Strategies for Tapping New and International Markets for SMEs

This report examines the international market expansion strategies for Small and Medium Enterprises (SMEs), using Connect Catering as a case study. The report begins with an introduction to the global business environment, emphasizing the importance of analyzing external forces using PESTLE analysis and internal strengths and weaknesses using SWOT analysis. It then explores the advantages of international trading blocs and the impact of tariff and non-tariff barriers on businesses. The report also discusses the import and export processes, highlighting their advantages and disadvantages. Finally, it analyzes various methods for SMEs to tap into international markets, providing recommendations for Connect Catering's expansion. The report aims to provide a comprehensive understanding of the challenges and opportunities associated with international market expansion, offering practical insights for SMEs seeking global growth.

TAPPING INTO NEW AND
INTERNATIONAL
MARKETS

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION-1.....................................................................................................................................3
Global business environment.......................................................................................................3
Analysis of threat and opportunities along with its impact..........................................................5
Advantages of international trading blocs ..................................................................................6
Tariff and non tariff barriers........................................................................................................7
SECTION-2.....................................................................................................................................8
Advantages and disadvantages of import and export along with process...................................8
Difference between merchandize and service import and export................................................9
SECTION-3.....................................................................................................................................9
Methods of tapping international market by SME along with their pros and cons...................10
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Expansion of business activities in international market will leads the companies to grow
and raise their business along with raising sales and revenues. In today's competitive world it is
very essential that every company have to explore its business activities. But for meeting such
expansion every company have to carefully analyse the international business environment
before tapping it. This report will study about the concept of international business environment
along with its analysis with regards to Connect catering. It is one of the famous Small and
medium scale enterprises (SMEs) that operate as restaurant in UK. This report will also highlight
the concept of trading blocs, tariff and non tariff barriers, import and export process along with
their pros and cons. At the end this report will discuss various methods of tapping international
market along with the best method that Connect catering can adopt and implement.
SECTION-1
Global business environment
It refers to business environment that exist at global level which involves many countries.
In simple words it can be said as business environment that is considered at global level is
included under global business environment.
It is very essential to study this environment by every company including connect
catering so that it can retain and operate their business. Since this environment is unpredictable
and it has great impact over companies so it make it more essential for companies to study this
environment. As connect catering wants to expand its business and its activities at global scale so
it is very essential that it should be aware about this environment and its related changes. For
analysing this environment it can adopt:
PESTLE analysis:
This is one of the best tool that gives information about various external forces and
environment along with its impact over business (Perera, 2017). Implementation of this model
will help Connect catering to accomplish its objective of expanding its business globally. This
model constitutes:
Political forces:

It includes all different rules and policies that are prevailing in country. As, political
situation in the form of policies, or trade restriction is different in different country. So, it is very
essential to study this force by connect catering while entering into new country or to establish
its business in new country.
Economic factors:
It refers to all economic policies and rules including currency rate, employment rate,
trade rate, economic situation and various other. As connect catering is planning to tap its
business into global economy so it make it more essential that it can frame its strategies as per
analysis of this environment.
Social force:
As every company run its business to serve its customers so it becomes very essential that
their customers will be satisfied form them. This force is wholly concerned with customers and
their taste and preferences along with changing trends (Elmansy, 2019). Since, by expanding
business Connect catering wants to grab more customers so it has to analyse this fore carefully so
that it can serve its services as per customer's need.
Technological environment:
It is one of the fast changing environment. Also, it is very essential for every company to
perform their activities as per this environment. This is because this force give and generate more
efficiency for the operation of business. Since, there are many countries which are
technologically advanced so it is very important for Connect catering to consider this factor and
implement accordingly.
Legal forces:
As the legal framework of every country is different from one another in terms of laws,
regulations, rules and policies. As Connect catering wants to expand its business so it has to
carefully analyse this force and work within its framework.
Environmental factors:
Along with rising awareness among public regarding environment and its safeguarding.
So, Connect catering also have to implement this practice whole exploring its business in other
country. It can do this by production of eco-friendly products, adoption of sustainability concept
and many more.

Analysis of threat and opportunities along with its impact
It is very essential to have an analysis of internal strength and weakness so that
companies can can minimize intensity of threat and grab future opportunities. Whenever, any
company like Connect catering wants to enter into new market then it becomes very important
for it to perform its internal analysis so that it can grab future opportunities and minimize threat
intensity. For this Connect catering can adopt:
SWOT analysis:
Connect catering by implementing this analysis can evaluate its internal strengths and
weakness. And on the basis of that it can identify future threats and grab future opportunities.
This analysis constitutes:
Strength:
It refers to capabilities of company which make it different from other (Gürel and Tat,
2017). Connect catering has strength in the form of handling big contracts, serving more clients
at a time, good food quality and taste, low price menu and many more.
Weakness:
These are basically loopholes of companies which is needed to be overcome so that
operations of business will run smoothly. Lack of efficient workforce, lack of training habit, low
supply range are some weakness of Connect catering.
Opportunities:
Changing trends and more attractiveness towards restaurants along with raising concept
of online food delivery, raising awareness regarding healthy food and many other opportunities
will evolve in near future that can be captured by Connect catering.
Threats:
High competition, similar products and services, wider choice, rising prices of food are
few threats that may affect companies including Connect catering.
It is to be noted that SME including Connect catering is not that much affected from
internal competition or environment. This is because of its well awareness and coverage of local
market. But at global level it has to face severe competition.
However, it is also an important point that along with rising risk, chances of raising profit
and growth opportunities also increase. This means as more risk will be taken by Connect
catering, there are greater chances that it can avail more opportunities in global market. Along

with that, connect catering have to carefully analyse prevailing demand in global market
regarding customers. This analysis will help it to capture big customer share because on the basis
of that analysis it can make and produce its products accordingly and ultimately raise its sales
and profit percentage along with expansion of its business.
Advantages of international trading blocs
Trading blocs:
It refers to a trade agreement between government of different countries under which
various trade tariffs, or tariff rates will be reduced or barriers will be lifted. The main purpose of
trading blocs is to raise trading activities between countries so that local entrepreneurs will get a
chance to trade its business in different countries (Mudyazvivi, 2018). For example: European
Union trade agreement, The North American Free trade Agreements.
Advantages:
There are many advantages for implementation of blocs in countries. Due to free
movement of goods and no restrictions on expansion of business, it raises Foreign Direct
Investment (FDI) in country. When a country will open its economy then it raises the chances of
coming of FDI in that country. Due to free movement while operation of business activity
between different countries, it reduces manufacturing cost. This is because along with free trade
it becomes easy to import and export raw material (Wang, 2020). Also, if manufacturing cost
will reduce then production of companies will automatically raise. Thus, due to low
manufacturing cost, companies will directly have positive impact over their business in the form
of raising sales and earning high profits.
Also, due to bloc and agreements it opens up opportunities for manufacturer because with
low cost they can produce more and sale more. This system also enhance the performance of
market along with raising its efficiency.
Due to trading bloc Connect catering will also get advantage while tapping into
international economy. This is because with low trade restriction it can easily enter into new
country and establish its business. Also, with low trade restrictions, SME's cost of operation will
be reduced because due to trading blocs they have to spend very less in meeting formalities or
documentation procedures while entering into new country. Hence, it would not be wrong to said

that trading blocs has open up new ways of business and raise many opportunities of growth for
local traders and manufacturer along with SME's.
Tariff and non tariff barriers
Tariff barriers refers to trade restrictions and barriers which are imposed by countries in
order to prevent interest of local traders. The main purpose behind the implication of tariff
barriers is to protect local traders or SME's so that new and big companies will not affect their
business. These barriers also helps in reducing unfair trade practices in the country.
Tariff barriers:
It refers to those barriers which is imposed on import and export activities. It includes
levied of taxes, custom duty, fees and many more during the cross border movement of goods.
Import refers to movement of goods within the country to meet the needs while export refers to
transfer of goods outside to some other country. It is mainly imposed on import, as a result the
cost of import raises (Cheong, and Tang, 2018). The reason behind the imposition of these
barriers is to reduce import activities and promote local manufacturing. However, it is also to be
understood that import and export tariff will only be imposed and collected only on the
agreement between countries.
Non tariff barriers:
It is opposite of tariff barriers. However under this barrier, trade activities will also be
restricted but by the imposition of some other modes. Under this non tariff barriers restrictions
are imposed through:
Subsidies:
It is one of the common method of non tariff barriers. This method is adopted to provide
additional benefits to local companies or ventures. It may include tax holidays, cash grants, low
prices for raw material and various other. The main purpose of subsidies is to protect the interest
of local companies and SME's.
Quotas:
It refers to fixation of specific quotas in the country. As per this mode amount of quantity
will be restricted while performing the activity of import and export (Kinzius, Sandkamp and
Yalcin, 2019). The main purpose behind the implementation of quotas is to promote local
manufacturing and reduce dependency on some other country.

Licences:
It is also an important mode of non tariff barriers. Under this method, as per country's
political situation and prevailing policies licences are grants to companies (Yalcin, Felbermayr
and Kinzius, 2017). This licences will limit the quantity of export that country can perform.
Thus, it is very essential that every SME including connect Catering have to consider
trading bloc along with various tariff and non tariff barriers prevailing in different countries. A
careful analysis of these concepts will helps Connect catering in minimizing intensity of threats
also with accomplish its objective in the form of expanding its business in new country.
SECTION-2
Advantages and disadvantages of import and export along with process
Import and export:
Import refers to bringing in goods and services that are produced in some other country.
However, export refers to movement of goods and services outside the country which means to
other country. Import in one country refers to export for some other country and vice versa.
Import and export are the important element of international trade. It is very essential that there
should be adequate balance between these activities (Jin, Lee and Hwang, 2019). This is because
an exceed of any activity have direct negative impact over country's market and economy.
Process of import and export in the contrast of Connect catering:
Import/export process:
For conducting the practice of import and export Connect catering will have to adopt
some steps which will starts with preparation of purchase order that which goods and services it
has to avail in country. While preparing purchase order Connect catering have to consider export
document which is concerned with export of goods and services from the country by which it is
importing. After, that it has to clarify the good that it wants to import followed by making
arrangement of adequate transportation. After, completion of these steps it has to insure the
goods against any damage. When goods will arrive in the country, then it has to off-load it with
the payment of all duties. Lastly after all these steps it can transfer goods to its warehouses. This
process will remain same for export too.

Adoption of this process is beneficial and justified because this process will enable it to
avail resources and goods that are present in some other country. Through the implementation of
import process by Connect catering can raise its market competency along with meeting market
competition. This is because import will help it to produce and sales those goods which is in
demand but not in availability (Hayakawa, Laksanapanyakul and Yoshimi, 2019). This process
will also lead to raising of income for Connect catering as it is the base by which sales of a
company can be raised along wit raising of customer share.
However, it is also to be considered that on the one side as it raises growth of Connect
catering but at the same pace implementation of this practice is difficult because it involves long
documentation procedures. Involvement of different currencies is also a major issue or
disadvantages of these activities. In addition, of above issues a higher import will raise
dependency of country over other. So it is recommended that every company including Connect
catering have tried to reduce the process of import and shift their focus towards local
manufacturing so that not only cost but dependency will also be reduced.
Difference between merchandize and service import and export
The major difference between merchandise and service import and export is that former
deal with physical goods while later deal with services. In simple words, mechanize refers to
sending of physical goods outside the country or either receiving of goods in the country
(Hrechyshkina and Samakhavets, 2019). For example: movement of television, raw materials,
furnitures, or various other.
While under import and export of services no physical movement will be performed.
Unless it will involve transferring or enabling the services like financial services, advisory
services and many more.
It would also be right to said that while merchandise is solely concerned with tangible
goods on the other hand service import and export is related to intangible good which means
services.
SECTION-3

Methods of tapping international market by SME along with their pros and cons
There are various methods by which SME can enter into international market and
establish their business. As Connect catering is planning to expand its business into new
economy and market so there are various methods that it can adopt. Out of those methods some
are:
Exporting:
It refers to selling of goods and services to other country from the manufacturing country.
It is one of the best method of exploring business in new country (Paul, Parthasarathy and Gupta,
2017). Connect catering, by adopting this method can raise its business share or expand its
business operations in other country too. It is one of the common method of tapping international
market.
Pros:
Implementation of this method will lead to raising sales and revenue of the firm along
with making an expansion in other country. Through this practice, Connect catering can without
sacrificing or affecting its trademark or patent right can easily enter into new market. In addition
to this exporting enables more controlling power to Connect catering while operating business or
diversifying its business.
Cons:
It involves huge involvement of money due to paying of high duties or taxes or high
transportation cost. Risk percentage is also high due to movement of goods and services. It also
raises high dependency over distributors.
Licensing:
Connect catering can also tap international market through the process of licencing. As
per this method it can apply for licence in that country where it wants to diversify its business.
Licence is that document which allows the companies to deal in specific goods or services in
country (Gaille, 2018). Through this method Connect catering can expand its business and raise
its sale in other countries too.
Pros:
It is one of the best method for raising business activities and sales or revenue of the
company. Connect catering by adopting this method can create new business opportunities along
with expanding into new business line of new country. It enables it to sale its products to other

country thereby prepare it to meet market competition or becoming market leader. This method
involves low risk percentage due to following or operation of business activity within legal
framework.
Cons:
Long procedure for enabling licences, raises dependency over licensor, raise market
competition, not 100% chances of raising revenue are some cons of this method that could affect
Connect catering if it chooses this method.
Joint venture:
This also a common method of entering or establishing business in some other country.
As per this method two companies will agree to combine or join their business. This joining will
also include sharing of profits or resources too (Connelly, 2019). By adopting this method
connect catering can join its business with local trader of different country and thereby enter into
new market or economy.
Advantages:
Adoption of this method will lead to raising of capacity of business along with reducing
cost or percentage of losses. Since it involve sharing of business so in this mode losses or profits
will also be share. Thereby, there are less chances of failure through the adoption of this method.
Disadvantages:
One of the biggest disadvantage associated with joint venture is that it involves
communication error. High expectation with unclear goals are also counted under the
disadvantages of this method which could affect Connect catering if it will continue with this
method.
Although in case of Connect catering the most suitable method that it can adopt is Joint
venture. This is because adoption of this method will give it a chance to tap into international
market along with exploring new market. Since, connect catering is planning to expand its
business in new country or economy so this method will allow it to do so. Also, through this
method the chances of getting success will also raise due to involvement of experience of local
traders.

CONCLUSION
From the above report it can be concluded that it is very essential for every company to
work with globalized trends. Connect catering also have to consider various aspect before
entering into any new country or tapping international economy. It is also understood that for
meeting an objective of business expansion by Connect catering it has to be well aware about
concerned trading bloc along with prevailing tariff and non tariff barriers in those countries in
which it is planning its exploration. Connect catering also have to analyse various import and
export tactics along with adequate methods including joint venture, by which it can raise and
establish its business in target country.