is going to be a great factor for the overall
performance (Götz, 2020). Everyone has a different take which can give birth to a new idea and
this can create a great opportunity for the company's long run.
 Brand Value and image
More customers globally are going to be aware of Oak Cash and Carry which is good for
the products, services and economic factor of the company. The trust and loyalty of the
customers can be gained easily and the organization will be able to develop in the market further.
 New customer base and innovation to take place better
It is very important for firm to be able to operate effectively in the market so that there is
good working and profit margins can be increased. Expanding is going to get in more customers
which is good for the company to understand and get in changes accordingly so that the company
will be able to develop themselves in the market effectively (Rottig and Reus, 2018).
P 3 Analysis the advantage of international trading blocs and agreement
Trading bloc refers to the group and collection of countries within the geographical
boundaries through which they safeguard themselves from the imports (Mudyazvivi, 2018). The
main work of all these countries is to promote trade and all those activities which are related to
trade.
Advantages of international trading blocs and agreement
Increased revenues
The biggest advantage of international trade is that company can get new potential
customers, whenever the company OAK cash & carry will enter into new country and in new
market they will make new customer through which their revenue will get increased and their
business will take a growth in the international market.
Reduced competition
When all the countries joint their hands together, it will be beneficial for the companies to
enter into international market and the competition for OAK cash & carry will also decrease.
Even company will get chance to get tied- up or merged with another big firms of different
countries to increase the market share.

Risk management
The most significant benefit of international trading bloc is diversification of market. Due
to international trade now companies are tapping into different countries as well instead of
focusing on domestic market only, and the risk of failure in core market of the company is
getting reduced.
Advantage of currency exchange
Another benefit of international trading is company may take the advantage of currency
fluctuation. For example– if the US dollar get decreased then company can export goods from
US and attain the benefit of fluctuation in the currency.
Enhanced goodwill
If any company do business more than one country, it may increase the reputation and
goodwill of the company (Cheong and et.al, 2018). If OAK cash & carry take their business in
different countries there is a high chances that their business can become a global brand, and
they may earn high profits.
Offer new line of product
Once the company earn reputation, name & fame in the international market, they can
expand the range of products and can add new products to attract more potential customers.
P 4 Tariff and non- tariff barriers in international trading environment
Tariff barriers are known to be the taxes imposed by the government of any country,
when the company imports the goods to other country (Baya, 2019). The main objective of
imposing tariff is that it gives revenue to the government. Besides this, the another objective of
government is to improve the economy of the country and save the domestic retailers. In short, it
is barriers imposed by the government in the form of customer levy and tariffs on all those goods
which are entering the particular country. Tariff barriers can be in the form of– licensing,
quantity restrictions, privacy requirements etc. on the other hand non- tariff barriers refers to all
those barriers which are other than tariff barriers. The common non– tariff barriers are foreign
exchange hurdles and restrictions etc.
Types of tariff barrier
Import license- Under this barrier, importer of good, products and commodity has to get a
license of each and every shipment then only the goods will get entry in the particular country.

Without getting official licence of import no one company can get goods from different
countries.
Technical barriers- most of the country imposes technical barriers for the packaging, labelling
of the products, which the company has to bear, because id the packaging is not appropriate and
up to the mark then the goods can be defaulted.
Quality restriction– The government of some countries want only quality goods to get imported
in their country so before importing goods, the goods have to go through the process of quality
check (Rojas and et.al, 2020).
Forms of non-tariff barriers
Quotas– quotas known to be the quantitative restrictions which get imposed on the imports and
exports of the goods(Non-Tariff Barriers, 2020).
Embargoes– It states the total ban on some specific commodities declare by the government so
the importer can't import such commodities in their country. This can be known as legal
barriers.
P 5 Advantages and disadvantages of importing and exporting
Benefits of import
The biggest advantage for the companies who import goods all over the world is to
increase the profit margin. The can import raw- material, labour at low cost from other countries
as compared to their home countries. OAK cash&carry Ltd who deals in groceries and foods can
easily get the raw-material from developing countries at cheap prices. Besides this, companies
can get better quality products as well from other countries. Sometimes government also give
some leverage in the rules and regulations of imports so that the company can take benefit from
imports. Apart from this company may get the more variety in the goods as well.
Disadvantages of import
The foremost disadvantage of importing goods is the fluctuations in the currency, with
fluctuation in exchange rate may cause a huge loss to the importers(Wei, and et.al, 2019).
Another risk factor is political risk, government can impose tariff charges on the imports, by
which the cost of imported goods may raise suddenly. Besides this government has restricted
some goods so the company can't import them if it is necessary for the business.
Advantage of export

With the help of export company can increaser their revenues and sales by selling their
product in different countries. Export helps the company to be a strong competition for other
companies as well by exporting better goods and products at cheap prices. When the company
started exporting its goods in the international market it may not remain dependent on the local
and domestic market for sells. Besides this, due to export OAK cash & carry get reputation in the
other countries as well and in future company can expand their goods and services in the
particular company.
Disadvantage of export
Competition is one of the biggest challenge and disadvantage of export specially for
OAK cash & carry as they deal in food and grocery and there are huge competitors available
who deal in similar products. Besides this, entering into export market and establish name in the
market is time-consuming process. Risk of non- payment or delay in making payment is always
there in export. Apart from this, goods and products can get damaged during the transportation
so the risk of transportation is also there.
P 6 Difference between merchandise and service imports & exports
Merchandise
The term merchandise refers to the promotion of goods and services which are available
for retail sales (Sofjan, 2017). Merchandise is concern with the quantities, prices, marketing
strategies and make provision to provide goods in the hands of end user. Basically it focuses on
the marketing, advertisement and promotional activities for the company. OAK cash & carry can
take advantage from merchandise services to promote its goods and services. As technology is
changing, so the company take advantage to increase the sale of their goods and products. With
the help of merchandise, this company can increase the market share not only in their home
country but in global market as well.
Imports
In the procedure of imports, businessman or company buy necessary raw-material from
those countries in which they get those goods and raw-materials at fewer prices. In the case of
OAK cash & carry they can purchase the goods and equipment s form other countries specially
from developing countries so that they may save the extra cost, if they purchase the same raw-
material from their home country (Onyusheva and et.al, 2018). But on the other hand, while

importing goods from other country company has to face various lows and regulations of their
home country and other country as well. So someties import become costly as well if the
company buy small quantity of goods.
Export
This service refers when the company sells its products to other countries, by exporting
company can increase its reach to different market instead of staying in one market only. With
the help of exporting OAK cash & carry can sell its product to different countries by doing, so
they can create their name and fame in different countries, but they may have to face loss as well,
if the customers don't like their products sop this can be a loss for the company. Besides this,
before entering into the international market or selling their products in different countries they
may have to suffer from lows and regulations of other countries.
P 7 Methods through which SMEs can tap into international market
When any company decide to enter into the international market there are various ways
and methods available through which they can tap the international market.
Joint venture
With the help of joint venture two totally new companies comes together and form a new
company (Ortlieb, 2020). By joint venture OAK cash & carry can make a tie-up with the other
big company of different country who deals in the similar products and goods. All the profit and
losses will get shared between the companies with the help of joint ventures, OAK cash & carry
can enter the market.
Merger
By doing merger, OAK cash & carry can easily tap the international market, it can do
merger with the big name and fame company of other country. After getting merged, OAK cash
& carry may get already set market to sell their products and goods. It is less expensive or the
company by just getting merged with a reputed company, OAK cash & carry will get potential
customers and set market.
Licensing
This is the another option through which OAK cash & carry can enter into the
international market. Instead of entering directly into the different markets, company can transfer
the right of selling its goods to the licensee or other companies of the particular country in which

the company wants to enter(Import and et.al, 2019). It saves the extra cost of the company, only
they have to pay the fee and commission of licensee to sell their products on the behalf of OAK
cash & carry.
Partnership
It is another option available for OAK cash & carry to impose their name in the
international market. Partnership refers when two or more companies come together to share
profit and loss. By partnership OAK cash & carry get the potential customer of other company
only by working together. Because local company have good reputation in the market as
compared to new company.
Direct exporting
By direct exporting OAK cash & carry can sell their goods and products directly to the
consumers and business as well (Ahi and et.al, 2017. All the profit and loss has to bear by the
company alone.
P 8 Pros and cons of each method and comparison
Joint venture v/s merger
In joint venture tow companies form a new third company. So the advantage of joint
venture is that it is less expensive for those companies who want to enter into the new market
and country as well and get the potential customer without making more efforts in marketing and
promotion so it is a cost saving approach. But there are some disadvantages also, as the company
lose its entity and name because both companies create new one so the possibility is available
that, customers don't like the newly formed company.
Partnership v/s direct exporting
Direct exporting is not so much castle as the company directly export its goods and
products to the needy once but for that company has to spend money on promotion and
advertisements (Tian and et.al, 2017). But in partnership OAK cash & carry will not have to do
lot of marketing as they already get the potential customer of other company and market share as
well. Besides this OAK cash & carry will not have to bear establishment cost and don't have to
spent on wages and salary of the employees and workers.
After analysing the entire method it can be suggested that OAK cash & carry, can go for
merger as it is less expensive and the company don't have to spend so much money on research

and development and marketing as well. Besides this company will get new and potential
customer for their products in the target country.
CONCLUSION
From the above report it can be concluded that there have to be right measures and
understanding of the international market so that there are going to be higher working and
processing which would take place. There are a lot of methods which can be used by the
organization to be able to expand themselves and the right technique must be used so that the
company will be able to brand themselves well and the portfolio is going to be stronger.

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