Strategies for Entering New and International Markets: Airdri Report

This report examines the strategies for entering new and international markets, with a focus on the global business environment faced by Small and Medium Enterprises (SMEs). It analyzes the external factors influencing business operations, including economic, political, and demographic influences, and the opportunities and threats SMEs encounter, such as cybercrime, climate change, and technological advancements. The report further discusses the advantages of international trading blocs and agreements, and details tariff and non-tariff barriers. It explores the advantages and disadvantages of importing and exporting, the differences between merchandise and service trade, and various methods for SMEs to enter international markets, comparing the pros and cons of each approach. The report uses Airdri, a manufacturer of hand dryers and related products, as a case study to illustrate key concepts and strategies for international market expansion.

Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Global business environment under which small businesses operate....................................3
P2 Threats and opportunities which is faced by SME in the global environment.......................4
P3 Analysing advantages of international trading blocs and agreements....................................6
P4 Tariffs and non tariff barriers which exist in international trading environment...................7
P5 Advantages and disadvantages of importing and exporting and how to secure deal.............8
P6 Difference between merchandise and service imports and exports......................................10
P7 Various methods through which SME can enter in international market.............................11
P8 Compare ways through which SME enters in global markets, addressing pros and cons of
methods......................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
New and international markets can help the company in increasing the profits and
facilitate growth. When the company do exposure in international market then they have to face
both pros and cons of that but operating globally can bring massive advantages and also gives
brand recognition. Airdri manufactures and design hand dryer, along with hand dryer company
offers all washing equipments, elevators etc. this company is known for its good quality of
products. This study will discuss global business environment under which small businesses
operate and also the threats and opportunities which SME have to face in the competitive global
environment. Further, analyse the benefits of international trading blocs and agreements and will
explain tariff and non tariff barriers that exist in international trading. This study will also discuss
advantages and disadvantages of importing and exporting and the difference between
merchandise and service imports and exports. Will evaluate different methods by which SME
can enter in international markets and comparing methods by explaining pros and cons of each
methods.
MAIN BODY
P1 Global business environment under which small businesses operate.
Businesses operate in the dynamic environment and which have direct influence on the
operations and also on objectives of the company. The external environment of Airdri affects the
business operation of company a lot (Aithal, 2017). Although the managers of business have
control on the business internal environment, they decide about what kind of employees they hire
and decisions related to raw materials etc. but the external environment changes fast and not in
the control of business. To compete these factors manager should regularly analyse market
trends. Global competition is the element which is not easy to control by the business. The
various environmental influences are:
economic influences:
Economic influence is the external influences of the business, if there is any fluctuation in the
economic activity then it will affect the entire business cycle of Airdri. If the economy is high
then it will cause less unemployment and high income level. If there is change in the economy
then it will affect the inflation rate and interest rates. Basically it depends on demand and supply
which will decide the products prices and their behaviour in the market.
Political influence:

This factor is the another challenge for Airdri, the government laws and the level of political
stability influence the political climate. If the company want to operate internationally then this
factor is very important to consider. Government stability is also very important.
Demographic factors:
These factors are also not possible to control by the managers, demography is the approach of
the statistics of people which include age, gender, religion, location etc. demographics will help
Airdri to search for target markets and also tell the size of the product. Company must focus on
hiring skilled and knowledgeable workforce so that can achieve company to achieve the
objectives. Company should consider ethnic group when forming their marketing strategies as
the spending power of minority group has increased.
Management skills:
As Airdri is small company so it is very important that the company upgrade their management
skills, the method from which they collect information and the technology. It is also seen that
SME are more flexible when it comes to offer products according to the taste and preference of
the customers. To become more productive company can borrow funds and distribute funds
between research and training and development (Perez, 2017). If Airdri will operate on global
level then the company have to adopt advanced technology to survive for the long time.
Government laws: government policies affect the companies a lot, if the policies are in the
support of business then it can help the company to face the global competition and strict
government laws can influence the profit of the company.
P2 Threats and opportunities which is faced by SME in the global environment.
Threats faced by SME:
cyber crime will increase:
When Airdri will operate at global level then there are chances of increasing in the cyber
crime. Often businesses are on the radar of cyber attack, so businesses have to be very careful
and even the company should appoint experts so that they can control on such crimes.
Carefully store the data:
Company should use such software so that their data can remain secure and should not post their
important data on social media like as we can see that Facebook are said to be responsible for
leaking the personal information of the users (Belyaeva, 2018).
Extreme weather:

Climate change is also the important factor which should be considered by the business as it is
said to be the threat to the business. Flooding or rise in the sea level can affect the work cycle of
the company. Extreme weather can be harmful for health, economy etc. and can do disruption.
Vulnerable supply chain:
Change in the weather pattern can affect the global supply chain of Airdri. There are many
instability which can affect the supply chain. Tariffs is the another challenge which can build
inefficiencies by causing market distortions which can increase the price and the uncertainty in
market.
Global financial crash:
Recession can be caused which increase the interest rates on the short term borrowings. The
financial crash can affect the capital flow of company.
Opportunities faced by SME:
innovation:
At global level innovative products and services are high on demand so that can give opportunity
to the business to earn high profits. Airdri deals with automatic hand dryer and it is in demand
because it has hygiene factor connected with that and if company come up with good design and
advanced feature which no company has brought then can definitely capture the target markets.
Technology:
Adoption of advanced technology by the company can help in the growth and which will
eventually increase the revenue. Company should install software and new equipments which
can decrease the costs and can improve productivity of the company. Productivity is the work
done by worker in the given time. If the new technology company adopt then it can improve the
manufacturing units which will result that company will produce more.
Job creation:
When Airdri operate internationally then the company will create jobs in that country which will
provide employment to the citizens of that country (What Are The 7 Benefits of Going Global.,
2018). If company provide jobs then the government of that country can become lenient to the
company and does not impose strict regulations on that.
Getting foreign investment opportunities:

Foreign investments are very beneficial for the company, if Airdri go at international level then
the company can get knowledge about the investment opportunities available and how the
company can get beneficial out from that.
Improve company reputation:
If Airdri operate globally then it will definitely help the company in improving the reputation of
company as company is operating internationally, so they are recognized by more people which
will create strong brand value (Shageeva and et.al., 2017).
P3 Analysing advantages of international trading blocs and agreements.
International trading blocs:
When the trade agreements is formed between the countries is called trading blocks. It
includes custom union, economic union and free trade areas.
Advantages of trading blocs:
It helps in promoting free trades which can be said that trading is done without tariffs. It
facilitates free movement of workforce, it gives benefit to Airdri that their skilled labour can
move to other country where it is needed. It helps in building the trading relationships with the
other countries in trading bloc. It promotes trade enabling increase in specialization that give
advantage over economies of scale. Rich trading blocs joined by companies can help in getting
trade opportunities and get benefit of inward investment. According to the research it says that
when close proximity trade is done with the country that plays vital role as it helps in reducing
transport. It increases the competition as when the tariffs are removed then the customers will get
more choices so company have advantage to adopt advanced technology and cut the cost so that
they beat the competition (Baltensperger and Dadush, 2019). Trade creation increase because of
removal of tariffs and also enable the exporting opportunities.
International trading agreements:
Trading agreement is the agreement which is signed by the multiple countries to increase the free
movements of goods and services within borders. All the members of the agreement have to
follow the internal rules which is there in the agreement.
Advantages of trading agreements:
It helps in the economic growth, the countries who are the members of the agreement get
benefits. It helps in creating more jobs and bring market opportunities. Airdri can get investment
guarantees because of trade agreements. Those companies who wanted to invest in other

countries can get the protection from political risk. The volume of trade of member countries
also increase as they get new market to explore. Trade agreements give lot of opportunities to
business, when the company enters the new market the competition in that market increases and
when the competition is increased then the company have to manufacture good quality of goods
and also increase in the products variety (Kamath, 2019). Customer satisfaction can be improved
if good quality of products are provided by the company. When the company is expose globally
then they have options for more resources which can enhance the quality of products. Trade
agreements facilitate growth in the developing countries by giving trade and investment
opportunities.
P4 Tariffs and non tariff barriers which exist in international trading environment
Tariff barriers:
Tariff barriers are the taxes which are there on certain imports. Under this the price of
imported goods increased so that people do less imports. It is done to promote local businesses.
Non tariff barriers:
Non tariff barriers are those trade barriers which create hurdles on importing and exporting of
goods by other means but not tariffs. Examples of non tariff barriers licenses, import deposit etc.
Tariff barriers in international trading environment:
tariff barriers can include custom levy and many more which are:
licencing requirements:
It is the barrier for Airdri when the company want to enter in global market, as acquiring licences
is not easy for the company to get. For getting the licence company have to go through all strict
policies of government (Vakulchuk and Knobel, 2018).
Product labelling requirements:
Government of every country have their labelling requirements accordingly so Airdri have to do
labelling according to that and if company does not do labelling according to government norms
then have to bear penalties which are imposed by government.
Price controls:
Company cannot increase the price according to their wish because government have control
over the price so that company cannot exploit customers. Airdri have to keep this in mind before
they increase the price on the products.
Additional trade documents:

Additional trade documents which include certificate of authenticity, certificate of origin etc. this
barrier restricts trade of such commodities which are not authentic or duplicate. Through this
trade barrier government has monitored the activities of the companies.
Non-Tariff barriers in international trading environment:
quotas:
Quota refers to the restrictions related to quantity which are applied on the imports and exports
of the products. While doing foreign trade, countries use quotas, it reduces the quantity of the
commodities that company can import. Airdri can also face this issue if they plan to import in
large quantity in the future as it controls the quantity of goods which can be imported.
Embargoes:
When on the specific commodities there are bans to do the trade which are applied on imports
and exports of the products which are delivered from some specific countries is called
embargoes. They are the non tariff barriers to trade, so government can impose barriers to
achieve the economic goals.
Import deposit:
Import deposit is the kind of legal barrier to trade under this the company who want to import
have to pay some amount to the country's central bank for some period. The cost of imported
goods and the amount that is to be paid should be equal. Airdri have to go through all of these
trade barriers if want to operate globally (Kinzius, Sandkamp and Yalcin, 2019).
P5 Advantages and disadvantages of importing and exporting and how to secure deal.
Importing:
Importing refers to bringing goods or services in the country from the other countries for
the purpose of sale. Small business also do importing for such items which are not manufactured
in their country which can include clothes, furniture, shoes etc.
Advantages of importing:
high profit margins:
This is the main reason of importing goods from other countries is the high profit margins. In
some countries the cost of labour is high, high material costs and high taxes etc. encourage
companies to import products from such countries where labour or material costs are low and
also low taxes.
Better quality:

If company want to sell products which are not native of the country, in that case company's
import goods to get better quality (Khotamov and Ismoilov, 2020).
Tax reduction:
Airdri can get the benefit of low tax from the country for some special products.
Disadvantages of importing:
Documentation:
Imports require lengthy and complex documentation and also getting licence for import is not the
easy task.
Damage to local business:
If company started importing in bulk then that can reduce the sales of domestic business and
sometimes also hurt country's economic process.
Exporting:
When the goods and services are manufactured in one country but are sold to another is called
exporting. Exports are considered one of the oldest method of transferring products or services.
Advantages of exporting:
increase expansion:
Through exporting Airdri can reach at international level through this the company can expand
their markets.
More production:
If company has expanding then they will manufacture more products which helps them in getting
more profits and reaching towards economies of scale.
Getting market opportunities:
Through exporting can help in getting high market opportunities so that if the domestic market
start falling then also company can make profits by selling products in different countries.
Disadvantages of exporting:
Competition:
There are massive competition in the export markets, so in this it is difficult to take competitive
advantage and beat the competition.
Financial risks:
Government restrictions can adversely impact the business in export market, if Airdri operates in
the oversea market then have to face exchange rate fluctuations which can cut profit margin.

Payment:
Payment is the complicated procedure in exports as to those companies whom products are
delivered can delay in making payments and mode for payment is also complex and time-
consuming (Edwards, Sanfilippo and Sundaram, 2018).
Secure deal:
Airdri will be facing foreign markets so to secure deal the company should have done research
about market before entering. Also, have idea about language or culture, so that due to language
barrier they do not face any issues. Making sure that all legal documentation is done in advance.
Company who is doing business with the foreign company should check the complete
background of that company like what is their finance history, how they are in making payments
etc. a guarantor should be made example any financial institution so that if the party has not
made the payment then guarantor is liable for payment.
P6 Difference between merchandise and service imports and exports.
There are various differences between them which are as follows:
Particulars merchandise Service imports and exports
meaning Merchandise exports are said
to be the trade of tangible
products or goods which are
done between companies of
different countries. It is mainly
deal with goods.
Service imports or exports
means when the services are
delivered to other country and
get international earning in
return. It is mainly deal with
services.
payment Under this payment is made
for receiving the goods. Airdri
can also try merchandise
exports for global expansion.
Under this payment is made
after the services has delivered
(Shahriar and et.al., 2019).
examples Finished goods, products for
direct use etc.
Hotel stay, consulting,
accounting services etc. are
considered as service export.
trading In the exporting there is
trading of goods which is quite
In the service exporting or
importing there is transfer of

easy (Medina, 2017). Trading
can be done through ships,
trains, air planes etc.
services which cannot be seen
as it is intangible in nature.
Profit margin In merchandise exporting there
is high expense because goods
are exported and for this,
goods have to be manufactured
first. So profit margin is not
that high.
In service exports there is no
need for manufacturing
anything there is only giving
services and taking payment in
return as compare to
merchandise the profit margin
in services are more.
documentation There is requirement high
documentation in this as it
involves transferring of goods
or products and trade barriers
are there by the government
when exporting goods.
There is requirement of less
documentation in services
because in this no there is no
transfer of physical goods.
consumers Under this consumers can buy
goods or products in return of
payments.
Under this consumers can get
services related to banking,
insurance etc. in return of
payment.
costs Costs which are associated
with merchandise are related
to raw materials, labours etc.
Costs which are included in
service exports or imports are
innovation or expertise as they
are providing services to
clients.
Number of firms The member of firms in the
merchandise trading is more
because it is less difficult to
manage.
The number of companies in
the service imports are less
because it is risky and comes
with high investment.

P7 Various methods through which SME can enter in international market.
There are many modes through which Airdri can enter the global markets which are as
follows:
Franchising:
It is very famous method when company want to do business globally, under this the owner of
the business gives permission to other individual the right to carry the company selling the
products or services of the franchisor (Mazorenko, 2019). Franchisor give rights to franchisee to
use their goodwill, trademark, branding and can get the benefit from their marketing activities. It
is ideal for those individuals who want start their own business can get the benefit of franchising,
under this there is the partnership agreement between two parties for specific period of time. The
franchisee also get expertise and guidance from franchisor.
Licencing:
It is also the mode for entering overseas, it is cost effective as compare to purchasing the whole
company (Ortlieb, 2020). It is the approach in which company transfer their rights related to the
products to the global company in exchange for fees. It has low risks and expenditure associated
with it as in this royalty is transferred from licensee to the licensor. Then the products are used in
the production process by the licensee. It can be the blessing for the licensee if the licensor have
large customer base.
Partnership:
Partnership refers to the process when two or more companies make partnership agreement to
carry the business operations. Airdri want to enter into international market so the company can
do partnership with other foreign company so that can enter easily in foreign markets. As during
the partnership there is one company who is aware about the market and have complete market
knowledge and also the domestic partner have idea about the culture and know the taste and
preference of the customers. Through partnership others partners can get benefit of the
experience or knowledge of local partner.
Joint venture:
Under joint venture two companies are combined to form complete new entity, this done to get
exposure of new markets. Each partner get advantage of knowledge and experience of other
partner which will also help them in achieving the objectives or goals. Risks which comes in the
business are shared among the partners along with that costs also. Airdri can also merge with