An Analysis of Opportunities and Challenges for SMEs in Global Markets

This report examines the opportunities and challenges faced by Small and Medium Enterprises (SMEs) in the global market. It begins with an analysis of the global business environment, considering political, economic, social, and technological factors, with a focus on the case of DCS Group, a UK-based distributor. The report then explores the threats and opportunities SMEs encounter in a competitive global landscape, discussing the importance of trading blocs and agreements, and analyzing tariff and non-tariff barriers. It delves into the advantages and disadvantages of importing and exporting, differentiating between merchandise and services, and recommending import and export processes. Finally, the report assesses different methods for SMEs to tap into international markets, providing recommendations for successful market entry strategies and considering various approaches for SMEs to overcome barriers and leverage opportunities for growth and expansion in the global market.

UNIT 43

Table of Contents
INTRODUCTION...........................................................................................................................................3
Main Body...................................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1) Discuss global business environment................................................................................................3
M1) Analyze global business environment in which small enterprises operated....................................4
P2) Discuss threats and opportunities faced by SME in competitive global environment.......................4
M2) Discuss the implications of threats and opportunities in reference of SME.....................................5
TASK 2..........................................................................................................................................................5
P3) Discuss how trading blocks and agreements are important for business..........................................5
P4) Discuss several tariff and non tariff barriers present in international environment..........................6
M3) Discuss benefits of international trading blocs and agreements......................................................7
D1) Discuss the way in which SMEs are able to get advantage of opportunities in international market
and overcome with barriers....................................................................................................................7
TASK 3..........................................................................................................................................................8
P5) Determine advantages and disadvantages of importing and exporting............................................8
P6) Define the differentiation among merchandise and services imports and exports...........................9
M4) Apply the appropriate import and export process and make recommendations of how they could
be applied in international context.........................................................................................................9
D2) Recommendations to undertake different approaches in international context............................10
TASK 4........................................................................................................................................................10
P7) Assess the different methods in which SMEs can tap in to international markets..........................10
P8) Compare and contrast the various ways SMEs can tap into international markets........................11
M5) Different method SMEs can utilise to tap in to different markets with application to a small
business or entrepreneurial venture.....................................................................................................12
D3) Give recommendations with critical consideration and evaluation of different methods..............13
CONCLUSION.............................................................................................................................................14
REFRENCES................................................................................................................................................15

INTRODUCTION
Market refers to a place where products and services are exchanges in terms of money.
There are some crucial parities such as buyers, seller, suppliers and more are present in market.
Products are exchanged in market with a major aim to earn higher profit margin and meet with
the requirements of customers (Aernoudt, 2017). International market exists beyond the
boundaries of a country. The present report is based on opportunities for SME to enlarge
business in international market. In the current report DCS group is taken into consideration that
is distributor of beauty and house hold brads within UK. It was founded in 1994 by Denys
Shortt. The report includes analysis of global business environment along with several barriers
related to tariff and non tariff within international market. In addition, difference between service
and merchandise imports and exports also included in the following report.
Main Body
TASK 1
P1) Discuss global business environment
Here, global business environment is made with the environment prevailing within
different countries that influence overall decision making process of company. For managers of
SME, it is essential to analyze global business environment in order to expand business
successfully. Here, different factors for this purpose are given as under:
Political Factors: It is analyzes that political environment of different countries is not
similar. It comprises several factors such as trade policies, political condition of country and
more. it is monitored that political environment of Europe is favorable for growth and expansion
of small business. But, managers of DCS group need to evaluate political conditions of different
countries in terms of business expansion in significant manner.
Economical factors: In this, elements such as employment rate, interest rate, demand,
supply and more are included. In global business environment, there are ample of nations and
their economic conditions are included (Zerdin, 2017) . However, economic condition of UK is
favorable but there are some developed countries that are still lacking even in necessary
infrastructure. In reference of DCS group, managers need to evaluate the economic conditions
of different countries ijn order to prepare effective strategies.

Social Factors: These are important factor of global business which includes purchasing
behavior, personality, attitude, social class and status of individuals. In context of DCS group,
they need to consider these factors so that they can meet with needs and requirements of global
audience.
Technological factors: In current business world, there are ample of new as well as
innovative techniques are used by companies in order to ensure sustainability. For this purpose,
managers of DCS group also adopt creative approaches to strengthen their market position.
M1) Analyze global business environment in which small enterprises operated
Global business environment comprises positive as well as negative factors that influence
small business in significant manner. Now, global market has become highly competitive that is
creating difficulties for small business to expand market. In addition, there are several other
factors such as political, economical, social and more which also affect global business
environment. So, organizations need to bring unique approaches as well as strategies in order to
explore business in international market place.
P2) Discuss threats and opportunities faced by SME in competitive global environment
Opportunities
Business expansion: It refers to enlarge business functions, operations in another
countries at global market place (Kaur, Kaur and Singh, 2017) . It is considered as one of the
greatest opportunity for SME that further help to target local as well as international audience.
With this, managers of DCS group can enhance business presence in international market.
Increase in profit: Main aim of each and every business is to earn substantial amount of
profit. Here, global business environment provides this opportunity to small business to earn
higher amount of profit that will lead business towards higher growth and success. In addition, it
will also provide an edge to company at competitive market place.
Threats:
Business interruption: It is analyzed that in global business there are ample of
competitors of company are present in market (Bah and Azam, 2017) . So, SME has a great

threat of higher competition that may interrupt business. It is not easy for respective company to
survive in such an uncertain as well as risky environment.
Changes: It refers changes in current political, social as well as technological
environment. However, changes are important but create higher threats for organization in terms
of business operations and functions. They need to make appropriate changes in their existing
policies and strategies accordingly.
M2) Discuss the implications of threats and opportunities in reference of SME
In corporate world, organizations have to face ample of threats as well as opportunities
while expanding business in global market. There are opportunities to enlarge business and earn
higher profit but companies need to prepare appropriate plans to turn those opportunities in real.
On another side, threats also faced by SME in global market which may interrupt current
business functions. So, managers are required to face changes current business activities in an
efficient manner.
TASK 2
P3) Discuss how trading blocks and agreements are important for business
Trading blocs is way that is used by countries to save their economy through international
competition. In this, tariff and other kind of charges are eliminated among participating state or
countries so that they can easily trade with each other. Three types of trade agreements undertake
by small business are given as under:
Free trade area: There is no tariff imposed among members as there is no external
members involve in this.
Custom union: It refers free area of trade and common external tariff as here participants
of trade blocs can easily negotiate with each other (Chan, 2016) .
Common or single market: In this, major barrier of trade such as transfer of worker,
products, capital and more are eliminating by business managers.

So, this practice is prevailing within UK in order to minimize trade barriers within
participants. It is essential to facilitate trade of products and services in nation without imposing
any additional charges.
Benefits of trade blocs and agreements:
Economic leverage: It helps in trade of products and services resulted mass production is
done by companies to reduce overall cost of production. It helps to achieve economies of scale
that is essential for betterment of company. By reducing cost DCS group is able to provide
products to customers at lower price (Du and Zhou, 2019) . So, trade blocs are helpful in
economic leverage of participating countries. With this, company is able to manage higher
productivity as well as efficiency that is crucial to maintain effective economics of scale within
country.
Size of market: The another benefit of trade blocs is enhancement in current size of
market. It helps to minimize tariff and other expenses that facilitate business within different
countries. So, it provides higher scope to small companies such as DCS group to enlarge their
business in an efficient manner.
P4) Discuss several tariff and non tariff barriers present in international environment
In international market, companies need to go through with tariff and not tariff constraints
to operate business in significant manner. These barriers are given as under:
Tariff barriers:
It is related to custom duty that is applicable on trade of products and services within
different countries at global market place. It occurs while importing as well as exporting
products and services from domestic border to international market. Some tariff are discussed as
under:
Particular tariff: It depicts fixed charges that are imposed on export of particular
products & services on specific unit. Besides this, it also differs according to type of products
that are imported through physical entity.

Ad valorem tariff: In this, custom duty is determined according to value of products. It is
levied merely on imports and charged as a predefined percentage of value of products & services
(Saeed, Yousaf and Alharbi, 2017) . So, it is a major tariff barrier for small companies that
enhances final price of goods.
Non tariff barriers:
It is regarded as the non tax restriction and control of public bodies over international
business. Some kinds of these barriers are discussed as under:
License: It refers to the written permission of government to undertake a particular type
of business in international market. By providing license public bodies permit managers of DCS
group to execute trade across the border of country. With this, government keeps restrictions on
some unauthorized business functions to manage and control different business activities in an
efficient manner.
Import quotes: It is a barrier which imposed on the price of specific products and
services that are being import through other countries. So, limited products can be exchanged
with limited quantity that is fixed by legal authorities.
M3) Discuss benefits of international trading blocs and agreements
It is monitored that these blocs are helpful to minimize trade restrictions within countries
that is helpful to promote international business. It provides several opportunities to small
companies in terms of enhancing and enlarging their current business operations in significant
manner.
D1) Discuss the way in which SMEs are able to get advantage of opportunities in international
market and overcome with barriers
It is monitored that small companies can avail ample of opportunities of business
expansion and increase in profitability through extensive market research. It will help them to
provide significant information regarding international market that will further help to prepare
approraote strategies. In addition, they can overcome with barriers by making future plans and
adopt creative as well innovative techniques of business.

TASK 3
P5) Determine advantages and disadvantages of importing and exporting
Imports: It refers to purchase products and services from other nations. Here, necessary
goods, raw material are imported from other countries in order to meet with increase present
level of demand at market place (Fuertes and Serena, 2016) .
Advantages:
 It minimizes cost of manufacturing of products and services in domestic country as
company imports necessary goods from other countries where they are available at lower
price.
 Imports help to meet with future uncertainties in terms of sudden increment in current
level of demand at market place.
Disadvantages:
 The major disadvantage in import is related to outflow of foreign exchange as companies
make the payment of imports in home currency.
 Huge imports also harm domestic manufacturing practices of country. If, imported goods
are available at cheaper price then people prefer to buy it.
Exports: It depicts to sale domestic products and service in other countries that is essential
for growth and development of economy.
Advantages:
 It is essential to get foreign currency that will strengthen the position of country at global
market place.
 In addition, with export companies are able to make their presence at international
market.
Disadvantages:
 Sometime, government of counterpart nation imposes higher tariffs and other expenses
on imported products that will increase overall cost of product in global market.

 Here, it is not easy to get acceptance in other countries as company might have to face
exteisve competition in international market.
P6) Define the differentiation among merchandise and services imports and exports
In context of international market, dealing of goods is ordinarily included as a display of
constancy of nation’s fiscal or economic system (Rottig and Reus, 2018). In common situation,
product face shortage is misunderstood such as arrangement shortages, but they are different
forms. The differentiation among goods and services imports and export are defined as under:
Merchandise trade Service trade
The bring in and bring out of the commodities
and touchable products can be pragmatic and
associated.
The trading insubstantial workforce and
facilities can be experienced only.
Products trading and bringing in have high
contracting of less value.
Facilities sell abroad and trade in have less
dealing of high value.
The figure of companies in the product trade is
higher because it is manageable.
The number of companies in the service sell
overseas and trade in is less because it
considers high threat and capitalisation.
Products contract is a deal due to consideration
of communication of control of a tangible and
transportable thing from a dealer to a purchaser.
Services are interactions in a customer
advantages from practices involved by the
service provider.
M4) Apply the appropriate import and export process and make recommendations of how they
could be applied in international context
There are several phases and steps which are considered by organisations in context of
import and export process. In context of import, steps are trade inquiry, getting import license,
procurement of foreign exchange, older placement, and letter of credit, advice of shipment,
import documents, goods arrival and custom clearance (Banshwar and et. al., 2018). While

export process include product inquiry, order placement, credibility of the Importer, export
license, production of goods, quality control, certification of origin, space reservation for
shipment, packing and forwarding, goods insurance, custom clearance and providing bill of
lading etc.
D2) Recommendations to undertake different approaches in international context
It is monitored that imports and exports are the effective practices that can be adopted by
company in order to explore business in global market. Further, there are different trade practices
such as merchandise and service trade are used to sustain in international market place. It can be
suggested that, these process of import and export can be applied by the management of DCS
group during the time of purchasing raw material to produce goods and during exportation of
finished goods in market place.
TASK 4
P7) Assess the different methods in which SMEs can tap in to international markets
The management of DCS Group can consider several methods of international market. They
are as:
Assessing markets- With the consideration of this method, DCS can assess that particular
target market of selected region which support in making development in their economic
condition as well as consumer base of company by providing quality goods and services (De
Haan, Schoenmaker and Wierts, 2020).
Financial support- With the help of this method, DCS Group can analyse the monetary
support in global market in context of financial sources which will offer fund to the company in
order to operate its business.
Distribution and transportation channels- In DCS Group, by making use of this tool, the
firm can determine the ways of transportation so that they can trade raw material and selling
commodities in the global business environment and accessible to them in reach of their
consumers.

International regulations- With the help of it, DCS Group can collect information about
international business laws in term of manufacturing, trading, atmosphere and consumer related
laws.
P8) Compare and contrast the various ways SMEs can tap into international markets
The small business organisation makes appropriate use of various methods in order to tab in
international market (Saeed, Yousaf and Alharbi, 2017). Therefore, there is different kind of
methods such as franchising, joint venture, as a licensing that is determined with pros as well as
cons that is going to be mentioned below:
Pros
Franchising Licensing Joint venture
The advantage of franchising
is that it is determined as
affordable way that is adopted
by business organisation and it
does not need any kind of
finance as well as it possess
less amount of risk during
particular phase of time
period. Therefore, it has been
analysed that franchising is
most affordable and less risky
method that is adopted by
business organisation for
conducting different tasks and
activities during particular
phase of time period.
SME focuses on intensify
market share & its profit with
use of this way and it is less
risky method. The licensing is
adopted by SME in order to
reduce level of risk and
increase profit margin in
future period of time which
will be helpful for
organisation in future period
of time (Prashantham, Kumar
and Bhattacharyya, 2019).
In context of joint venture,
they focuses taking advantage
of integration along with
support of this kind of method
and this is useful in optimum
utilisation of resources and
risk level is reduced in an
appropriate manner during
particular phase of time
period. Herein, it is useful for
business organisation in order
to optimum use of resources
and reducing risk during
particular phase of time period
which will be beneficial for
company for their success and
growth.

Cons
Franchising Licensing Joint venture
It is determined as a method
that possesses threat for
business organisation at it
does not have images well is
quality of organisation that is
managed by franchisee in an
appropriate manner. Due to
franchising, it erodes brand
image of business organisation
that is determined as a main
threat for them.
As per this method, it provides
different kind of challenge
within organisation that
imposes negative effect image
and goodwill of business
organisation during particular
phase of time period (Orser
and Elliott, 2015). Therefore,
through licensing it reduces
image or reputation of
company during particular
phase of time period.
Herein, this method provides
different kind of challenges
and in this unbalanced
involvement reduces risk
credibility. Therefore, it is
determined as a threat for
chosen organisation named as
DCS group.
M5) Different method SMEs can utilise to tap in to different markets with application to a small
business or entrepreneurial venture
The SME focuses on taking appropriate use of joint venture as they provide support of
capability of business organisation to expand and diversify well and services that is advanced on
continuous basis. Herein, the efficiency as well as the effectiveness of work is improved as
business organisation focuses on performing their work according to ability in an appropriate
manner (Rottig and Reus, 2018). In context of joint venture, the capability of organisation to
expand working and it is useful in expanding organisation on larger level during particular phase
of time period.

D3) Give recommendations with critical consideration and evaluation of different methods
It is stated that there are ample of ways such as licensing, joint venture, franchising and
more in order to explore business in international market. All the methods have their own
benefits as well as drawbacks. So, managers need to select a suitable methods after due
consideration and market research. Here, joint venture is considered more suitable for DCS
group in terms of business expansion as it will help to enhance the profit margin of company in
significant manner.

CONCLUSION
From above discussion, it is summarized that international market is a crucial to target
domestic as well as global audience. It is more helpful for SME for business expansion and
growth. It is summarized that global business environment comprise ample of factors that need
to evaluate before internalization. In addition, there are ample of ways such as imports, exports,
joint venture, franchising and more are used to explore business at global level.

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