Oak Cash & Carry Ltd: Report on Tapping into New Global Markets

This report assesses Oak Cash & Carry Limited's strategy for tapping into new and international markets. It examines the impact of the global business environment on SMEs, highlighting threats and opportunities in international markets. The report details the import and export processes, discussing the advantages and disadvantages of each, and explores various market entry methods available to SMEs. A PESTLE analysis is conducted to understand the global business environment, and the report addresses challenges such as finance, technology, and currency fluctuations, alongside opportunities arising from Brexit. The advantages of trading blocs and the impact of tariff and non-tariff barriers are also discussed, providing a comprehensive overview of the factors influencing Oak Cash & Carry's international expansion.

Tapping into New and
International Markets
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Table of Contents
INTRODUCTION.................................................................................................................................3
SECTION 1........................................................................................................................................4
GLOBAL BUSINESS ENVIRONMENT IN WHICH SMEs OPERATES.................................................4
THREATS AND OPPORTUNITIES FACED BY OAK CASH & CARRY IN AN INCREASINGLY
GLOBALIZED ENVIRONMENT.......................................................................................................6
ADVANTAGES OF TRADING BLOCKS FOR FIRMS..........................................................................8
VARIOUS TARIFF AND NON-TARIFF BARRIERS.............................................................................9
TRADING BLOC AGREEMENTS....................................................................................................11
SECTION 2......................................................................................................................................14
IMPORT AND EXPORT PROCESS TO AN OAK CASH & CARRY LIMITED......................................14
JUSTIFIED RECOMMENDATIONS................................................................................................16
SECTION 3......................................................................................................................................17
DIFFERENT MARKET ENTRY METHODS......................................................................................17
CONCLUSION.................................................................................................................................20
REFERENCES...................................................................................................................................21
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INTRODUCTION
The companies can develop new customers and increase demand for their products by tapping
into new and international markets. The well-prepared plan is needed by companies that are
trying to tap the international market (Eaton et al. 2016). This report will include the impact of
the global business environment on SMEs. It will also include threats and opportunities to tap
into international markets. The second part of the report will include the export and import
process along with the advantages and disadvantages of exporting and importing. The various
methods by which the SMEs can tap into new and international markets will be discussed in the
last part of the report.
Oak Cash & Carry Limited is a company that offers a wide range of products in bulk for offices,
newsagents, and retailers. The number of employees working in the company is 37 and it is
located in the United Kingdom. Oak Cash & Carry was founded in 2000 and it is a non-
specialized wholesaler of beverages, food, and tobacco.
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SECTION 1
The global business environment affects companies when trying to tap into new and
international markets. The high-level competition exists among businesses when operating
globally. The company also needs to compete with the local business in the country it is
tapping. There are many factors and market risks that hinder the company in tapping into
international markets (Hamilton and Webster, 2018).
GLOBAL BUSINESS ENVIRONMENT IN WHICH SMEs OPERATES
The vital role is played by the SMEs in the economic development of the company. The new
business challenges are faced by Oak Cash & Carry in a competitive business environment. The
PESTLE analysis tool will help in understanding the global business environment in which SMEs
operate (Adagba and Shakpande, 2017).
Political factors- The Oak Cash & Carry has to face many political challenges when tapping into
international markets. The government regulations and rules in new markets should be
followed by Oak Cash & Carry (Hans, 2018). The rise or low in corporation tax by the
government impacts the profit of the company. The company needs to consider different
political factors like tax policy, government stability, etc.
Economic factors- The economic factors of the countries in which SMEs operate affect the
operations of the Oak Cash & Carry. The economic factors include interest rates, inflation,
exchange rates, recession, demand/supply, and many others (Adagba and Shakpande, 2017)
Social factors- The cultural aspects of the country are included in social factors. The social
factors that affect Oak Cash & Carry are buying habits. Education level, CSR, etc.
Technological factors-
The use of advanced and updated technology is needed by Oak Cash & Carry to compete in
different markets (Hamilton and Webster, 2018). The technological factors include the
existence of 3D technology for food, beverages, and tobacco, internet connectivity for fast
services to customers, etc.
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Legal factors- There are different laws and regulations in international markets which include
health and safety law, import/export law, consumer law, etc. These laws should be used by the
Oak Cash & Carry to protect its labor and consumers.
Environmental factors- The demand pattern of different products and services of the Oak Cash
& Carry is affected by changes in factors like weather, temperature, etc. Oak Cash & Carry
should consider these factors due to increasing environmental awareness (Hans, 2018).
The global business environment in which the Oak Cash & Carry is planning to operate requires
huge planning. The market analysis and internal analysis of the company is very important
before entering into the international market. The company should invest in advanced
technology to gain a competitive advantage. Oak Cash & Carry should come up with innovative
products and services for increasing its customer base in the new market (Hans, 2018).
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THREATS AND OPPORTUNITIES FACED BY OAK CASH & CARRY IN
AN INCREASINGLY GLOBALIZED ENVIRONMENT
THREATS
Finance and technology are the major threats faced by Oak Cash & Carry. The key issue faced
by the Oak Cash & Carry is keeping up with technology. The experts are required for
cybersecurity, online marketing, and compliance. The Oak Cash & Carry won't always have
these specialist skills employees available. The planning to cope with the financial crisis will be
made by Oak Cash & Carry (Stankovska et al. 2016).
The real economic concern includes the weakening oil sector and slows down in China which is
the threat for Oak Cash & Carry. The unstable growth in the Eurozone and weak Euro in the
wake of the Greek debt crisis and migrants affects the Oak Cash & Carry. The plan will be made
by the company to cope with a global financial emergency (Masood and Sonntag, 2020).
The prices of fuel play important role in the profitability of the Oak Cash & Carry as it is a
wholesaling company in which the products are transported. The total operating costs of the
company are affected and some SMEs do not afford these.
The currency fluctuation is also a threat for Oak Cash & Carry as it directly impacts the pricing
when selling and buying overseas. Oak Cash & Carry overcome this barrier by using a forward
contract which leads to the amount paid to foreign suppliers in advance. The Oak Cash & Carry
will be protected from any drop in the value of the pound (Van Roy et al. 2020).
The willingness of the Oak Cash & Carry to grow its business is impacted due to uncertainty and
ambiguity caused by the EU. The biggest uncertainty for the Oak Cash & Carry is a possible exit
from the EU. The company makes sure that the plan for research and all eventualities into the
probable implication of Brexit for overcoming this barrier (Van Roy et al. 2020).
Oak Cash & Carry needs to use AI and robotics for making its operations more efficient and
smarter in international markets. A huge investment is required for this technology
advancement. Trained and high skilled employees are needed to use them effectively (Van Roy
et al. 2020).
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OPPORTUNITIES
Every business aims to grow and tap into new markets and it requires looking at scale-up
opportunities. Oak Cash & Carry looked beyond the UK due to the beginning of Brexit and think
for operating internationally (Gaganis et al. 2019)
Oak Cash & Carry is targeting the international market for expansion due to post Brexit. British
products and services are more reasonable for international buyers due to fluctuating exchange
rates. It provides an opportunity for Oak Cash & Carry to export its products abroad. The
international sales of the SMEs were triple due to the post-Brexit currency fall (Orazulike,
2018).
The expansion in non-EU countries will provide many benefits to Oak Cash & Carry as the many
companies are looking to non-EU countries to trade with due to the impact of Brexit. The no
more EU red tape means that the UK is no longer bounded to 19,000 EU regulations and rules.
This will be a great opportunity for the Oak Cash & Carry to expand internationally (Orazulike,
2018).
The profitability of the company depends on many factors and the many challenges and risks
are faced when entering into new markets. There will be many opportunities available with Oak
Cash & Carry if a company invests in the updated and latest technology which leads to a unique
experience for its customers. To attract customers in a new market, the Oak Cash & Carry needs
to offer innovative services and products (Gaganis et al. 2019). The company can increase its
customer base with continuous innovation, market research, etc. There also exist many threats
like financial risk, political and legal challenges, economic challenges that affect the operations
of the company. The proper planning and market analysis will help Oak Cash & Carry to
overcome these barriers (Hans, 2018).
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ADVANTAGES OF TRADING BLOCKS FOR FIRMS
The trading bloc facilitates smooth trading between different countries. The type of
intergovernmental agreement where barriers to international trade are eliminated or reduced
among the participating states. It makes trading easy and smooth (Ogbor and Eromafuru,
2018).
 The market efficiency improved as the removal of tariffs and increase competition drive
down price and consumption increase which reduces the deadweight loss.
 The cost of imports drives down as trade blocs eliminate tariffs. It also reduces the cost
of locally produced goods (Ogbor and Eromafuru, 2018).
 The prices for consumers are lower as production increases due to a fall in the average
cost of each good produced. The Oak Cash & Carry can take advantage of economies of
scale (Ogbor and Eromafuru, 2018).
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VARIOUS TARIFF AND NON-TARIFF BARRIERS
The restrictions that are imposed on trading within countries are tariff and non-tariff barriers.
These barriers are used for protecting domestic employment, protecting consumers, infant
industries, national security, and retaliation. The tariffs are not paid by the exporting country
but are paid by consumers and they also impact the relative prices of imported products
(Cheong and Tang, 2018).
TARIFF BARRIERS
The taxes on certain imports are tariff barriers. The imports are made less competitive as the
prices of imported goods raises. The tax, duty, or custom imposed on goods that move across
borders are tariffs and these three words are interchangeable (Cheong and Tang, 2018).. These
barriers are used in controlling exports and imports. The different tariff barriers include:
1. Import duty- It is the tax executed by the importing country i.e. the duty imposed on
imported products. It protects domestic industries and imposed to raise revenue.
2. Export tariff- The tax imposed on products by the exporting country on it distributes is
an export tariff (Cheong and Tang, 2018).
3. Specific duty- The tax imposed is fixed according to the volume and quantity of the
commodity as it is created on the physical characteristics of goods.
4. Compound duty- It is a tax imposed on a single product with a combination of ad
valorem duty and specific duty. It is somewhat built on the value of goods and
somewhat on the number of goods (Cheong and Tang, 2018).
5. Ad valorem duty- The taxes imposed according to the commodities’ value traded
between countries are ad valorem duty.
6. Transit duties- The tax imposed on commodities that create in one country, consigned
to another, and are cross another are transit duties. The country by which the
commodities passed imposed these duties. It reduces the number of goods traded and
increases the cost of products (Cheong and Tang, 2018).
NON-TARIFF BARRIERS
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The trade becomes more difficult as the non-tariff barriers contain regulations and rules. These
tariffs are in the form of subsidies, embargo, quotas, etc. These are non-tax restrictions that
affect overseas trade. It includes government procedures, policies, and regulations (Cheong and
Tang, 2018). The various non-tariff barriers are:
1. VER (Voluntary Export Restraint)- The quota requested by the importing country and
fixed by the exporting country on exports is Voluntary export restraint (Kinzius et al.
2019).
2. Subsidies- The payment received by the domestic producers by the government which
helps them to complete against foreign goods are subsidies. It can be a tax holiday, cash
grant, government equity participation, subsidized input, etc.
3. Quotas- The arithmetical limit on the quantity of the commodities that can be exported
or imported is quotas. It is related to the issuance of licenses (Kinzius et al. 2019).
4. Local content requirement- It is a legal regulation in which the specific amount of goods
must be supplied by the producer in the domestic market. It is used to help domestic
suppliers of products and local labor. Input requirements, labor requirements, and
component required at a local level may state by the government (Kinzius et al. 2019).
5. Embargo- It means a certain commodity is completely banned. The export and import of
certain commodities may be banned by a country to achieve some religious or political
goals.
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TRADING BLOC AGREEMENTS
Type of Trading bloc Description Costs Benefits
Trade agreement The trade
relationships and any
contractual
arrangement
between the states is
a trade agreement
which may be
multilateral or
bilateral. It means
between more than
two states or two
states (Manger and
Pickup, 2016).
The company like
Oak Cash & Carry
which is small will go
out of business due
to trade agreement
as it will not be able
to compete with
powerful industries
in a foreign country
(Manger and Pickup,
2016). The price
advantage is lost by
them when
protective tariffs are
removed.
The trade barriers on
the imported
products of Oak Cash
& Carry get lower
and it will lead to
better quality
products by the
company and lower
prices (Manger and
Pickup, 2016).
Free trade area The free trade
agreements signed
by a group of
countries to reduce
trade barriers and
facilitate trade are
known as a free trade
area (Ohkawa et al.
2016).
The ideas of Oak
Cash & Carry would
easily be stool in the
countries with little
or no laws on
intellectual property
as the domestic
producer access
when imports come
more easily and they
copy the ideas and
sell them as knock-
The efficiency of the
country increases as
the free trade area
encourages
competition and it
also led to a better
quality of products
and services without
being too expensive
(Ohkawa et al. 2016).
The consumers of the
Oak Cash & Carry will
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offs (Ohkawa et al.
2016).
enjoy a higher
purchasing power as
the prices go downs.
Customs union An agreement
between two or
more neighboring
countries to
eliminate quotas,
abolish or reduce
customs duty and
remove trade
barriers is called
customs unions
(Qtaishat, 2017).
The difficulty is found
by member countries
to forgo the trade of
certain services and it
is the major issue
deal by the UK during
Brexit (Qtaishat,
2017).
It leads to an
increase in economic
integration and trade
flows which will
benefit Oak Cash &
Carry (Qtaishat,
2017).. It also leads
to an increase in
economic welfare
among member
countries.
Common market A free trade area
with a comparatively
free movement of
services and capital is
called a common
market (Neuwirth,
2016).
The existence of
monopolies becomes
more difficult as
there exists a
competitive
environment that
leads to loss of
market share by
inefficient companies
(Neuwirth, 2016).
The elimination of
barriers by national
borders which means
free movement of
goods, people,
services, and capital
will help the Oak
Cash & Carry to
increase innovation
and compete in a
strongly competitive
landscape (Neuwirth,
2016).
Monetary union An agreement
between two or
The adoption of new
currency by
The exchange rate
risk is eliminated
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