International Expansion Strategy for SME: David Canners Ltd

This report provides a comprehensive analysis of the global business environment, focusing on the international expansion strategy of David Canners Ltd., a UK-based SME in the fruit and vegetable processing industry. The report begins with an introduction to international expansion and a profile of David Canners Ltd., which aims to expand into Asian markets such as China and Malaysia. Task 1 examines the global business environment, including the impact of technology, globalization, and political, economic, social, technological, legal, and environmental factors (PESTLE analysis). It assesses the threats and opportunities faced by SMEs in the competitive global environment. Task 2 evaluates international trading blocs and assesses tariff and non-tariff barriers. Task 3 analyzes the advantages and disadvantages of importing and exporting, and differentiates between merchandise and service imports and exports. Task 4 evaluates various methods for SMEs to enter international markets and compares the pros and cons of each method. The report concludes with a summary of findings and recommendations for David Canners Ltd. to successfully expand into international markets.

Tapping into the world

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain the environment of global business where small and medium enterprises operates.
................................................................................................................................................1
P2 Assess the threats and opportunities in competition in global environment faced by SME .2
TASK 2............................................................................................................................................3
P3 Evaluate international trading blocs with advantages.......................................................3
P4 Assess various tariff and non-tariff in international trading environment........................4
TASK 3............................................................................................................................................5
P5: Advantages and disadvantages of importing and exporting with a secure deal...............5
P6: Difference between merchandise and service imports and exports.................................7
TASK 4............................................................................................................................................8
P7: Evaluate various methods in which SME can tap into international markets..................8
P8: Compare and contrast various modes of SME can tap into international markets, assess
pros and cons of each method................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International expansion is defined as process where business organisations are willing to
focus towards planning, pricing, promoting and further expanding their products range to a new
country across international borders with an aim of achieving higher market share & increased
profitability in the business. It is a tool that is based on the objective of enhancing the multi level
strategic plans for establishment of a global presence and enhances the level of profitability.
Present report is based on a SME organisation David canners Ltd. That is having presence in
Craigavon. UK and is part of the fruit & vegetable processing industry. They are presently
having 90 employees across this location & are generating 16.26 dollar million sales (DAVISON
CANNERS LIMITED, 2021). David canners Ltd. is willing to expand themselves to Asian
countries such as China, Malaysia. The report is based on making a analysis of global business
environment by evaluation of the threats & opportunities to determine the benefits of
international trading agreements (Najmaei and et. Al, 2017). Further there is analysis of tariff &
non tariff barriers. There is evaluation of methods that can assist SME brands in tapping in such
international markets by comparing various modes.

TASK 1
P1 Explain the environment of global business where small and medium enterprises operates.
Global business environment means changes in organisation due to fast change
technology, effect of globalization that impact on social, economic and political. These three
words define the nature of trade in international and also defined different sovereign countries in
business environment that influence decision on use of resources and their capabilities. They are
classified into internal and external business environment. In context to Davison Canner as they
are operating in UK have to take decision according to global changes effectively. In Small
enterprise provide contribution and can also earn revenue whereas in large enterprises they use
resources and funds in this way SME can achieve target in particular time this help organisation
can operate smoothly and flow of goods and services (Gilman and Salder, 2020). In reference to
Davison Canner have to expand their business in Asian countries they will engage in global
environment can be benefit for organisation or sometimes can be risky because due to changes in
global environment they affect the performance of small and medium enterprises. These
countries develop the economy of state that gives growth in SME, as GDP is good that give
opportunities to organisation to create a job opportunities. These contribute towards the economy
of country to assist the political that acknowledge political. These types of organisation stimulate
to different economy in effectively and in appropriate manner. In other words, global business
environment means resources and capabilities is linked with decision of secular nation. Those
organisations operating their business in UK in SME have to take decision and analyse the need
of global with limitation and small enterprises gives contribution can earn revenue whereas large
organisation can take benefit by funds to attain the objectives in stipulated time period. Global
business environment helps small business entrepreneur in operating its business in different
culture, belief, locations, rules and regulation which spread their brand image all over the world.
Global business environment includes culture and environment of different countries which
brings much opportunity for growth of small business. In context of selected firm, global
business environment brings many opportunities which increase their revenue and brand image.
Different culture of countries helps selected firm to innovate new products for satisfying needs of
customers.
PESTLE analysis:

PESTLE analysis is used as a tool of making evaluation of various external forces that
are affecting present functioning of organisations. In present scenario David Canners is willing to
expanding its market share across international borders that are Asia countries. For this external
analysis is mentioned below:
Political factors: There are some of the political factors that include the stability of
government based on rule of law, corruption and effectiveness of government policies. All these
political aspects are affecting the present functioning of David canners. BREXIT situation has
also created lot of uncertainty in recent times. All such factors are affecting present functioning
of David canners and are also going to help them in their future expansion plans.
As per the different statistics that are published by statistics research department in year 2021.
58% of the British people are now having an approach that is willing to leave European Union
that is 39 % of British adults. There is increasing threat because of complete changes in the legal
policies and regulations. This might possess impact in present expansion strategy of David
planners because the European Union will have application of trade agreements since 1st January
2021.
Economic factors: There are some of the economic factors that include the present GDP
trends that are ranging at 2.744 trillion UK dollars. The diverse economy is adding value to the
customer’s lives and helping in creation of high demand in the market.
The present situation of covid-19 is creating many economic issues that is present GDP of UK is
at 5% that is below the requirement of fourth quarter in the year 2019. There have been many
efforts that are reduced because of the emergency measures and situation at is arising because of
covid-19 pandemic. For David canners, there is a major issue that is in the coming time period
for low projection growth. Another major issue can be because of the reducing purchasing power
of customers as their over disposable income has also declined with time. This is creating
opportunities as different business segments can be approached by David canners for the purpose
of expanding across international borders.
Social factors: David canners has always been working on development of a social
approach where the organisation is working towards expanding of their business into new
diversified areas such as hot eat desserts so that they can develop new dessert range. As per the
preferences of changing needs of customers there can be investment in new facility and

exploring of new markets for their potential and present customers. This approach will be taken
forward to their new target Asian markets where David canners are willing to expand their
market share.
The present situation of covid-19 has been one of the major issues that are helping the industries
to work according to the changing nature of the customers. David canners can utilise the overall
opportunities that are being generated because of this situation where customers are shifting
towards online purchasing and e-commerce platforms. David canners can make use of
opportunities that are generated through such platforms and having more low cost options to
expand the present loyal customer base. The present customer base can also be used for the
purpose of having indirect marketing approaches to enhance the market share.
Technological factors: David canners are a brand that is continuously working towards
reviewing the existing business models for expanding in new areas. They are using latest
technological support in form of internet up-gradation and other technological measures for
diversification of business with new product range.
Technological advancement can help organisations in having more shifting towards opportunity
to have complete transformation of the business. The present situation is also providing
opportunities to David canners where there can use of drone deliveries as one of the latest
technologies for the purpose of approaching their customers in a more innovative manner. It is
one of the technological advancement tools that can be used as part of capital intensive approach
as compared to present labour intensive approach.
Legal factors: All business organisations have to follow employment act 1996 operating
in UK. Such legal laws and regulatory framework are different as per different geographical
locations. In David canners there is need to focus on all legal impactions that will be taking place
while David canners will be entering in their new target Asian countries for the purpose of
achievement of higher market share.
Environment factors: There are some of the factors that have to be considered by David
canners. Such as, it includes serious environmental issues. As a grown family business David
canners have always been passionate about achievement of laid objectives of the organisation.
They are working towards protection of environment and not harming it with any type of raw
materials that can damage the present sustainability of environment (Davison Canners launches
new own brand range as business reaches into new markets, 2020).

Organisations can move towards more sustainable approaches by using recyclable products and
eco friendly packaging. There can be availing of opportunities that can help organisations for the
purpose of expanding themselves in more sustainable measures. David canners can plan to focus
on reduction of use in plastics and other non biodegradable substances so that the organisation is
able to for the main contribution towards sustainable development of environment (UNITED
KINGDOM: ECONOMIC AND POLITICAL OUTLINE, 2020).
From the above mentioned PESTLE analysis it can be said that there are many different
opportunities that are available for small businesses so that they are able to expand themselves
across globe. For this there is requirement to emphasize the global context for entrepreneurship
and small business that can lead to presentation of more opportunities for search entrepreneurial
businesses. Some of the ways that can be used in context of David canners is by expansion
opportunities include expansion of sales life of existing products and services by developing new
markets for selling them. There can be reduction of dependence on the existing markets by
enhancing the market share there can be use of price penetration as a strategy to approach new
target segment of customers.
There can be exploitation of more opportunities that are part of corporate technology by
focusing on demand cycles and seasonal changes by tapping into markets that are different and
also who are having less counter cycle fluctuations.
A small business can also work towards exploitation of new corporate technology and
know-how by entering of a global marketplace. So, that they are able to compete against other
foreign brands and then battle with them on different grounds.
P2 Assess the threats and opportunities in competition in global environment faced by SME
Small and medium enterprises have lot of opportunities of growth in business
environment in regard to creation of job and technological advancement. These sectors face
many challenges and opportunities in increasingly competitive environment. In other words, it is
important for organisation to grow and operate their business in other countries that increases the
standard of living and employment. In reference to small and medium enterprises challenges or
issues and opportunities faced by organisation are discussed below:-
Challenges for SMEs:-

They face many challenges, where first challenge is that they have inadequate market
facilities and SME have less support from government, this threat is challenging as there is low
budget which limit their growth because of marketing their goods and services. Second challenge
includes limited number of workers as this affect to operate business globally in competitive
world. The third challenge is lack of credit and resources available to SME, it affect the
performance of business as there are various situation such as sanctions of loans or high rate of
interest on loan skilled workers and finance (Hartland-Thunberg, 2019). Last challenge that deal
by SME is shortage in economies of scale. Davison canners is going to face many challenges to
expand their business in other international market because of global environment they do not
have much employees to work in competitive world, policies that affect performance of
organisation or they can also face resources problem that affect to operate their business. These
all threats can be faced by Davison canners when they will start their business in Asian countries.
Threats:
Local and global competition:
One of the major challenges that can be faced by David canners s that are willing to
expand across border is related to the presence of high amount of global and local competition.
Increasing local competition is leading to additional problem because there are dynamically
growing labours that are expanding across new territories because of the success achieved in
domestic countries.
Notable diversity is also a very crucial aspect that is part of local and international
brands. Small and medium enterprises have somehow disappeared in some of the early years
because they do not possess the right amount of ability to respond and understand the challenges
that a part of global competitive environment. The definition of small and medium enterprises is
different in each country and there is need to evaluate it according to the prevailing
circumstances of the target intern country.
Globalisation is a major factor that is main reason for high amount of competition and economic
turbulence that are part of external environment.
This aspect of globalisation has affected the high amount of competition and economic
turbulence in the external marketing environment. There is also a difficulty in accessing to new
markets, new technologies, formation of strategic alliances, transferring of knowledge and
Capability

Opportunities for SMEs:-
The main opportunity is e-commerce, by making their presence in digital world. Second
advantage that SME can gain at global level that increases in the revenue by increment in the
field of consumer that organisation will directly gain profit of organisation. By increasing their
sales in market the firm where they produce a particular product can offer their services in
expanding nation, this will benefit Davison canners to expand their business internationally. It
will help them to capture market in large in limited period of time. The advantage will be
diversifying market by dividing the products in different market.
Virtual shopping carts: it is a technique that is based on using it as a tool just like the
physical shopping cart. In this items are hold for the purpose of buying and shopping it is one of
the best techniques of shopping cart software that is very important for a growing business.
Online payment systems: there has been complete shift in the way new payments are
made through online systems it includes the way customers can purchase favourite brands from
any part across world. This technique can be used as a part of expansion strategies by various
small and medium enterprises, such as credit card as a payment system where the money is not
deducted from the payers account immediately is one such method. Another method is by paying
securely through debit card that is also a secure and inexpensive way of making online payments.
In this amount is directly deducted from the account. There is zero liability protection debit cards
are also very helpful in securing of online transaction that is their 24 hours fraud monitoring
services that leads to detecting of suspicious activities. Further there have been other third party
payment systems that includes Google wallet, skrill, payoneer that are secure methods of online
payment.
Social media presence: local and small medium enterprises can focus on using of social
media as a very effective tool for the purpose expands across international borders. In case of
David canners it is to use such methods where there can be use of social media as a tool to
effectively approach some new international market segments. For this there is need to follow
some of the aspects that includes setting of social media goals, researching the competition,
conducting of social media audit, finding of inspiration and further creating of social media
calendar.

TASK 2
P3 Evaluate international trading blocs with advantages
Trading bloc is defined as intergovernmental agreement, where different countries
international trade are eliminated on participating states. This means they can trade with other
nation and there is no restriction to trade in other country. There is contract between nations that
can freely trade but they will set some barriers that will impact to global and competitive world.
This will help exporter as they have new opportunities of international trade whereas they are not
liable to pay taxes (Lake, 2018). United Kingdom was member of European Union so they have
benefit to trade in European nation and their region but when after implementation they are
separated from European Union and have signed with other trade agreement. This trade
agreement means where they can easily trade in other nation. CARIFORUM-UK is trade block
of partnership agreement. Small and medium enterprises can easily trade in other countries or in
different 11 nations. Second trading agreement is SACUM-UK economic partnership agreement,
this means they can trade in different southern countries.
Advantages of trading bloc
 The advantage is for foreign direct investment, it develops economy for long time and
by reducing cost so that medium enterprises can afford as it increases investment and
overall size of firm.
 Trading bloc increases economic leverage that decrease the production cost.
 It increases competition because it remove tariff that create choice for customers.
However, it increases incentive by reducing cost.
It reduce the trade effect by importing goods and improving goods, it increases the demand of
consumer by lowering the product cost and demand of that product increases.
Trade creation and trading blocs:
Trade diversion is a major switch from a lower cost for and supplier’s source that is
outside of a custom union towards a high cost supplier that is part of custom union. Diversion is
regarded as a feature of a country that is willing to join custom union there can be free trade
taking place between the customer union and also a common external tariff. The concept of trade
creation is part of trading bloc that is occurs when a country enters a free trade area and is part of
custom union where there can be free trade among the members that are part of common external

tariff. It is one of the most effective methods that can be adopted by organisations for the purpose
of sharing their losses and dealing with higher amount of regulations.
Trade diversion can help an organisation to part of common external tariff that might
sometimes increase the cost of importing. At the same time it is one of the most important
aspects that can lead to words low-cost suppliers and part of third party nation.
Trade diversion may sometimes to decreasing in rate because there can be formation of trading
block along with non-trading block members that has to be replaced by trade with relatively high
cost reading block members. On the other hand has a trade that is taking place between member
countries so that there can be expansion of formation of trading bloc. It is generally related to
removal of trade barriers that can help in increasing specialisation and higher competitive
advantage. For David canners it can help in dealing with rises that are falling and expansion of
trade.
Regional trade agreement:
Regional trade in agreements are regarded as a treaty that is signed by two or more
countries for the purpose of encouraging free movement of goods and services across different
members who are part of their members. The agreement as part of internal rules that member
countries have to follow while they are dealing with non member countries there are some
external rules that have to be followed.
Some of the types of regional trading agreements are mentioned below:
Preferential trade areas: preferential trading agreements require low level of
commitment that is there is reduction of trade barriers to member countries is not eliminating the
barrier among them.
Free trade area: in case of free trade agreements all the trade barriers are eliminated so
that there can be free movement of goods and services. Further dealing with non-members is a
different scenario.
Common market: common market is a trading agreement where members can work
towards removing internal trade barriers and adopting common policies while they are dealing
with non members it allows movement of resources in a freer manner.
Benefits of regional trade agreement: Regional trade agreements are very helpful for
organisations that are willing to expand across Nations because it helps them in encouraging free