Unit 43– Tapping into New and International Markets

Tapping into New and
International Market

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Introduction to the chosen country and region and explain the global environment in which
small and entrepreneurial businesses operate.............................................................................1
An analysis of the global business environment and the influence of key global drivers
specifically in relation to the United Kingdom...........................................................................2
Rationale for SMEs to expand their business internationally.....................................................3
SMEs take advantage of international opportunities and overcome barriers for global growth.3
Trading blocs and agreements and advantages...........................................................................4
Various tariff and non-tariff barriers that exist in international trading environment................4
How international trading blocs and agreements stimulate and generate global growth for
SMEs...........................................................................................................................................5
TASK 2............................................................................................................................................5
CONCLUSION:...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The current market conditions and huge competition demands the organisation to expand
their operations on to a global level. A business seeks to achieve its goals and objectives in
terms of growth and development by planning all the course of action efficiently and effectively
(Najmaei and et. al., 2017). The foremost step in the growth plan is to establish the company's
branches within different developing nations apart from its originated country. This enforces a
firm to enhance the functioning level of a business's trading, production, marketing and sale to a
whole new level of market. In this context the management can use several tools and implement
all those principles of working into new and international market.
This report is prepared for Barclays PLC, a most efficient global financial organisation
which majorly offers services regarding investment and various financial services. The SME
which is selected for the expansion purpose is Ella's Kitchen which is planning to expand in
Australia. The effect of all the global factors on an entrepreneurial organisation will be
examined. In relation to this the report also comprised of opportunities and challenges of global
business, pros of custom duties and non custom duties and the global trading blocks. Moreover
the trading, importing & exporting, etc. are such major key factors which can be practised to
capture more on international level.
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TASK 1
Introduction to the chosen country and region and explain the global environment in which small
and entrepreneurial businesses operate.
The analysis for the report is performed on the aspects of United Kingdom, as the nation
is well known with fact that a a lot of small and medium enterprises are contributing efficiently
to enhance national economy (Mahajan, 2012). The UK is the most developed and constant
growing part of the Europe continent. The UK is ranked on the 6th position among the world in
respect of its nominal GDP which impacts majorly on the development of nation as well as of its
people. The nation is recognised for the continuous trend evolvement in the sector of education,
business and technologies. With such growth the country provokes a huge number of small
medium enterprises for the expansion and higher growth of their operations. The governing rules
and regulation authorities provide subsidies for SMEs to set up their ventures as well as to
increase their scale of operations. Certain other assistances are provided by the locally governed
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authorities to potential start-ups and other organisations in order to enhance the industrial
capacity and capital earnings of the nation.
These support and assistance of external factor enables those business entities to perform
the optimum utilization of resources for getting maximum output. These measure helps an
organisation to grow and develop on a higher scale to achieve more profitability. Thus when
these SMEs practices and develop their operations in the nation and outside of it, the strength and
economy of respective country gets a huge encouragement.
Detailed global business environment with respect of the country determines that the
political factor of UK is more consistent. By this it can be understand by the manager of
organisation that the political regulations as well as their governing policies will remain stable.
The basic knowledge of British laws helps the organisation to execute the planned actions and
applying selective curse of action with respect of the laws and legislations. These aspects
ultimately makes the business process more efficient to achieve the major portion of market
share. The big and small ventures provide employments to nearly 16.3 million person, which is
equal to about 60% participation of overall employment need of the nation. Small level industries
plays an efficient role to raise the economy of the country as they maintain a proper balance
among financial conditions and social values.
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An analysis of the global business environment and the influence of key global drivers
specifically in relation to the United Kingdom
Global business environment captures the overall transformation in business, which are
erupted by the globalization of trading factors and other technological factors. These
environmental aspects effect the political, social and economic conditions of the respective
nation (Topol, and Sherman, 1994). Major key decisions for cooperative actions can be taken by
analysing the nature and position of all the business factors as per the global environment. Small
business organisations provides optimum contribution in the national revenue as approx 11
million pounds and medium scale business enterprises gets approximately about 50 million
pound of revenue.
The trade and operations of SMEs are enhancing due to the higher acknowledgement and
necessary aids of United Kingdom with the help of globalisation. This leads to a decrement in
custom and other trading restrictions, which is responsible for the smooth flow of production and
marketing. As the market of United kingdom is more dynamic and flexible. The BREXIT
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policies of UK affects business significantly as it limits the base of consumer. The other segment
of SMEs also negotiate while participating in European trade activities after implication of
BREXIT. The key global drivers of business underlies by four sets of organisational
management conditions in every condition the driver create influence and potential for the
respective industry to operate its trading on a global level.
Ella's Kitchen is currently operating business in various countries such as China, Norvey,
Denmark, Sweden etc. The global market is very competitive for the organisation because there
are various other companies that are selling same food items that are offered by it.
The level of competition in the global business environment is increasing continuously. It
is very important for all the companies to deal with it properly so that competitive advantage
could be acquired. There are various factors which are required to be focused by Ella's Kitchen
which is planning to expand business in Australia. All of them should be analysed on
international level. Description of all of them is as follows:
Political: The political situation of Australia is very stable which is beneficial for all the
organisations to expand business there. With the help of it Ella's Kitchen will be able to attain
growth in the market because the stability of political party in the country will help it to develop
the business and establish it successfully. The political parties of the nation keep the restrictions
low for the companies which can help them to grow the business.
Economic: There are various economical factors such as unemployment, inflation,
deflation, exchange etc. which are required to be focused by the managers of all the companies
which are planning to operate business in a new country. As Ella's Kitchen is planning to expand
business in Australia therefore it is very important for the managers to make sure that they
analyse all these elements in context of the country. For example, a sudden change in these rates
may affect purchasing power of customers. If inflation or deflation rate fluctuates suddenly then
it may leave negative impact upon the capacity of clients to buy the products sold by the
organisation.
From the analysis of the global business environment it has been analysed that there are
various opportunities and threats for Ella's Kitchen which could be faced by it while expanding
business in Australia. All of them are as follows:
Opportunities: Stable political situation of Australia is an opportunity for the
organisation because it will be beneficial for it to establish the business successfully. Another
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opportunity for the SME is lack of political interferences in business process as it will help to
ignore additional expenses on granting permission to operate business.
Impact of opportunities: Both the opportunities will leave positive impact upon
business because it will help the management to grow the business in various countries and
enhance profitability.
Threats: The major threat for the organisation is sudden changes in economic situation
which may leave negative impact upon functionality of business because it results in lower
purchasing power of customers.
Impact of threats: The threat for Ella's kitchen will be negative because it will affect the
growth of business in Australia.
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Rationale for SMEs to expand their business internationally
Certain various measures for SMEs are there Which enforces them to do business in
multiple countries. Major rational behind international business can be termed as many foreign
nations acts as the hub of new innovations and technologies. This renders all the potential SMEs
with a scope to save cost and time and generate the optimum revenue. Major SMEs are able to
establish their distribution, servicing and production plants across developing nations as the
preferred countries can be India, China, Malaysia, Japan etc. This will help the business to obtain
the opportunities of cost cutting in the business with cheap labour and other resources. Certainly
the business authorized centres enhance the more customer interaction with the parent company.
As also it builds a good brand image in the market which helps the company to launch its new
products and trying innovations in their foreign subsidiaries.
By investing into the foreign markets and trading with them enforces small and medium
enterprises to attain comprehensive knowledge and other valuable information of various market
demands and needs. These information plays a vital role in selecting the plan and implementing
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the principles in market. Also the new innovations and experiments of company gets more open
market area to be executed, and chances of success gets increased.
SMEs take advantage of international opportunities and overcome barriers for global growth
A pool of opportunities and challenges is connected for the assistance of growth of
organisation on a multinational level. When companies seek to do business in foreign markets,
the chances of high cost of operations are increasing (Meredith, 2000). Today SMEs are making
use of international business strategy by the help of these strategy the sales volume of the
business gets increased. Increased sales brings enhanced revenue to the organisation which helps
in settling the production onto higher standards by putting influential cost methods in
manufacturing and overall business process. To handle the rivalry competition of the company
on the global level in an efficient way, SMEs can use the solution of bringing up with
innovations and business disruptive offerings in a quick period of time.
Trading blocs and agreements and advantages
Those official agreements which are regulated with a vision to exclude the trade barriers
between two or more national territories are termed as the trading blocs or mutual agreements.
Major advantages of trading block and agreements are as follows :-
Technology transfer– innovative and unique techniques of business processing helps in
settling the trade alliances and agreements which leads to create a tech savvy image of business
associations, the E- commerce and various modern innovations helps the business to transform
from one place to another place either horizontally or vertically in an effective manner.
Improvement of exchange – Flexibility in the exchange policies, emphasising more on
decreasing the limitations of exchange and strategies of foreign trade. Exchange functions has
the nature to provide solutions to the business practices across different countries. It enables to
understand the policies and regulation of respective nations.
Advantages of international trading blocs and implications on SMEs:
 International trading blocs are very beneficial for the organisations because it help them
to ignore the additional tariffs which are required to be paid at the time of import or
export.
 Trading blocs are very beneficial for SMEs because with the help of them companies
such as Ella's Kitchen can grow effectively and attain the long term goals.
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Various tariff and non-tariff barriers that exist in international trading environment
Tariff and non tariff barriers are encountered while performing the business within the
global market by maintaining the trade networks among SMEs and the foreign marketplace as
such barriers are:-
Tariff barriers
Specific duty – These are the barrier related to the direct charges of trading into a
particular nation that is charged by legal authorities. That leads to raise cost of business, which
affects the price,sale and profits.
Transit duties – the taxation charges which is charged by governmental authorities of a
country on the transmission of products and services from location to location are known as
transit duties.
Non tariff barriers
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Import policy barriers – the import policy barriers are those restriction which affect the
organisation's global trading in a negative manner. It is necessary for business to undertake such
barriers tactfully to carry out the business effectively.
Service barriers – These restrictions are placed in order to monitor and control the
distribution of product and services through out the respective nation while performing the
international trade.
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How international trading blocs and agreements stimulate and generate global growth for SMEs
Trading blocs gives proper assistances on trade affairs on national and international
aspects. As per the BREXIT, all the major trade practices are as generally signed by the UK legal
authorities on a mutual agreement with other trading countries (Luo, 1999). In Barbados and
Bahamas, certain trade affairs and other executing option are there to do business freely
according to CARIFORUM-UK economic partnership agreement. These agreements helps in
performing the international business more transparently and effectively in order to achieve the
objective of maximum expansion of organisation.
TASK 2
Discuss pros and cons of importing and exporting and how a deal can be secured
An export is an international trade in which goods and services produced within one
country are purchased by someone in another country. In simple words, the person who buys
goods and services is an importer while seller is an exporter. There are various methods of
exporting goods and services such as mail, air shipping and hand delivery and many more.
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Advantages of Exporting: Exporting allows a firm to gain exposure to new market,
innovative ideas and management practices in order to gain competitive advantage within the
market. One of the advantage is that exporting allows firm to expand their market beyond the
limit which help to boost sales and thus, increase the profit of a company. Greater production
provide large access of market which leads to economic growth of a country.
Disadvantages of Exporting: In a global environment, there is a severe competition in
the market. It is difficult for small firms to raise financial resources as it has to develop new
marketing campaigns with attractive packaging which increases the cost of product (Contractor,
Kundu and Hsu 2003). Also, there is a transportation risk while exporting the goods such as risk
of damage, spoilage, theft etc.
Import involves the process of bringing goods or services into one country that was
produced into another country. It imposes tax on good and services that is subject to an
agreement according to jurisdictions. An import on services in a global economy is rendered by
non residents to residents of a country through electronic means.
Advantages of Importing: One of the advantage is that goods imported are of high
quality, low cost which provide benefit to an economy. This is due to the reason of cheap labour
and low tariffs. There is huge involvement of government as it assist in providing information
regarding the manufacturers that provide advantages to buyers as they buy goods of standard
quality.
Disadvantages of Importing: One of the major drawback is that it is difficult to obtain
the license and documentation of foreign trade while importing goods. When there is a situation
of trade deficit, at that time importing of goods leads to erosion of the domestic market.
In a competitive era, international business is competing at a global level. The deal can be
secured by various ways like creating a sense of urgency to fulfil the requirements. It is very
important to satisfy the needs of customers by providing goods of standard quality at a low cost.
Also, the deal can be secured by overcoming cultural and language barriers by providing cultural
training and also by building proper communication strategy among the countries. By conducting
proper market research, it helps to identify the customers demand so that it can provide goods
according to their needs.
Distinguish between merchandise and services imports and exports
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Merchandise are physical and tangible goods like cars, furniture and so on while services
are intangible like consulting, accounting services etc.
Merchandise and service imports means bringing goods or services into domestic nation
from the international country (Hohenthal, Johanson and Johanson, 2003). The merchandise and
services which are shipped into domestic nation through boats or other transportation medium is
termed as merchandise and service import.
Merchandise and service exports are termed as selling goods or services into another
countries from domestic nation.
Differences between two of them are as follows:
Import merchandise represent high import level that is sign of great demand while export
merchandise and service represent huge export level that shows high trade balance.
Import merchandise and service are performed by SMEs for fulfilling demand within
home nation and export merchandise and service are done by SMEs for raising global presence
for improving organisational image.
List of documents requires in export and import procedure:
Letter of credit: It is a letter that has been issued by a bank to another bank that act as a
guarantee for payment made to particular person. In case of non payment by buyer, the bank is
liable to pay full amount as guarantee is provided.
Packing list: It is a list that contain information about the content of package. It provides
detailed description regarding the quantity, weight of a product.
Commercial invoice: It is the document between the supplier and the customer that
provide description about goods sold and amount dues to a customer.
Terms of payment: It is a document that provides information about the amount due to a
customer and period of payment. It provides a condition in which seller completes a sale and
allow buyer to pay the amount due.
Discuss the various methods of tapping into international market
In a global market, the business environment in which company carry out its operation is
regarded as dynamic. Tapping into international market offers many advantages like growth
opportunities, expansion and diversification (Webb and et. al., 2014). Due to advancement of
technology and transportation facilities, there is intense movement of capital. One of the
advantage is that small and medium enterprises can promote their products in international
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market so that they can increase their sale and profits. Thus, they can increase the brand
awareness of the products and gain large exposure of market. There are various methods of
tapping into international market that are described as follows:
Licensing : Licensing is very important for a business for expansion and diversification
of a business. Licensing is a arrangement in which company sells the right to use intellectual
property. The advantage of licensing is that it provide business with multiple revenue streams as
it break the business into new market segments which provide growth opportunities. The
disadvantages of Licensing is that trade secrets can be leaked out and also conflict can take place
between both parties in case of licensing.
Franchising: Franchising is a agreement in which a person(franchisor) allows other
person(franchisee) to use a brand name. franchising charges fee in return for a service rendered.
The advantages of franchising is that there is low risk and it can cover large access to market.
One of the drawback is that a wrong franchisee may spoil the company's name.
Joint Ventures: Joint Venture is an arrangement in which two or more parties combine
together for achieving a common goal. Firm use their resources like capital, workforce which
help in expanding their resources (Westerlund, Rajala and Leminen, 2008). Joint venture is
made for long duration in which co-venture share profit and loss at the end of period. The firm
can gain access to innovative technology which increases the productivity and efficiency of a
business. The main purpose of SMEs tapping into international market is to reduce the risk of
heavy investment and to expand their business globally by joint venture. One of the advantage of
joint venture is that firm can achieve large economies of scale which increases the output of the
economy. One of the disadvantage of joint venture is that sometimes it creates
misunderstandings among them due to lack of communication which creates conflicts.
Direct Exporting: This means exporting goods directly to the buyer by the manufacturer
itself to capture large market share in international market. Organisation can sell their products to
wide range of customers and dealers like wholesalers, distributors and dealers in order to boost
the sale of products and increase the profits of a company. One of the advantage of Direct
exporting is that the firm has greater control aspects of transaction and it provide protection to
trademarks, patent and copyright. The disadvantage of direct exporting is that this method is
costly and time consuming.
Compare various methods of tapping into international market with their pros and cons
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There are various methods of tapping into international market like licensing and
franchising, joint venture and direct exporting. Each method provide growth opportunities to a
business which help in expanding, modernization and diversification of a business. This provide
economic growth and increases the efficiency of business. Today, Globalization has grown due
to advancement of technology and infrastructure facilities and it has led to the concept of new
emerging market. This achieve large economy of scale and help firm to run the operations
smoothly and successfully.
Comparison of licensing and franchising: Licensing and franchising provide growth
opportunities which help in diversification of a business while franchising is an arrangement
where franchisor grants rights and authorities to franchisees. One benefit that franchising provide
is that it help to find intelligent people so that they can run their business successfully at a
suitable location. Also, there is little risk in case of franchising and generate high financial
returns. The drawback of franchising is that there is possibility of conflict as every one have
different point of views. In case of licensing, it provide new business opportunities which help in
expansion of firm. The drawback of licensing is that it provides competition in the market. The
major difference between licensing and franchising is that training is required in case of
franchising but no training is required in case of licensing.
Comparison of Joint venture and Direct exporting: Joint venture is an agreement
between two or more companies which combine together to achieve the task in an effective
manner. One advantage of joint venture is that the firm can gain competitive advantage and at the
same time there is possibility of cultural clashes and conflict among the members. Direct
exporting means direct selling of goods by producers in order to increase the profits of a
business. One of the benefit of direct exporting is that it leads to increase in sale which thus
increase the profits of a company but drawback of direct exporting is that there is high risk and it
is difficult to break the market in trading blocs.
CONCLUSION:
From the above information, it can be summarised that export and import is very
important for a business as it provides growth opportunities and help in expansion and
diversification of a business. Thus, it increases the productivity of a business and help in
conducting smooth operation of a small and medium enterprises. With the rise of digital
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technology, organisation have to make wide range of decisions to expand the market
internationally.
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