Unit 43: Strategies for Entering International Markets Report

This report analyzes the global business environment, focusing on how small and medium-sized enterprises (SMEs) can tap into new and international markets. It examines the worldwide business environment, including the opportunities and threats faced by SMEs, and the impact of international drivers like workforce and investment. The report explores international trade blocs and agreements, including their advantages, along with tariff and non-tariff barriers. It also delves into the advantages and disadvantages of importing and exporting, and methods for securing deals. Different market entry methods for SMEs are measured, compared, and contrasted, assessing the pros and cons of each. The report uses Ella’s Kitchen as a case study, providing a practical application of the concepts discussed. The report provides a comprehensive overview of international market entry strategies for SMEs, including the importance of understanding global dynamics, trade regulations, and market-specific considerations. It emphasizes the need for SMEs to develop adaptable strategies to succeed in the international marketplace.

Unit 43– Tapping into New
and International Markets

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explicate the worldwide business environment in which small as well as entrepreneurial
businesses operate........................................................................................................................3
P2 Analysing the threats as well as opportunities which SMEs has been facing in order to
increase competitive global environment....................................................................................4
TASK 2............................................................................................................................................5
P3 Advantages of the international trading blocs as well as agreements....................................5
P4 Tariff and non-tariff barriers...................................................................................................6
TASK 3............................................................................................................................................7
P5 Find out advantages and disadvantages of importing and exporting and how to secure a
deal...............................................................................................................................................7
P6 Justify the differences between merchandise as well as service imports and exports............9
TASK 4..........................................................................................................................................10
P7 Measure the different methods in which SMEs can tap into international markets.............10
P8 Compare as well as contrast the various methods SMEs can tap into international markets,
assessing the pros along with cons of each method...................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
.......................................................................................................................................................14

INTRODUCTION
Exploring international market is one of the most effective practice which is used by
business entities in order to tapping into global marketplace with the motive of getting success
and growth. Major aim of this project is to develop an understanding related to the international
marketplace where different sort of threats as well as opportunities are going to be exposed
which arise at the business environment (Calkin, 2015). In the present report, Ella’s Kitchen is
an organisation which is chosen which is located in London, United Kingdom. This is the report
in which global business environment of United Kingdom is going to be analysed which includes
all the threats and opportunities which affect the operations. Along with this, benefits and
limitations are also going to be examined in the present report which includes all the tariff as
well as non tariff barriers. In addition to this, it also consist of discussion about the exporting and
importing factors along with the different methods used by business entities in order to enter into
new marketplace.
TASK 1
P1 Explicate the worldwide business environment in which small as well as entrepreneurial
businesses operate
It has been observed that United Kingdom is one of the stable country which is currently
facing economic crisis but still remain positive, innovative, forward looking as well as is open
for new business entity. It has also been identified that the legal authorities as well as
Government of the country are highly committed in order to provide facilities to SMEs as they
act as the backbone for the country economy. This as a result also contribute their share towards
the enhancement of the GDP. This will leads towards the development of economy which
generates employment within the business entity. UK is the fastest growing country with the help
of their private business sector and capture sixth position in the world (Chen, Kim and Kohli,
2017). It is said that the service sector of United Kingdom highly contributes in the growth of the
economic system which is almost 80% of the overall GDP which is generated mostly from
SMEs.
It has been said that Small and mediums business enterprises refers to the business
organisation which usually operates their business functions with a small scale and is usually
limited to only some specific regions and nations. In reference to United Kingdom, it is said that

small business entities includes employees which are less then 50 in number as well as turnover
is lower that 10 million pounds. In addition to this, it has also been said that medium business
organisation includes employees which are less than 250 in number whereas have total turnover
which are less than 50 million pounds. It is said that these are the business entities which usually
operates in such surroundings where they imports goods and products from various other regions
in order to operate their business effectively as well as export all their manufactured items into
different nations across the whole wide world (Hassan and Haddawy, 2015). Each and every
SMEs along with entrepreneurial business organisation of United Kingdom mainly operates their
functions in a global business environment which is supported by legal authorities and the
government. It has been identified that the majority of SMEs business within UK usually
operates their functions within Europe boundaries where they exports their products to different
European countries which consist of Spain, Netherlands, France and many more. In this context,
overall transportation cost will be reduced and because of the European Union, SMEs need to
pay very minimum amount of cost while exporting their goods and services.
In addition to this, it has also been said that SMEs of the United Kingdom strengthen their
overall global environment with the help of which they can effectively perform their operations
within the marketplace of America, Asia, some region of the African countries. It has been
concluded that the environment has been enhanced which modify the opportunities in order to
grow at the competitive marketplace which leads towards the contribute of business entities to
the overall GDP of the nation.
P2 Analysing the threats as well as opportunities which SMEs has been facing in order to
increase competitive global environment
International business environment along with the influence of essential global drivers
It is said that the global business environment of the marketplace of UK is quite dynamic
which modifies itself by changes in the external environmental elements. External environment
is currently facing huge issues and challenges because of the new policy BREXIT arise at
workplace (Hemsley-Brown and et. al., 2016). SMEs of United Kingdom has been allowed to
trade freely within different European countries without facing any kind of restrictions before
implication of BREXIT, but now SMEs as well as entrepreneurial business needs to pay some
reasonable amount of exchange rates. There are different sort of global drivers which have the
capabilities to influences the overall economic system of the country. Some of these key drivers

includes, work force, investment, productivity, finance. It has been said that the labour force
within United Kingdom marketplace is highly expensive because of which SMEs of these
nations procures workforce from the Asian countries, this will aid them in order to reduce their
overall cost and assist them in a positive manner. Apart from this, if talking about productivity &
investment, it has been said that these factors have the skill to influences the economic system of
the country in both positive and negative manner.
Threats & opportunities in the competitive global environment
SMEs include limited or less staff members as well as turnover because of which they
might face some challenges in order to operate their business functions (Izberk-Bilgin and
Nakata, 2016). One of the most influencing issue faced by business organisations is lack of
resources which includes skilled workforce, finance, land, market accessibility which restricts
the business and affect overall profitability of the company in a negative manner. Apart from
this, one of the most influential challenge is deficiency of economies of scale which as a result
control the SMEs in order to attain their goals and objectives.
Apart from the issues and challenges faced by SMEs it is said that there are some
opportunities which enhances the overall business functionality as well as operations of the
company in an effective manner (Li and et. al., 2020). Government of UK has initiated different
sort of policies with the help of which different SMEs can easily operate their functions without
paying any kind of high taxes.
Critical evaluation of international opportunities and overcome barriers.
It has been identified that in order to enhance the market share as well as for improving the
goodwill of a business entity, an organisation need to adopt internationalisation of their business.
This will aid in getting huge opportunity at new marketplace but on the other hand includes some
sort of challenges and issues. It has been concluded that there are both positive as well as
negative impact can be seen of getting international opportunities. Apart from this, in order to
overcome from such barriers managers of the company need to modify their strategies and
policies as per the new marketplace so that they will be able to gain positive response.

TASK 2
P3 Advantages of the international trading blocs as well as agreements
Trading blocs refers to the kind of inter governmental contract or agreement where all the
restrictions as well as limitations related to trading between different countries can be eliminated
for all the participating nations or states (Larabe, 2016). It has been said that trading blocs &
agreements define as the contracts among nations which help in allowing each and every
participating nations included in the agreement so that they will be able to trade freely. This will
aid them in facilitating industrialisation as well as in the improvement of overall economy of the
country.
It has been identified that there are different sort of tariff are implemented on each and
every country which needs to be followed by them in an effective manner. Trade blocs as well as
agreement provide benefits to the organisations within a region so that they can trade effectively
in different regions and is not liable to pay any sort of taxes. It is said that United Kingdom was
effective member of the European Union which as a result allows UK in order to trade within
any of the European state. But on the other hand, after implementing BREXIT, United Kingdom
has signed different sort of trade agreements which as a result will allow them in order to
connect with other nations in the world. It is said that one of these trade bloc consist of
CARIFORUM-UK economic partnership agreement. With the help of these trade
agreements, it has been said that SMEs of United Kingdom can effectively and easily trade freely
in different nations which are Bahamas, Barbados and different eleven countries (Neuner and
Wratil, 2020). These are the acts and regulations which needs to be adopted by business
organisations in a well defined manner for getting positive response at new marketplace.
In reference to UK, another most effective trade agreement is SACUM-UK economic
partnership agreement (EPA). With the help of this trade bloc, it has been identified that
business entities will be liable to made trade with different southern countries of Africa.
Southern Africa is considered as a regions which are rich in different natural components where
by using this agreement business entities of UK can easily import products in an effective
manner and without paying taxes.
After the implementation of BREXIT arise, it is said that UK become liable to effectively
trade under regulations of WTO which define as a trade agreement among UK and different 163

members. This as a result produce benefits to the businesses of United Kingdom as it leads
towards fair trade on the fair prices (UK trade agreements, 2019).
Stimulation of global growth for SMEs
International blocs as well as agreements highly stimulate the international growth for
SMEs as it is said that by trading as per the free trade agreement SMEs can export as well as
export from different foreign countries by paying no or less taxations.
P4 Tariff and non-tariff barriers
Global as well as International business environment refers to the aggregation of trading
environments where business entities of different nations trading with each other in an effective
manner. This is the process of trading which is limited by imposing obstruction which consist of
all tariff as well as non tariff barrier. Apart from this, it has been said that the tariff barriers are
usually imposed with main motive of earning relevant revenues with the help of custom duties
along with the interest rates (Li and et. al., 2020). On the other hand, if talking about non tariff
barriers they are usually imposed with aim of limiting the exporting as well as importing of some
specific sort of products.
It is said that Tariff trade barriers refers to the limitation which as a result limits the overall
business entities in order to trade of exporting the any kind of products and services. These are
the barriers which consist of levying a tariff over goods before permitting them to enter into a
particular region. It has been said that there are different types of tariff barriers within
international environment which limits the business entities in order to do trading because of
which they are required to pay high taxes as well as interest rates (Thomas and Azmitia, 2016).
All these barriers consist of licensing requirements, different taxes and charges, price controls &
so on. In addition to this, it has been said that custom as well as taxation rates are some sort of
barriers which needs to be paid by SMEs before doing any kind of trading (Masters, Oehninger
and McDermott, 2017).
Apart from the tariff barriers, it has also been said that there are some non tariff barriers
which control the entity in order to perform any kind of trading within international marketplace.
These are the trade barriers which are not implemented to earn revenues with the help of interest
or taxations. Some of the most essential examples of non tariff barriers consist of product
labelling, administrative process, quantity restrictions, subsidies, procurement rules and so on.

Above stated tariff as well as non tariff barriers highly influences the growth, success and
development of the small and medium business organisations. It has also been said that these are
the restrictions which are quite essential in order to maintain discipline within industrialisation.
These are the barriers which ensure that each and every country is earning some specific profits
margin from the trade. Along with this, it has also been said that it will assist the overall country
in order to restrict importing and exporting of goods and services. It has also been said that the
main reason behind implementing all the barriers is to keep the stableness in legislations of all
the trade which consist of health and safety, import licensing, employment law, overvalued
currencies & so on (McCormick and Somaya, 2020).
Evaluation of advantages concerned with international trading blocs and their implications
on SMEs
Trading blocs are said to group of nations that form trade agreements among themselves.
It comprises of customs union, free trade areas along with single market. It is evaluated that
international trading blocs benefits by increasing local investments as these have competence to
improve overall market of company such as Ella’s Kitchen . Other advantage of international
trading blog is that open trade results in faster transfer of technology across borders through
which an organisation is able to deliver its products in overseas market (Whillans, Çekin and
Thapar, 2020). It gives small businesses a great stay in international trade agreements which
implies that small business have greater incentives for cutting costs to remain in tough or
competitive market. International trading blocs allows small business such as Ella’s Kitchen to
place facilities and relocate its operations that imply positively on its trading.
Critical evaluation of how SMEs take advantage of internal opportunities as well as overcome
barriers.
According to Chen, Kim and Kohli, 2017, it is critically evaluated that there are multiple
opportunities and challenges that facilitates growth of small business enterprise in international
market. In context to Ella’s Kitchen , junior executive of marketing department can take
advantages of international opportunities as well as overcome barriers through understanding
market and planning strategies. It is significant for marketing department of Ella’s Kitchen to
understand about needs of the market wherein it is planning to expand its operations. With this,
the company will be able to devise effective strategies so that all the barriers including
government regulations and tariffs are properly analysed and are overcomed effectively.

TASK 3
P5 Find out advantages and disadvantages of importing and exporting and how to secure a deal.
Importing is a process of purchasing foreign manufactured goods and service by local
economy. This method helps to maintain balance in economy and promote new & exciting
product to the economy. One of advantage of importing to Ella’s Kitchen is that it extends profit
margins of importing goods from those country where wages, fees and material cost are low.
Other advantage includes government of developed companies provides support to their small
companies for importing goods which helps to established business and small business are able
to purchase raw material and labour at lower cost that tends to low cost of manufacturing.
(Neuner and Wratil, 2020). However, its humiliation includes unemployment increases due to
importing goods, labours of local companies does not have chance to manufacture product and
companies must to pay high GST and other taxes on imported goods which leads to decrement in
profit margin.
Exporting is a process of of selling commercial goods to foreign countries, or exporting
forces the act of trading in the international market. It helps to gain revenue and maintain
economy balance. Exporting benefits Ella’s Kitchen by significantly expanding its market, more
production leads to big economies of scale and better revenue. Other benefits includes from
international markets, gain more market shares, reduced vulnerability, by less depending on local
market, extended product life cycle by finding an export market and enhanced competitiveness
by gaining new ideas, management, practices, marketing techniques and way of competing
(Sass, 2017). Similarly, limitations of exporting are risk of damage, loss or theft., economic or
government restriction leads to financial risk, product modification to meet safety and security.
Also, Ella’s Kitchen need high cost and time because of government rules and regulation, lack
of information of competitors, negatively affects ability to do good in foreign market and the
concept consumes huge time in collecting payment apart from non-payment risk.
Exporting mainly divided into two parts which are direct and indirect. Direct exporting
means sale of product in abroad without involving any intermediate whereas indirect includes
middle man to import their product. Some major types of intermediaries of indirect export are
commission agents, purchasing or buying agents, export agents, export management companies

etc. This method have less risk and cost but with limited profit margin as it involves
intermediate cost (Sipe, 2016).
The deal of exporting and importing can be secured by filling official form to meet rules
and regulation of the countries and value of this documentation is that it make capable trades
between two entities who don't know each other. Documentation requires bill of landing,
commercial or customs invoice, export declaration, certification of origin, insurance certificates,
letter of credit, some governments requires purchasing licenses and packing list.
Advantages and disadvantages of exporting and importing
Exporting Importing
Advantages Advantage of adopting
exporting includes increase in
sales profitability as well as
market share
If talking about advantages,
one of the biggest advantage
is that risk can be mitigated
and is considered as one of
the most effective source of
funds.
Disadvantages Disadvantages of exporting
includes extra cost, financial
risk along with product
adaptation at the new market.
Importing of commodities
consist of risk which can be
harmed at the time of
transporting from one place
to another.
Appropriate import and export process to the company
In case with Ella’s Kitchen , import process that includes stages of deciding country,
searching suppliers, finding duty and taxes, searching reliable freight forwards addition to
customs broker and shipping products on time is suitable. At same time, export process that
comprises stages of export registration in exporting nation, export customs procedures and
documents required is used by an organisation (Hemsley-Brown and et. al., 2016). Detailed
stages of exporting are receipt of order, obtaining license, letter of credit, devising exchange rate,
international exchange formalities, preparing execution of order, completion of formalities by
forwarding agents, bill of lading, shipment advices, presenting documents, realising export
proceeds and follow up.

P6 Justify the differences between merchandise as well as service imports and exports.
It is said that the goods and services export as well as import are quite essential for a
business entity who are willing to enter at international market. Along with this, it has also been
said that there are some essential differentiations which are on the basis of nature, scope and
meaning of the export and import. In the present context, some of the major differences for
merchandise as well as services export & import are going to be discussed as follows:
BASIS MERCHANDISE IMPORTS AND
EXPORTS SERVICE IMPORTS AND EXPORTS
Meaning
It define as the exports as well as
imports of all the tangible goods, which
can easily be sold and purchased among
various countries (Thomas and Azmitia,
2016). For example, Ella’s Kitchen is
the organisation which offer some
effective products to their client outside
UK, for example new gadget in order to
operate internet banking by business
entities.
On the other hand, if talking about trading
of all the services these are the intangible
exchanges. In reference to the present
organisation, Ella’s Kitchen is the
company which is paying to company in
order to import service, for example
professionals coming from different
countries in order to provide some
services.
Scope
It has been said that this is the sort of
import as well as export, which do not
have appropriate & tangible products
which can effectively be distributed by
the business organisation.
On the other hand, it has wider scope
where there are several services like
professional training, infrastructural
development, technological installations
& so on (Vallee and Zeng, 2019).

Cost
The cost occur in the production as well
as trading of merchandises is high
where it needs effective acquisition of
all the raw materials as well as
investment in order to develop them
into final goods.
This is a simple process as particular
service is traded among the same, which
reduces the operating cost of organisation,
as no activity of merchandise
development is there.
TASK 4
P7 Measure the different methods in which SMEs can tap into international markets.
Each and every business entities apart from the size and nature gave some sort of
methods with the help of which they can easily operate their business functions in the
international marketplace which as a result help them to enhance their market share as well as
profitability. Some of these methods which is highly used by the management team of an
organisation in order to tap into the new and international marketplace.
 Franchising– This refers to an agreement which is formulated between two different
parties in which franchiser is the person who allows franchisee in order to use the logo,
brand name and products and then sell them to gain profitability (Wang, Helms and Li,
2020). This is the method which as a result bound both parties in order to follow the
contract in an effective manner. Along with this, company need to maintain the quality of
products and services in order to enhance the image and brand name of the business. By
using the method, Ella’s Kitchen will be able to tap into international market through
opening its store or outlet in other market with franchisor. It will allow Junior Executive
of marketing department of small business to use brand and method of franchisor to do
business for distributing its offerings to consumers (Somaiah, 2020.Calkin, 2015).
 Licensing– Similarly to the franchising, licensing is the method which involves a
contract between parties which help or allows the licensee in order to access patent and
by offering some some amount of royalty value. This refers to the agreement which does
not bound the licensee in order to maintain any sort of quality of products and services

offered by them (Whillans, Çekin and Thapar, 2020). With adoption of the method,
Junior Executive of marketing department of Ella’s Kitchen will tap into international
markets by suing patents, designs, intellectual and copyrights of another well established
company in global market.
 Joint venture– According to this, a business entity of various nations need to agree on
working together for a particular topic which as result provide them benefits to both the
organisations. This is the kind of method which is also act as partnership between two
entities for a specific period of time for expanding the business functions in an effective
manner. Adopting of the method can assist Ella’s Kitchen to tap international markets as
the method includes arrangement of business where two or more entities agree to pool
resources of each to accomplish particular tasks.
P8 Compare as well as contrast the various methods SMEs can tap into international markets,
assessing the pros along with cons of each method.
Small as well as medium business enterprises tap into new and international marketplaces
by adopting licensing, joint venture as well as franchising. But these methods also have there
pros and cons which are going to be discussed as follows:
Franchising Licensing Joint venture
Pros
This is the affordable method
and does not need to invest
huge amount of funds.
Furthermore, this includes
moderate risk.
Business entities can capture
high market share by adopting
this method as well as it
includes low risk (Somaiah,
2020).
In this, entities enjoy
combination of expertise as
well as effective resources. In
this risk is being shared
between both the business
entities equally.
Cons
There includes huge threat of
reduction of brand image if
the franchisee is not capable
to maintain it effectively
This can face some issues
related to non payment of
royalty and leads towards the
loss for business entity.
In this method both the
parties need to share profit
equally which might create
conflicts among the business

(Masters, Oehninger and
McDermott, 2017).
entities. In addition to this, If
SMEs adopts this method
then they face the issue
related to rigidity (Larabe,
2016).
CONCLUSION
With the aid of above mentioned report, it is concluded that global or international business
environment consist of different factors which includes rules and regulations which as a result
restricts free trade among various nations. It has also been said that small and medium business
entities face different sort of threats and opportunities which aid them in order to gain success at
the international marketplace. Furthermore, it is also observed after preparing this report is that
UK is a location which actively involved in different sort of trade agreements. This as a result
provide aid to the businesses in order to trade with different countries without paying any kind of
tax. At last, in has also been observed with the help of above mentioned information that two sort
of trade barriers are there which as a result restricts business entities in order to trade at
international markets.

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