Analysis of SME Strategies for Tapping International Markets, Unit 43

This report examines the strategies for businesses, specifically SMEs like Oak & Cash Carry Ltd, to expand into international markets. It begins by analyzing the global business environment, including political, economic, social, and technological factors, along with the threats and opportunities faced by SMEs in a competitive market. The report then delves into international trading blocs and agreements, explaining their advantages and disadvantages, and analyzes various tariff and non-tariff barriers. It further explores the advantages and disadvantages of importing and exporting, along with how to secure deals, and differentiates between merchandise and service imports and exports. Finally, the report discusses various methods for SMEs to tap into international markets, comparing and contrasting these methods to recommend the best approach for Oak & Cash Carry Ltd. The report provides a comprehensive overview of the key considerations and strategies for successful international market entry and expansion.

Tapping into New and
International Markets

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
LO 1.................................................................................................................................................4
P 1 Global business environment................................................................................................4
P 2 Threats and opportunities that SMEs face in the competitive market...................................5
LO2..................................................................................................................................................6
P3 Determine and analyse the advantage of international trading blocs and agreements...........6
P4 Explain the various tariff and non-tariff barriers that presented in the international trading
environment.................................................................................................................................7
P5 Determine the advantage and disadvantage of importing and exporting and how to secure
the deal.........................................................................................................................................8
P6 Explain the difference between merchandise and service import and export......................10
LO 4...............................................................................................................................................11
P 7 Methods for SMEs to tap in international market...............................................................11
P 8 Compare and contrast the various ways SMEs can tap into international markets.............12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
There are a lot of risks and measures which have to be taken for making the company
gets international so that there is going to be better sales. The customers have to be made aware
of the products and services and to have a strong portfolio organization must follow policies,
tariff and other factors which are going to make functioning in international market efficient and
effective. Oak & Cash Carry is a private organization which a non-specialised in tobacco,
beverages and wholesale of food. Company is located in Oxfordshire, United Kingdom and was
incorporation on 2000. Company is micro sized with 10 employees and a turnover of under £2
million. In report there is a discussion on Global business environment, threats, opportunities,
advantages and disadvantages of trading bloc and importing and exporting and importing. There
is also going to be a discussion on methods for SME tap into international market and comparing
the different methods and recommend best for company.
LO 1
P 1 Global business environment
The environment is also going to differ from one place to another and connectivity as
well for which the political parties put a lot of policies like trading taxes, etc which have to be
maintained by the organization so that there is going to be better functioning (4 considerations
before taking your business international, 2020). There is a lot of impact of corruption in the
business which is not going to be good and the labour laws also have to be maintained so that the
company will be able to operate in the market effectively. There are a lot of factors which is
going to have an influence on the business when the businesses want to expand in the market.
Oak & Cash Carry Ltd will also find it very difficult for working since the organization will not
have a lot of international marketing, policies, trade and other political regulations which can
make the company have limited sales. For businesses in the market, it is very essential for them
to have a strong image and portfolio for themselves in the market which is going to help the
organization to expand themselves easily.
Lifestyle of the customers is different from one another so that there is going to be good
functioning and there has to be good improvement according to this factor so that the customers

are going to be loyal (Kearney, 2018). There are anti discrimination laws which the SME will
have to follow so that the company can have a strong reputation in the market which is going to
make the organization have better performance in the market. SME will have to find employees
when they shift and having high unemployment rate in the country is going to make the company
have higher economic factor which is going to be positive. The culture, beliefs, values are going
to differ in all the countries and they have to be maintained so that the organization can make the
customers have a better experience and become loyal as well.
P 2 Threats and opportunities that SMEs face in the competitive market
When the organization is ready to expand themselves the company will have to analyse
opportunities and threats for themselves which is going to help with competing with competitors
in the market. The following report is going to discuss opportunities and threats which Oak &
Cash Carry Ltd are going to face.
 Threats
The threat for the SMEs in the market is going to be that they are not going to have a lot of
experience to be able to expand them even after they have been able to have a strong base and
portfolio for themselves in the market. There is uncertainty in the political power of the countries
as well which can make the company have a lot of investment on the strategies and making the
working slower and profitability reduce. Employees will not want to work with small businesses
since there is going to be an unstable future for them therefore Oak & Cash Carry Ltd is going to
have a difficult time to be able to operate effectively. There are a lot of large retailers which have
expanded themselves internationally and competing with them is going to be challenging and the
organization will have to find plans and measures to be able to compete (Gammeltoft and
Hobdari, 2017). Investment is not going to be high therefore the information technology,
qualified human resource, exchange rates and other important factors will not be able to operate
effectively.
 Opportunities
This is going to make the business know more and improve accordingly so that there is going
to be higher sales and the satisfaction of the customers is going to be present which is good for
loyalty. Networking for the SME is going to be excellent which is going to make the functioning

of the business even better and expansion for the future is going to be better since there is going
to be experience which is going to be gained. SME must expand in countries where there is high
unemployment rate so that the organization will be able to find employees for the productivity
and operations at low cost. The organization will be able to gain a lot of experience so that they
can expand further and compete with larger organizations. There are a lot of researches which
the business will have to do for the services, market and products so that the business will be
able to operate effectively (Ryan and et.al., 2019).
LO2
P3 Determine and analyse the advantage of international trading blocs and agreements
Trading blocs are designed when several group of countries within geographical
terminate trade barriers between these countries while managing barriers for the rest of the
global. There are some major trading blocs such as European Union (EU), ASEAN, SAFTA etc.
On the other hand, trading agreements are the terms on which different nations mutually agree to
business with the supports of World Trade Organization (WTO) (Shtal and et.al., 2018). For
example, Regional Trade Agreements (RTA), Free Trade Agreements (FTA), NAFTA etc.
Forming such agreements and trading blocs can have significant effect on the member of
countries’ international trading dynamics, economy and business, and can give lots of advantage
and disadvantage after implementations. There are several advantages of trading blocs and
agreements which can offer to small and medium-sized enterprises.
 Competition: There is a one of the best advantages of the agreements and trading blocs
that offer to member of countries as dismissing trading tariffs creates tough competition
among manufacturers to gain competitive advantage, which often put high stress on them
for becoming more productive, efficient, reducing product prices to competitive
standards for users. Overall, high competition among local manufacturers is not only
improved product quality but also supported to compete with low priced imported goods
and services for achieving same market share. However, this phase of trading blocs can
have undesirable impact on SMEs as it can be tough for them to compete with giant
international business which can increase their production rate in order to gain better
chance in global markets.

 Economic of scale: Large market share and increase competition forces companies to
gain benefits that provides by economic of scale, as production cost increases. However,
this process decreases price for the user. This factor has a negative impact on SMEs
specifically, because they cannot develop a large MNCs or have look towards alternative
options.
 Demand: Agreements and trade blocs also helps in improving potential market share for
companies to achieve as with no tariffs, products can be exported to new customers and
other countries can be offered. This factor has positive impact on SMEs as exporting
goods to fulfil increased demands in different countries across the world, can influence
their market reach and profit created.
P4 Explain the various tariff and non-tariff barriers that presented in the international trading
environment
Tariff barriers are created and imposed by nation customs on all imported goods, charge
taxes. Tariffs is charged on the basis of item(car), percentage value, units(oil), or a combination
of these. Tariffs increase the costs of all imported commodities, reduces their ability to compare
with domestic products and make them premium in most of the cases (Saarelainen, 2020). There
are some ways tariff barriers can be implemented which are mentioned as follows:
 Import Tariffs: Country’s government imposed these tariffs on importing goods charges
in order to enhance revenue and protect domestic businesses.
 Export Tariffs: These are the major customs levied by a country on exporting goods.
 Transit Tariffs: There are the major duties or responsibilities levied by country on goods
that passes through their boarders in route to the destination. These tariffs increase market
costs of the goods and restricts commodities traded.
 Specific Tariffs: These tariffs are imposed on the basis of specific attributes of goods
such as rice, wheat, cement etc. charge depending upon the number of units or
commodity.
Alternatively, government can apply other strategies except tariffs to impose limits on trade,
in order to gain their framed economic and political objectives. This strategy develops non-
monetary barriers that leaves a different impact (Baier, Yotov and Zylkin, 2019). Countries

imposes non-tariff barriers to limit or restrict the amount of trade executed with other nations.
Used strategies are mentioned below:
 Quotas: It is a procedure of imposing limits on numerical quantity of products that can be
imported or exported into a country for certain period of time. In a case if imported
quantity exceeds defined limits then fines and penalties are charged accordingly different
cases.
 Voluntary Export Restraints: It is a type of quota implemented by exporting nation on the
behalf of importing country to restrict the high numerical quantity of goods to be
exported.
 Subsidies: These are the payments through which local government makes local
manufactures, in respect of improving their efficiency and productivity, to achieve them
and compete against foreign goods.
 Currency Control: These are the restrictions that places by government to limit the
conversion of local currency. To import goods from other nations, payments have to
make in foreign currencies like Dollar, Yen, Euros etc. Scarcity of the amount of
currency conversion supports to regulate trading.
 Embargo: It is procedure of banning import and export of specific goods or commodities,
imposed to fulfil various political or economic objectives.
P5 Determine the advantage and disadvantage of importing and exporting and how to secure the
deal
Foreign trade is an import and export process which facilitates the exchange of services
and goods between nations. Import is process of buying goods and leading them to one’s nation.
On the other hand, export is the process of selling domestic goods and services to foreign nations
(Cheong and Tang, 2018). Each country posses’ distinct legal processes so, trader must comply
in order to import or export goods and services even depends on target destination. However, in
UK has basic process that involves acquiring an EORI number, TARIC code, license, custom
clearance formalities, insurance, SAD documentation from HRMC and Letter of credit. There is
no nation in the global remain self-sufficient in the modern era, import and exports are
invaluable for nation’s growth and functioning.
Advantages of Imports

Imports offers nations with access and pick best and newly developed strategy or
technologies, high quality of services and goods in the global. Imports also launch new and
unique featured products into the market and forces local companies to innovate. It also
facilitates cheap resourcing of raw material by getting them globally, declining market cost of
goods and increasing sales.
Disadvantage of Imports
Most of the foreign products are served as substitutes or competitors for the locally
produce goods due to this local manufacturer loses their businesses or in extreme cases collapse
of domestic industry. It often resists local manufacturing and may yield in inflation. High amount
of good exchange has a direct effect on foreign exchange reserves.
Advantage of Exports
). It generates huge employment opportunities for the business man as industrial work
towards growing production to export good. Export greatly increases a nation’s economic and
culture development. Exports helps businesses to get rid of from excess production by offering
them with a foreign market through which they can increase sells of product instead of incurring
losses by offering high discounts on excess products. Export helps in increasing total market
share available, as foreign market can be easily captured now, making companies less dependent
on particular sector. It is also contributing great role in increasing a nation’s foreign exchange
reserves (Farnia, 2018
Disadvantage of exports
Exporting of local resources of a country leads scarcity in available resources that will
ultimately lead collapse of the country’s valuable resources. Exporting also can make domestic
businesses to lose focus on local customers and market. It is essential for the local businesses to
maintain quality of exported goods in order to fulfil global standards or in a case if they fail to
maintain quality that can lead negative publicity of nation’s goods in the international market.
Practising these import and export processes to small and medium-sized enterprises i.e.
Oak and Cash & Carry Ltd, a wholesaler company located in Banbury, England, UK. It offers a
wide range of products in bulk such as food, tobacco and beverages, tell that exports of it’s

products can support to earn revenue, while importing raw material from Europe with no tariff
can decline it’s input costs and improves standard of product quality.
P6 Explain the difference between merchandise and service import and export
Merchandises are tangible goods, physical and their manufacturing companies are known
as merchandising companies i.e. book stores, car showrooms, grocery stores, retail clothing etc.
Some merchandising companies manufactures products themselves, on the other hand, others
buy and sell goods wholesale (Oum, Wang and Yan, 2019). While service leads other people
undertaking different tasks which gives value to the customers by fulfilling customer’s set
objectives and the companies that offer said services are termed service businesses i.e. hospitals,
law firms, hair cut salons, schools etc. Some service companies can also sell goods for example
hair cut salons sells shampoos, conditioners etc. but they priorly generates revenue by offering
their services to customer.
Merchandise importing is the procedure through which foreign product and goods are
purchased and brought into to a country for its use or further trading purpose. On the other hand,
merchandise exporting is the procedure through which domestic goods are sold to foreign
nations. Both merchandise import and export processes are done to increase profits and enter
foreign markets. Alternatively, service import and exports are the procedures through which
services are exchanged between two or more nations or between individual and a foreign nation.
They both generates foreign earnings by only transaction in services (Gnangnon, 2020). The
company or person which makes the payment is making a service export while the company or
person which gains payment in exchange of service provided in making service export. For
example, when an African family trips London and books a hotel to stay purpose, then hotel
become service exporter while family become service importer.
LO 4
P 7 Methods for SMEs to tap in international market
There are a lot of methods which can be used by SME to be able to have a better
international marketing for them if they have a good method to follow. There is a requirement of

a lot of analyses and measures which have to be taken so that there are going to be lesser risks
and the company to have higher profitability.
 Assessing markets
The company will have to assess market in which business is planning to expand themselves
into so that there is going to be a better idea. There has to be good knowledge in order to be able
to expand themselves and trends in market are also shifting so that the products and services will
have to be moulded accordingly so that functioning is going to be better.
 Financial support
There is a requirement of a lot of investment in the company for being able to
internationalize their company (Hollinshead, 2020). SMEs are not able to invest much but there
are different methods which the organization can use to be able to operate them in the market
effectively.
 Distribution and transportation channels
The transportation channels are many but for that there has to be good connections in market
so that raw material can come in easily. Oak & Cash Carry Ltd will have to have good
distribution and transportation channels so that business will be able to operate effectively in
market.
 Legal considerations
There are a lot policies and laws which SMEs have to follow so that there is going to be good
functioning and making the portfolio even more stronger which is going to be good for the future
(Butzbach, Fuller and Schnyder, 2020). There are changes which come in the legal
considerations and they have to be analysed and implement effectively on time for the better
reputation.
 International regulations
There are policies which are made for international businesses as well which have to be
understood and with experience there is going to be better operations which the business is going

to have. Safety, quality and import policies have to be followed effectively otherwise the
company can be stopped from expanding themselves.
P 8 Compare and contrast the various ways SMEs can tap into international markets
There has to be good analyses on international market measures which business can take
which are going to be discussed in the further report.
 Licensing and Franchising agreements
Licensing and franchising are a very good method for company to expand themselves in
other countries without having a lot of investment to make. Advantages: The income of
company is going to increase and there are going to be higher business opportunities (14
Licensing advantages and disadvantages, 2018). Disadvantages: Company will be very
dependent on licensor and this is not a good factor for Oak & Cash Carry Ltd.
 Creating Joint ventures
Company can join another venture so that they can expand themselves effectively so that
there is going to be good functioning. Advantages: There is going to be an access to better
resources and understanding of market in which they are expanding into. Disadvantages: There
have to be same objectives with both business and relationship shared is not always flexible
which can be a great risk for SME.
 Establishing connections and partnerships with larger organisations
There are a lot of companies in market which do not want to take risks and gain knowledge
and experience of a new market is when they get into partnership with larger organization so that
there is going to be effective working. Advantages: There is going to be a large capital which
the business can get to be able to expand themselves and company will find it easier to form.
Disadvantages: This is a frozen investment which company will make in partnership which is
not good since they will find it difficult to leave this partnership (Steffen and et.al., 2018). There
are a lot of disputes which the company can have in organization which is not a good factor for
an SME and will not be able to expand in future.

Recommendation
Oak & Cash Carry Ltd must opt for creating joint ventures so that SME will be able to
make a place for them in market quickly and that is going to be very beneficial as well. There are
going to be risks in this factor as well but if joining is going to be done effectively then
organization will be able to grow further. The company will have to find opportunities for
themselves in the market by understanding working in a new market and then will be able to
separate in future with legal measures easily.
CONCLUSION
It can be concluded that global business environment in which small and entrepreneurial
businesses operates. The brief study has been summarized threats and opportunities that small
and medium-sized enterprises faces in the competitive market. It has identified and analysed the
advantages of domestic trading blocs and agreements. Tariffs and non-tariffs barriers existed in
the domestic trading environment. Advantages and disadvantages of importing and exporting
goods and services can be concluded in this report. There were various methods i.e. assessing
markets, legal considerations, financial support, distribution and transport channels applied in
Oak and Cash & Carry in this report.