Expansion Strategy: Red and Blue Restaurant in the Scottish Market

This report examines the international market expansion of Red and Blue Restaurant, focusing on its potential entry into the Scottish market. It begins with an introduction to the chosen country and region, explaining the global environment and the influence of key global drivers. The report conducts a PESTLE analysis to assess the political, economic, social, technological, legal, and environmental factors impacting the business. It explores the rationales for SMEs to expand internationally, highlighting opportunities and threats. The report also evaluates how SMEs can leverage international opportunities and overcome barriers to growth, including an explanation of trading blocs and agreements. It analyzes various tariff and non-tariff barriers and assesses how trading blocs stimulate growth for SMEs. The report concludes with an overview of the international expansion strategy, providing a comprehensive analysis of the market and recommendations for successful expansion.

Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................2
Introduction to the chosen country and region and explanation of global environment.............2
Analysis of global business environment and influence of key global drivers............................3
......................................................................................................................................................7
Rational for SMEs to expand their business internationally........................................................8
......................................................................................................................................................9
Critical evaluation of the way in which SMEs can take advantage of international
opportunities and overcome barriers for global growth...............................................................9
Explanation of trading blocs and agreements and examination the advantage of specific
trading agreements.....................................................................................................................10
Explanation of various tariff and non tariff barriers that exist in the international trading
environment...............................................................................................................................12
Evaluation of international trading blocs and agreements stimulate and generate growth for
SMEs..........................................................................................................................................14
PART 2..........................................................................................................................................16
Covered in Brochure..................................................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Tapping into a new and international markets can be defined as a procedure which is
focused by business entities to expand their business and generate higher revenues. Main
objective of it is to attain long term business goals such as improved performance and
profitability (Catchpole, 2019). Business Advisor of Barclays which is one of the biggest banks
of UK is asked to prepare content for a webpage on Scotland of United Kingdom Region. The
SME which is selected for this report is Red and Blue restaurant which will expand its business
in Scotland it is currently operating business in Liverpool. Present discussion covers various
topics such as analysis of opportunities and threats for firms exposed to an increasingly
globalised environment. Apart from this, illustration of advantages of trading blocs for firms are
also covered in this project.
PART 1
Introduction to the chosen country and region and explanation of global environment
The chosen country and region are Scotland, United Kingdom. Red and Blue is currently
established in Liverpool which will expand its business in Scotland to attain growth and
development. This nation is a part of UK and covers the northern third of the island of Britain. Its
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south and west part is surrounded by Atlantic Ocean and the north-east is surrounded by North
Sea. It is divided in 32 local authorities which are also called council areas. The area with highest
population in the country is Glasgow City and the largest area is Highland. The GDP of the
nation for year 2018 was around 170 billion pounds which is a big contribution in the overall
GDP of United Kingdom. There are various SMEs which are operating business in this country.
Environmental factors leave impact upon operations of the entities in Scotland because the
biggest challenge which is faced by them is climate change. It directly impacts water level,
disease, crops etc. Therefore it is vital for all the SMEs such as Red and Blue to keep detailed
information of the same. Governmental obligations in this nation are also very strict therefore all
the established and the SMEs that are planning to expand its business here are required to make
sure that they have detailed information of such environmental factors. Brexit is one of the recent
activity which has left impacts upon political and economic situation of the country (Jasovska,
2019).
Analysis of global business environment and influence of key global drivers
Global business environment is the combination different types of factors which are
leaving impacts upon functionality of a business. Main purpose of analysis it is to make sure that
all the elements which may leave negative impact upon a business are analysed in advance and
effective strategies are formed to deal with them. The global business environment of Scotland is
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highly impacted due to climate change, governmental policies and Brexit. For SMEs it is very
important to analyse all of them so that possibility of negative impacts of them could be reduced.
The key drivers which are attracting SMEs to expand their business in Scotland are technological
advancements and high international trade. Both of them influence businesses to establish
themselves in the country.
Technological advancements: The level of this driver in Scotland is very high which
helps the country to contribute a higher percentage in the overall GDP of UK. It influences
SMEs to execute business effectively so that they can meet the level of advanced technology and
fulfil requirements of customers.
International trade: Percentage of it in Scotland is very high which is benefiting the
business entities to execute their operational activities in systematic manner. It influence SMEs
because they have to formulate such strategies which can help them to establish themselves
appropriately.
Global business environment can be defined as the environment in which different
countries are operating business around the world to attain growth. It is very important for all the
entities to make sure that they have detailed information of it as it is required to formulate
effective decisions for growth of the organisation. As Red and Blue is planning to expand its
business in Scotland so it is vital for it to analyse it. In order to assess the global business
environment PESTLE analysis could be used by Red and Blue Restaurant. There are six different
elements of it which are as follows:
Political: It includes components such as political instability, taxation policy, political
situations etc. While expanding business in Scotland it will be very important for management of
Red and Blue to make sure that they are having detailed information of the situations of political
environment of the country. For example, the situations of the country are stable therefore it will
help the SME to expand the business successfully.
Economic: Exchange, interest, inflation, deflation, unemployment etc. rates are
considered as the elements of economic factors of PESTLE analysis. While planning for
expansion in Scotland all these components are required to be analysed by Red and Blue
restaurant which will help it to be prepare to deal with all the negative situations in future. There
has been a positive improvement in the economic circumstances in Scotland as there is rise in the
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employment rate and disposable income is £13,851 which makes it easy for a business to expand
their operations in this country (Scotland's Economic Strategy, 2015).
Social: Choices, preferences, needs, demand, buying behaviour etc. are social factors
which should be focused by all the organisations to strengthen market share. While expanding
business in Scotland it will be very important for Red and Blue Restaurant to analyse the
preferences of customers regarding food so growth could be acquired. For example, now a days
people are becoming health conscious therefore, the management should decide that such food
items will be sold by it there which are low in calories and good in taste. The favourableness of
health conscious trends of people assure that sustainability of the business operations is carried
out.
Technological: Automation, innovation, technological awareness etc. are technological
factors which are required to be focused by companies such as Red and Blue restaurant because
it can help to expand the business successfully. As the SME is planning to expand in Scotland
therefore it is very important for it to use new technologies so that growth could be acquired. For
example, the management can use online marketing strategy with the help of social media which
is a low cost but effective technology which will help to attract large number of customers.
Digital technology can be considered as one of the fastest growing sector in the Scotland
therefore taking advantage of the same will be helpful in achieving successful expansion of
operations in Europe. (Digital technology 'is Scotland's fast-growing sector', 2017)
Legal: It covers different types of laws such as consumer protection, health and safety,
copyright, patent etc. In order to establish business in Scotland successfully it is very important
for Red and Blue Restaurant to make sure that it is complying with all the legal implications. It
will help to attain development.
Environmental: It includes weather, climate, environmental policies etc. which are
required to be focused by SMEs such as Red and Blue restaurant because it is required to ignore
legal interferences and improve market image. The Scottish environment protection agency is an
effective regulator which assures that an efficient and reliable effective policies are build which
assures better environment. In Scotland rules regarding environmental protection are very strict
so the enterprise should make sure that its operations are not leaving negative impact upon the
environment because it can affect the expansion.
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From the above analysis following opportunities and threats are analysed for red and
Blue restaurants:
Opportunities:
 Political situation of Scotland is stable which is a good opportunity for Red and Blue
restaurant to expand its business successfully.
 By offering healthy food the organisation will be able to establish the business in
Scotland because most of the individuals in the country are becoming health conscious.
Threats:
 Rules and regulation of government of Scotland are very strict against environmental
protection and if red and Blue is not able to comply with them then it may leave negative
impact upon business.
 The rate of unemployment in Scotland is very high which is a threat for the SME to
expand business successfully.
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Rational for SMEs to expand their business internationally
SMEs are the businesses which are benefiting countries to be in a stable position so that
the fluctuation in GDP could be ignored. For all such types of companies it is important to
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expand their business internationally (Ju, Jin and Zhou, 2018). Rational of it could be understood
with the help of following points:
 Main reason for international expansion is generating higher revenues and capturing
larger market share.
 By expanding internationally SMEs will be able to grab foreign direct investments which
will help to perform operational activities properly.
 International expansion may also result in improvement in the reputation of company
therefore it is vital for SMEs to expand themselves.
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Critical evaluation of the way in which SMEs can take advantage of international opportunities
and overcome barriers for global growth
For all the SMEs it is vital to make sure that they analyse the international opportunities
and take advantage of them. For this purpose, effective market research could be conducted by
them which can guide them collect detailed information about taste, requirements and
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preferences of potential customers who are targeted by them. It will also help to find appropriate
ways to respond all the challenges which may affect functionality of business. The barriers
which may affect a SME to expand its business internationally are legal, cultural etc. All of them
can also be responded effectively with the help of proper market research because it will help top
level executives of enterprise to be aware of all of them. Effective and appropriate market
analysis will be beneficial for SMEs to deal with all the barriers and issues properly (Rana,
2018).
Explanation of trading blocs and agreements and examination the advantage of specific trading
agreements
Trading bloc can be defined as a intergovernmental contract which is made by some
countries to import and export appropriately. There are several types of it which are as follows:
Preferential trade area: It is made when countries in an agreement decide to eliminate
or reduce tariff barriers on specific goods which are imported by one nation from another one.
Free trade area: It is created by two or more countries that belongs to same geographic
area to eliminate or reduce barriers on import or export from each other.
Customs union: It is mainly related to elimination of tariff barriers between the members
of trading bloc.
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Common market: It is related to the elimination of all the barriers on not only tangible
goods but also economic resources. It will remove all the barriers for goods, services, labour and
capital.
Trade agreements are the set of contracts which are made by two countries which have
agreed to help each other in trading. Different types of it are as follows:
Multilateral agreements: Main purpose of them is to shape international trade unions by
setting riles for trade between several countries.
Bilateral agreements: These are used to set trading rules between two specific countries
and provide them tax and tariff benefits.
Both the above described agreements will be beneficial for SMEs to expand their
business in Scotland because it can help them to reduce the trade barriers and execute the
operations properly.
Advantages of international trading blocs:
 Trading blocs reduces the number of tariff and non tariff barriers for SMEs.
 With the help of trading blocs trade related disputes could be settled.
 All the countries which are involved in a the trading bloc may get benefited with the help
of it because it helps them to attain higher gains by reducing additional taxes.
 It promotes competition which helps the companies to formulate effective strategies and
provide best goods to consumers.
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Explanation of various tariff and non tariff barriers that exist in the international trading
environment
Tariff is the amount of tax which imposed by the countries on importing goods and they charge
tax according to per unit they import. These kind of barriers will increase the product price and
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further it reduces the overall profit margin of the company. These barriers include the import
duties which increases the price of product in the market. Along with this, it is imposes in order
to provide safeguard to the domestic organizations. For small organizations it become huge
barrier to pay such duties which affect the overall cost of production or minimise the profit
margin.
Government of the nation also use various tools to restrict the trade rather than using
tariff. In the international market, non-tariff barrier also affect the business where government set
the limit of goods quantity which allow to import. Main purpose of setting quotes is to limit the
import of products from the country. In order to save the interest of domestic companies,
government charge such amount which restrict the trade on international level. Tariff and non
tariff barriers mostly affect the small organization and it directly affect the profitability of the
organizations. These restrictions further affect the business operations which can minimise the
productivity as well as profitability. In order to meet their expenses or maintain their profit
margin they have to increase product price which can reduces the demand (Steiner and Fan,
2019).
There are various types of tariffs and some of them are as follows:
Specific tariff: It is the fixed amount of monetary resources which is paid according to
the measurement or weight of a commodity which will be imported or exported.
Ad Valorem Tariff: It can be defined as the the tariff which is paid on the value. It is
paid on the fixed percentage of the total value of a commodity which will be imported or
exported.
Tariff barriers:
 All the taxes such as import, export, GST etc. which are paid in the imports are
considered as the tariff barriers.
 Increased price of the imported goods is another tariff barriers which results in less
competitive imports.
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Evaluation of international trading blocs and agreements stimulate and generate growth for
SMEs
Trading bloc is the inter-governmental agreement which include the regional barriers for the
international trade. With the help of it, organizations able to reduce eliminate the restriction and
allow participating states to involve in the market. Implementation of trading bloc include the
agreement where countries can freely trade or improve the economy significantly. It help the
organizations to carry out the trade practices without paying any additional taxes to sell their
products & services in the international market. Uk is the member of European Union and they
allow the country to freely trade in the European region. After BREXIT, United Kingdom has to
sing various agreements & contracts which allow them to trade in the entire world. For example:
CARIFORUM- UK economic partnership agreement, with the help of this contract Small
Medium Enterprises ( SME ) able to freely trade in the Bahamas, Barbados and rest of the 11
countries under this agreement.
SACUM- UK economic partnership agreement ( EPA ) is the another trade agreement
which help the SMEs to get growth and opportunity to expand their business internationally.
With the help of trade bloc, UK's organizations able to trade with South African regions which
are rich in natural resources (Verougstraete and Aras, 2018).
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Stimulate & General global growth for SMEs
International trading blocs and other trades agreement will positively affect the global
growth of Small Medium Enterprises (SMEs). With the help of free trade for small organization
help the business to import or export the products without any trade restriction or paying any
amount in terms of tax. Further it helps the organizations to reduce their product cost or
maximize the profit margin and it further provide the global growth to the small businesses.
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PART 2
Covered in Brochure
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CONCLUSION
The above project concludes that tapping into new market is beneficial for SMEs as it can
help them to generate higher revenues and capture large market share. There are various key
drivers such as technological advancement and international trade that are influencing SMEs
such as Red and Blue restaurant in Scotland. Different trading blocs and agreements which could
be focused by SMEs are preferential trade area, free trade area, customs union, common market,
multilateral and bilateral agreements.
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REFERENCES
Books and Journals:
Catchpole, A., 2019. Tapping into the UK market.
Jasovska, P., 2019. Tapping into foreign markets: internationalisation of the craft beer industry
from small open economies (Doctoral dissertation).
Ju, M., Jin, J. L. and Zhou, K. Z., 2018. How can international ventures utilize marketing
capability in emerging markets? Its contingent effect on new product
development. Journal of International Marketing. 26(4). pp.1-17.
Rana, M., 2018. Tapping new opportunities in personal mobility market: opportunities &
challenges for SUZUKI Bangladesh.
Steiner, A. and Fan, S., 2019. Rural revitalization: Tapping into new opportunities. IFPRI book
chapters, pp.16-25.
Verougstraete, M. and Aras, A., 2018. Tapping Capital Markets and Institutional Investors for
Infrastructure Development (No. WP/18/04). United Nations Economic and Social
Commission for Asia and the Pacific (ESCAP).
Online
Scotland's Economic Strategy, 2015. [Online] Available through:
<https://www.gov.scot/publications/scotlands-economic-strategy/pages/4/>.
Digital technology 'is Scotland's fast-growing sector', 2017. [Online] Available through:
<https://www.bbc.com/news/uk-scotland-scotland-business-40307681>.
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