UK Business Expansion: International Market Entry Report

This report examines the strategies and considerations for UK businesses seeking to expand into international markets. It begins with an overview of the UK and its global business environment, discussing the influence of global drivers such as technology and international trade. The report analyzes the rationale for SMEs to expand globally, emphasizing opportunities to increase revenue, access talent, and build brand image. It then explores how SMEs can leverage international opportunities, including trading agreements, to overcome barriers to growth, and analyzes the advantages and disadvantages of various exporting methods, differentiating between service and merchandise exports. The report also covers documentation requirements and methods for entering new markets, comparing different approaches and offering suggestions for selecting appropriate countries and methods to meet specific business requirements. The report further discusses trading blocs, agreements, and their significance for the UK, as well as tariff and non-tariff barriers in international trade. Finally, it outlines how international agreements stimulate growth for SMEs, providing a comprehensive overview of the challenges and opportunities associated with international market expansion.

TAPPING INTO NEW
AND INTERNATIONAL
MARKET

INTRODUCTION
In recent time, companies drive towards expanding their business into international
market, it helps to provide the most common benefits for SMEs like ability to generate revenue,
capability to help more people, learning new culture, greater access to acquire talent and improve
business reputation within marketplace at global level.
The present report is based on UK, it explains the essential information of UK and chosen
region, global environment in which entrepreneurial & small businesses operate. It justifies
global business environment, influence of global drivers in relation to UK, define rational for
SMEs to expand their business into international market. It also clarifies, how SMEs take
benefits of international opportunities to overcome obstacles for international growth, trading
agreements and blocs, advantage of specific trading agreements that would have direct
significance for region as well as country.
Furthermore, report will also shed light on barriers pertaining to tariff and non-tariff that
associated with international trading. Besides this, report also entails the manner through which
growth for small & medium sized business is facilitated via international agreements. This study
defines the benefits and drawbacks of different types of exporting procedure. It justifies
differences between services and merchandize imports and exports. Documentation that is
needed some essential things and clarifies different methods of tapping into new international
markets. Moreover, this report explain contrast and compare of different ways SMEs tap into
global market, with cons & pros of each approach. At last, it defines suggestion on right
countries as well as methods to meet specific requirements of business.
PART 1
Overview of chosen country & region and global environment in which small entrepreneurial
business
UK is island nation archipelago and spanning including Great Britain, located in Western
Europe comprising Scotland, England, Northern Ireland and Wales. It is surrounded by Atlantic
Ocean, the English Channel, Irish and North Sea. At the start of 2018 massive 99.9 percent of 5.7
million organizations in this nation are medium or small size businesses (Galbraith and et.al.,
2017).
Europe, runs from Atlantic Ocean to Ural Mountains, is divided into seven geographic
regions include British Isles (UK and Ireland), Scandinavia (Norway, Denmark, Sweden, Iceland

and Finland) etc. 25.1 million SMEs in European union are operating their business, with fewer
than nine people in enterprises.
Global business environment in which entrepreneurial and small businesses operate are
constantly growing, with the advancement of technologies and elimination of trade barriers
(Anand, 2017). External and internal environment is the key element of global business
environment which affect business. External environmental factors such as political and other are
changing the way they work, in order to develop economies. The government of UK taking step
towards creating supportive business environment for entrepreneurial and small business that
encourage them to lead economic recovery. Global business environment is quite beneficial for
all business, as it help to reduce barriers to entry into international market.
Analysis of global business environment and influence of global drivers in relation to UK
Global business environment is defined as environment in various sovereign nations, with
elements endogenous to home atmosphere of company, influencing decision taking on resource
capabilities and use. It classified into internal and external environment, external environment
includes political, regulatory, social, legal, technological, tax and cultural environments. To
function efficiently and effectively, organizations operating globally had to understand social
environment of host nation in which they are operating since for so long.
Technological advancement, international investment and trader are the main global
drivers that influence UK (TASSINARI and et.al., 2018). For example, rapid technological
advances are changing the style of work, in term of people do their business, work with systems
and programs that manage day to day operations. Impact of emerging technologies such as
artificial intelligence are varied, it influence positively as helps to generate more debate around
whether organizations or peoples will proliferate in work at expenses of human resources.
Technological changes and advancement make positive influence in relation to UK, they make
necessary modification in existing structure and systems of business and allow people to adopt
the latest programs that enhance their living standards much better than before which is quite
beneficial for them (Gallant, Lecomte and Berteaux, 2019).
International trade is another driver of globalization that influence positively in context
to UK. It allows organizations to expand their business at global level and easily enter into new
market where they can earn more profit.

Rational for SMEs to expand their business globally
SMEs are beating heart of UK economy, it is a small sized business, according to
European Union, a small and medium-sized is business with more than 250 workers and income
of less than 50 million. They are expanding its business into international markets in order to
diversify their resources, increase profit margin and to build their brand image internationally.
Small firms also want to grow and their maximize productivity rather than before, it only
happens when SMEs take step towards business expansion (Egels-Zandén, 2017). In recent time,
organizations also utilize international market to promote their unique product or services, which
help to gain as well as maintain positive revenue stream.
Furthermore, there are many reason behind action taken by SMEs to expand business
globally. Organizations of small or medium size go international because they want to expand as
well as grow operations, more particular reason include generating more revenue and profit,
investment opportunities, recruiting new applicants with great skills and knowledge, diversifier
and competing for new sales.
In recent global economy, firms are establishing their business in foreign market because
it is one of the best opportunity that they can gain in order to build their image internationally
and drive people towards them (Hillary, 2017). Business expansion provide different benefits
including greater chances for market growth.
SMEs take advantages for international opportunities and overcome barriers for global growth
Business expansion procedure at international level provide many opportunities to SMEs
which they can take to overcome barriers for global progress. It helps to improve profit margin,
small organizations constantly look for opportunities to add revenue and customer’s base, when
growth strategies are used up on national stage, next way is to seek out international growth.
Firms can take the advantage of improving their profit margins through distributing their
products in additional nations where they can effectively increase client base as well as generate
market share much higher than before (Clarke, Chandra and Machado, 2016). As small
companies offer compelling solutions and build loyalty across global market, they are able to
strengthen its revenue.
International market provide opportunity to increase consumer base, SMEs take
advantage of this chance, by offering low cost product with better quality, that help to gain
consumers attention and allow people to buy goods because it is cost effective.

One of the best opportunity that international market provide to SMEs is recruitment of
applicant in pool of talent. Without skilled people, small size companies cannot be able to
operate their businesses at global level. They can take the benefits of this chance by developing
the best recruitment plan and listing knowledgeable candidates who are able to contribute in
achieving common goal.
Trading blocs and agreements
Trading bloc refers to intergovernmental agreement where regional barriers in relation to
global trade are eliminated or reduced among participating states, permitting them to trade with
each other as effectively as possible (Hartland-Thunberg, 2019). There are several types of
trading bloc which in turn includes preferential trade area, customs union, free trade area and
common market etc.
Trading agreement is broad ranging taxes, trade and traffic treaty that includes
investment guarantees (Murphy and McLarney, 2018). It exists when two or more nations accept
on terms that supports them trade with each other, Multilateral and bilateral agreements are the
two types of trade agreements.
Advantage of specific trading agreement have direct importance for UK-
Multilateral agreements set rules of trade between different countries, it shapes
international trade unions such as NAFTA, WTO and European Union. For example, EU is
regulated by various treaties such as treaty of Maastricht, treaty of Rome, etc. this agreement
make all signatories treat each other equal. It consists with many benefits that have direct
significance for UK and Europe (Hollway and Koskinen, 2016). Specific trading agreement
assists in enhancing trade level because concerned organizations in nation enjoy low tariffs
which in turn resulted into much cheaper exports. Under the phase of phase playing field no
nation give better trade deals to one country. It is especially essential for emerging market
nations such as UK. Many of them are medium or smaller, making them less competitive.
Developing countries like United Kingdom take benefits the most from this trading agreement. It
standardizes commerce regulations for all trade partner, firms in UK save legal costs since they
follow same regulations for each nation.

Various traffic and non-traffic barriers that exist in international trading environment
Non traffic barrier include embargoes, levies, sanctions and quotas, as part of economic
or political strategy, wide developed nations frequently use non traffic barrier to control cost of
trade they conduct with other regions (Molan, Rezapour and Ksaibati, 2019).
It refer to restrictions that outcomes from conditions, prohibitions and specific marker
requirements that make exportation as well as importation of products costly or might be very
difficult. It also includes improper and unjustified application of NTMs such as phytosanitary &
sanitary measures barriers to trade. Non traffic barriers arise from several measures taken by
authorities and governments in form of authority laws, government policies, regulations,
restrictions, conditions and particular requirements as well as prohibitions that defend domestic
sectors from international competition. All above non trade barriers are existed in global trading
environment that affect trade procedure.
Along with this there are various tariff barriers existing in international trading
environment which impact on further and current trading process of SMEs in UK. It includes
customs levy, traffic on products entering a nation & imposed by nation government. Traffic
barriers means obstacles to trade between some countries which takes form of abnormally high
taxes levied by government on exports or occasionally on imports for purposes of protection,
help of balance of payments and raising of share or revenue.
International trading agreements and Blocs stimulate & generate growth for SMEs
International trading blocs is unit of nations within geographical region that save
themselves from imports from non-participants. It helps to increase foreign direct investment
opportunity that help to stimulate progress for small and medium-sized companies. Trading
agreements is specially designed to reduce barriers between participating nations, give small and
medium size business better access to more people and larger their business. Trade is considered
as engine for growth and creation. Trading agreements connect one nation to another that helps
SMEs to expand internationally as easily as possible.
PART 2
Advantages and disadvantages of varied types of exporting methods for exporting services
Export is something that is brought or shipped to another nation to be traded or sold,
different types of exporting procedure available in global business environment, used to export
products and services to other country effectively (Siregar and Andiani, 2019).

Direct and indirect are the two different types of exporting process considered into
exporting of services.
Basis Direct exporting Indirect exporting
Advantages The advantage of direct
exporting for organizations
include more control over
export activity of products,
closer relationship to overseas
marketplace and buyer and
potentially higher profits
margin. Direct exporting is one
of the best method that helps
firms to have better knowledge
of market.
Indirect exporting procedure
less risks as risk of selling
acquire transferred to export
market intermediaries. It helps
to improve raw materials,
elements spare parts and other
things and availability of
imported inputs is the second
advantage of this process.
Disadvantages The cost of doing direct export
services or business is very
high, it includes greater initial
payment before income begin
to flow in.
The disadvantage of indirect
exporting process is that
company lose control over
their foreign sales when they
chose this way.
Deal will be secured with direct exporting as it helps people to know organization and
thus feel more secure in doing business directly with company.
Differences between service & merchandise imports and exports
Export includes sales of goods or services from domestic nation to foreign country. When
goods produced in one country is sold or brought by another country is termed as export
(Feenstra and Sasahara, 2017). Merchandise exports are tangible goods, sent out of a nation,
merchandise imports are products purchased into a country. When UK contractor sends
machinery products from Europe to US, contractor exports and US imports.

Services imports and exports generate non goods international earnings, the organization
receiving payments in making service export, while importing services individual or firms pay.
For example, when American visitors stay at hotel in London, hotel stay is service export.
Documentation that is required
Before exporting and importing services and products the common documents related to
this procedure will be required depending on rules of United State government or importing
nation.
Commercial invoice-
It is key accounting agreement for products from seller to consumers. On the basis of
this, appropriate value of items are determined by taking into account custom rules.
Packing list-
This list assists in conducting customs evaluations which in turn helps in verifying the
aspects that all products were received and shipped.
Custom documents-
In the context of international business, import-export, custom clearance is mandatory.
There are several documents which in turn requires for custom clearance include commercial
invoice, letter of credit, bill in relation to lading, exchange and shipping.
Letter of credit-
It is one of the most effectual payment mechanism which in turn used for international
trade. According to this, a creditworthy bank provides guarantee to an exporter of goods on the
behalf of concerned customer.
Different approaches of tapping into new international market including their benefits and
limitations
Methods used to enter into new global market-
Licensing-
Practice of licensing means to let out into international market while building strong
presence on soil, this method entails granting approval to separate organization to manufacture
products and offer services in their company's name or logo (Lindsay, Rod and Ashill, 2017).
Joint venture-
It refers to be equity based for example young fellowship is set up with companies
owning proportion of new line. Joint venture is second best method of tapping into new

international market. By employing strategies pertaining to international joint venture business
units can share operational cost. In addition to this, it also offers opportunity in relation to
attaining and enhancing high market share in both the countries.
Franchising-
Business unit can enter in international market by undertaking franchising as a strategy.
This strategy is highly significant that can be adopted by the firm for business expansion. By
this, firm would become able to offer right to other party or entity at international market in
relation to using business model, brand and selling aspects.
Illustration 1: Modes of Entry into International Market
(Source: How to enter a foreign market, 2019)
Exporting-
Exporting is the method of providing products into some other nations, it is divided into
two categories, direct and indirect export.
Pros and cons of each method-
Basis Licensing Joint venture Franchising Exporting
Benefits With the help of
this method,
Joint venture is
the best way to
It permits
simultaneous
By using this
method firms

companies obtain
extra income for
technical know
services and how.
With this
approach firms
quickly enter into
new market
without much
hazard or large
capital
investment.
make partnership
with other
company
operating their
business in
different nations
where firms want
to enter. It helps
to allow
organizations to
trade their
products
internationally.
expansion into
various region of
world.
Franchising
increase brand
equity and limited
risks.
significantly
expand their
business into new
market and leave
less dependent on
any single one.
limitations It makes incomes
lower than in
other entry
modes, while
using this method
company’s loss
control of
licensee
manufacture.
In joint venture
flexibility is
restricted, when
that happens,
business have to
focus on joint
venture and its
individual firms
suffer in
procedure.
Cost is higher
than expectations
while using this
method to enter
into new global
market. Inflexible
nature of
franchise restrict
ability to
introduce
modifications to
business to
respond to current
market and make
business progress.
Reduce the
opportunity to
meet with new
consumers as
results it does not
get to learn about
preferences of
consumers.

Contrast and compare various ways SMEs can take into international markets, assessing cons
and pros
Contrast-
SMEs can use exporting method in order to tap into international markets, exporting
services and products into new market permits firms to judge how well things will sell and what,
when any changes are required to current items so that it does well. Along with this, small and
medium-sized firms also used licensing approach to enter into global market effectively. It helps
to minimize political risk as licensee is typically 100 % locally owned.
Comparison of different ways used by SMEs to enter into international market-
Licensing is type of agreement in which SMEs sells right to use produce firm goods or
intellectual property to licensee for royalty. By this, business unit can build and enhance
customer base that closed by trade restrictions. On the other hand, exporting is better than
licensing method, it helps to greater production that lead to large economies of scale.
Recommendations on correct methods and nations to meet specific business requirements
In Order to enter into new market at international level, SMEs are suggested adopting
licensing method instead of exporting. It helps to meet business requirements in effective
manner. With direct export, firms will be able to get feedback information from target consumers
that helps to develop better relationship between both of them.
 Firms are recommended adopting indirect and direct exporting ways, as it help to better
protection of trademarks, goodwill, patents and other intangible property.
 Different types of ways available in indirect exports that used by companies according to
their business operations and aim. For example, export trading companies, provide
support facilities to entire procedures for one or more providers.
 Exporting potentially increased sales and greater profits, it supports organizations to
make control on further procedures after enter into international market.
CONCLUSION
From above analysis, it has been summarized that global business environment influence
positively on small and entrepreneurial business in which they operate. Different types of global
drivers such as technological advancement and other put positive impact on UK. SMEs expand
their business for several reasons as they want to increase consumer base and take the advantage
of increasing profitability rather than before.