Exploring International Markets: Ella's Kitchen's Expansion Strategy

This report, prepared for Barclays PLC, examines Ella's Kitchen's plan to expand into the Australian market. It begins with an introduction to the global environment for small and entrepreneurial businesses, with a focus on the United Kingdom's business environment. The report analyzes the political, economic, social, technological, environmental, and legal factors influencing the company's expansion. It explores the rationale behind international expansion for SMEs, highlighting the opportunities and challenges associated with global growth. The report also covers trading blocs, agreements, tariff, and non-tariff barriers, and their impact on SMEs. The analysis includes the advantages of international expansion, the role of trading blocs in stimulating growth, and concludes with a summary of the key findings and recommendations for Ella's Kitchen's expansion strategy.

Tapping into New and
International Market

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Introduction to the chosen country and region and explain the global environment in which
small and entrepreneurial businesses operate.............................................................................1
An analysis of the global business environment and the influence of key global drivers
specifically in relation to the United Kingdom...........................................................................2
Rationale for SMEs to expand their business internationally.....................................................3
SMEs take advantage of international opportunities and overcome barriers for global growth.3
Trading blocs and agreements and advantages...........................................................................4
Various tariff and non-tariff barriers that exist in international trading environment................4
How international trading blocs and agreements stimulate and generate global growth for
SMEs...........................................................................................................................................5
TASK 2............................................................................................................................................5
CONCLUSION:...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The current market conditions and huge competition demands the organisation to expand
their operations on to a global level. A business seeks to achieve its goals and objectives in
terms of growth and development by planning all the course of action efficiently and effectively
(Najmaei and et. al., 2017). The foremost step in the growth plan is to establish the company's
branches within different developing nations apart from its originated country. This enforces a
firm to enhance the functioning level of a business's trading, production, marketing and sale to a
whole new level of market. In this context the management can use several tools and implement
all those principles of working into new and international market.
This report is prepared for Barclays PLC, a most efficient global financial organisation
which majorly offers services regarding investment and various financial services. The SME
which is selected for the expansion purpose is Ella's Kitchen which is planning to expand in
Australia. The effect of all the global factors on an entrepreneurial organisation will be
examined. In relation to this the report also comprised of opportunities and challenges of global
business, pros of custom duties andnon custom duties and the global trading blocks. Moreover
the trading, importing & exporting, etc. are such major key factors which can be practised to
capture more on international level.
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TASK 1
Introduction to the chosen country and region and explain the global environment in which small
and entrepreneurial businesses operate.
The analysis for the report is performed on the aspects of United Kingdom, as the nation
is well known with fact that a a lot of small and medium enterprises are contributing efficiently
to enhance national economy (Mahajan, 2012). The UK is the most developed and constant
growing part of the Europe continent. The UK is ranked on the 6th position among the world in
respect of its nominal GDP which impacts majorly on the development of nation as well as of its
people. The nation is recognised for the continuous trend evolvement in the sector of education,
business and technologies. With such growth the country provokes a huge number of small
medium enterprises for the expansion and higher growth of their operations. The governing rules
and regulation authorities provide subsidies for SMEs to set up their ventures as well as to
increase their scale of operations. Certain other assistances are provided by the locally governed
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authorities to potential start-ups and other organisations in order to enhance the industrial
capacity and capital earnings of the nation.
These support and assistance of external factor enables those business entities to perform
the optimum utilization of resources for getting maximum output. These measure helps an
organisation to grow and develop on a higher scale to achieve more profitability. Thus when
these SMEs practices and develop their operations in the nation and outside of it, the strength and
economy of respective country gets a huge encouragement.
Detailed global business environment with respect of the country determines that the
political factor of UK is more consistent. By this it can be understand by the manager of
organisation that the political regulations as well as their governing policies will remain stable.
The basic knowledge of British laws helps the organisation to execute the planned actions and
applying selective curse of action with respect of the laws and legislations. These aspects
ultimately makes the business process more efficient to achieve the major portion of market
share. The big and small ventures provide employments to nearly 16.3 million person, which is
equal to about 60% participation of overall employment need of the nation. Small level industries
plays an efficient role to raise the economy of the country as they maintain a proper balance
among financial conditions and social values.
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An analysis of the global business environment and the influence of key global drivers
specifically in relation to the United Kingdom
Global business environment captures the overall transformation in business, which are
erupted by the globalization of trading factors and other technological factors. These
environmental aspects effect the political, social and economic conditions of the respective
nation (Topol, and Sherman, 1994). Major key decisions for cooperative actions can be taken by
analysing the nature and position of all the business factors as per the global environment. Small
business organisations provides optimum contribution in the national revenue as approx 11
million pounds and medium scale business enterprises gets approximately about 50 million
pound of revenue.
The trade and operations of SMEs are enhancing due to the higher acknowledgement and
necessary aids of United Kingdom with the help of globalisation. This leads to a decrement in
custom and other trading restrictions, which is responsible for the smooth flow of production and
marketing. As the market of United kingdom is more dynamic and flexible. The BREXIT
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policies of UK affects business significantly as it limits the base of consumer. The other segment
of SMEs also negotiate while participating in European trade activities after implication of
BREXIT. The key global drivers of business underlies by four sets of organisational
management conditions in every condition the driver create influence and potential for the
respective industry to operate its trading on a global level.
Ella's Kitchen is currently operating business in various countries such as China, Norvey,
Denmark, Sweden etc. The global market is very competitive for the organisation because there
are various other companies that are selling same food items that are offered by it.
The level of competition in the global business environment is increasing continuously. It
is very important for all the companies to deal with it properly so that competitive advantage
could be acquired. There are various factors which are required to be focused by Ella's Kitchen
which is planning to expand business in Australia. All of them should be analysed on
international level. Description of all of them is as follows:
Political Fcators: As situation of politics in Australia is very good and a kind of stability
is there. It is very beneficial for an organization and also opportunities can be gained for
expansion of business. This is helpful for providing growth to Ella’s Kitchen in the market and is
going to give positive response in developing business.
Economic Factors: Various factors are there which comes under economy that is
inflation, unemployment, deflation and exchange. These are required to be focused upon.
Managers of all organizations is planning for operating its business into a different country.
Ella’s kitchen has to plan for expansion of its business in Australia then its manager should
analyse these elements. Moderation in rate can be helpful in capturing market at large
Social Factors Under this all factors that is related to culture, morals, ethics and taste of
people living in society is covered. So, Ella’s Kitchen has to expand itself and for this purpose it
needs to know taste of people which is going to help in establishment at faster rate.
Technological factor: These factors is related to all the technological development
taking place in the world. It is important to be taken care by Ella’s kitchen because it is going to
help in increasing production which is going to help in covering of market.
.
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Environment Factor: These factors are related to climate, flora and fauna which ahs to
be takencare. Ella’s kitchen has to take this factor in mind because its going to attract eco
friendly customers and sale is going to increase.
Legal Factor: These are those factors which contains various types of laws and rule to
work and prform operations in an organization. Ella’s kitchen has to take this factor at most
priority because it is going to help in keeping operations smooth.
This analysis of global business environment has been analysed and various oppurtinities and
problem can be faced by Ella’s kitchen. These are explained below:
Opportunities: Stable political situation of Australia is an opportunity for the
organisation because it will be beneficial for it to establish the business successfully. Another
opportunity for the SME is lack of political interferences in business process as it will help to
ignore additional expenses on granting permission to operate business.
Impact of opportunities: Both the opportunities will leave positive impact upon
business because it will help the management to grow the business in various countries and
enhance profitability.
Threats: The major threat for the organisation is sudden changes in economic situation
which may leave negative impact upon functionality of business because it results in lower
purchasing power of customers.
Impact of threats: The threat for Ella's kitchen will be negative because it will affect the
growth of business in Australia.
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Rationale for SMEs to expand their business internationally
Certain various measures for SMEs are there Which enforces them to do business in
multiple countries. Major rational behind international business can be termed as many foreign
nations acts as the hub of new innovations and technologies. This renders all the potential SMEs
with a scope to save cost and time and generate the optimum revenue. Major SMEs are able to
establish their distribution, servicing and production plants across developing nations as the
preferred countries can be India, China, Malaysia, Japan etc. This will help the business to obtain
the opportunities of cost cutting in the business with cheap labour and other resources. Certainly
the business authorized centres enhance the more customer interaction with the parent company.
As also it builds a good brand image in the market which helps the company to launch its new
products and trying innovations in their foreign subsidiaries.
By investing into the foreign markets and trading with them enforces small and medium
enterprises to attain comprehensive knowledge and other valuable information of various market
demands and needs. These information plays a vital role in selecting the plan and implementing
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the principles in market. Also the new innovations and experiments of company gets more open
market area to be executed, and chances of success gets increased.
SMEs take advantage of international opportunities and overcome barriers for global growth
A pool of opportunities and challenges is connected for the assistance of growth of
organisation on a multinational level. When companies seek to do business in foreign markets,
the chances of high cost of operations are increasing (Meredith, 2000). Today SMEs are making
use of international business strategy by the help of these strategy the sales volume of the
business gets increased. Increased sales brings enhanced revenue to the organisation which helps
in settling the production onto higher standards by putting influential cost methods in
manufacturing and overall business process. To handle the rivalry competition of the company
on the global level in an efficient way, SMEs can use the solution of bringing up with
innovations and business disruptive offerings in a quick period of time.
Trading blocs and agreements and advantages
Those official agreements which are regulated with a vision to exclude the trade barriers
between two or more national territories are termed as the trading blocs or mutual agreements.
Major advantages of trading block and agreements are as follows :-
Technologytransfer– innovative and unique techniques of business processing helps in
settling the trade alliances and agreements which leads to create a tech savvy image of business
association ns, the E- commerce and various modern innovations helps the business to transform
from one place to another place either horizontally or vertically in an effective manner.
Improvementof exchange – Flexibility in the exchange policies, emphasising more on
decreasing the limitations of exchange and strategies of foreign trade. Exchange functions has
the nature to provide solutions to the business practices across different countries. It enables to
understand the policies and regulation of respective nations.
Advantages of international trading blocs and implications on SMEs:
 International trading blocks are very helpful for an organization as it is going to help in
removing additional tariffs.
 The certain other advantages of trading blocs are as they remove all the unnecessary
barriers of business. This helps the business to focus more on its growth rather than
limiting the operation of company in other subsidiaries and nations.
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 Trading blocs are very beneficial for SMEs because with the help of them companies
such as Ella's Kitchen can grow effectively and attain the long term goals.
Various tariff and non-tariff barriers that exist in international trading environment
Tariff and non tariff barriers are encountered while performing the business within the
global market by maintaining the trade networks among SMEs and the foreign marketplace as
such barriers are:-
Tariff barriers
Specific duty – These are the barrier related to the direct charges of trading into a
particular nation that is charged by legal authorities. That leads to raise cost of business, which
affects the price,sale and profits.
Transit duties – the taxation charges which is charged by governmental authorities of a
country on the transmission of products and services from location to location are known as
transit duties.
Non tariff barriers
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Import policy barriers – the import policy barriers are those restriction which affect the
organisation's global trading in a negative manner. It is necessary for business to undertake such
barriers tactfully to carry out the business effectively.
Service barriers – These restrictions are placed in order to monitor and control the
distribution of product and services through out the respective nation while performing the
international trade. 0
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How international trading blocs and agreements stimulate and generate global growth for SMEs
Trading blocs gives proper assistances on trade affairs on national and international
aspects. As per the BREXIT, all the major trade practices are as generally signed by the UK legal
authorities on a mutual agreement with other trading countries (Luo, 1999). In Barbados and
Bahamas, certain trade affairs and other executing option are there to do business freely
according to CARIFORUM-UK economic partnership agreement. These agreements helps in
performing the international business more transparently and effectively in order to achieve the
objective of maximum expansion of organisation.
TASK 2
Discuss pros and cons of importing and exporting and how a deal can be secured
Export
An export is an international trade in which goods and services produced within one
country are purchased by someone in another country. In simple words, the person who buys
goods and services is an importer while seller is an exporter. There are various methods of
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exporting goods and services such as mail, air shipping and hand delivery and many more.
Numerous way of exporting is to be analysed which can be found by right alternative only. So,
managers has to find it. In the context of Ella's kitchen, the merits and demerits are presented as
follows:
Advantages of Exporting: Exporting allows a firm to gain exposure to new market,
innovative ideas and management practices in order to gain competitive advantage within the
market. One of the advantage is that exporting allows firm to expand their market beyond the
limit which help to boost sales and thus, increase the profit of a company. Greater production
provides large access of market which leads to economic growth of a country. This provide an
opportunity to the Ella's kitchen to expand its operations beyond in order to increase the
profitability.
Disadvantages of Exporting: In a global environment, there is a severe competition in
the market. It is difficult for small firms to raise financial resources as it has to develop new
marketing campaigns with attractive packaging which increases the cost of product (Contractor,
Kundu and Hsu 2003). Also, there is a transportation risk while exporting the goods such as risk
of damage, spoilage, theft etc. The cost of Ella's kitchen would increase as it has to spend more
on advertising and packaging so as to attract their customers.
Import
Import involves the process of bringing goods or services into one country that was
produced into another country. It imposes tax on goods and services that is subject to an
agreement according to jurisdictions. An import on services in a global economy is rendered by
non residents to residents of a country through electronic means. This process is to be followed
by Ella’s Kitchen through collecting of material from its units.
Advantages of Importing: One of the advantages is that goods imported are of high
quality, low cost which provide benefit to an economy. This is due to the reason of cheap labour
and low tariffs. There is huge involvement of government as it assists in providing information
regarding the manufacturers that provide advantages to buyers as they buy goods of standard
quality. These factors provide an enormous opportunity to Ella's kitchen as taxes rates are low
and thus increase the profit margin.
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Disadvantages of Importing: One of the major drawback is that it is difficult to obtain
the license and documentation of foreign trade while importing goods. When there is a situation
of trade deficit, at that time importing of goods leads to erosion of the domestic market.
In a competitive era, international business is competing at a global level. The deal can be
secured by various ways like creating a sense of urgency to fulfil the requirements. It is very
important to satisfy the needs of customers by providing goods of standard quality at a low cost.
Also, the deal can be secured by overcoming cultural and language barriers by providing cultural
training and also by building proper communication strategy among the countries. By conducting
proper market research, it helps to identify the customers demand so that it can provide goods
according to their needs. Ella's kitchen focuses on providing best quality of food at a low cosy
which help in generating maximum customer satisfaction across the globe. Thus, increase the
positive reputation and boost the sale of a company. Excellent communication strategy and
proper planning and coordination in Ella's kitchen could help in securing a deal which help in
contributing towards the business to a next level.
Distinguish between merchandise and services imports and exports
Merchandise are physical and tangible goods like cars, furniture and so on while services
are intangible like consulting, accounting services etc.
Merchandise and service imports means bringing goods or services into domestic nation
from the international country (Hohenthal, Johanson and Johanson, 2003). The merchandise and
services which are shipped into domestic nation through boats or other transportation medium is
termed as merchandise and service import.
Merchandise and service exports are termed as selling goods or services into another
countries from domestic nation.
Differences between two of them are as follows:
Import merchandise represent high import level that is sign of great demand while export
merchandise and service represent huge export level that shows high trade balance. In the context
of Ella's kitchen, there is great demand of food so it there is high import merchandise while it
export its product at different parts of the country so as to generate more sales.
Import merchandise and service are performed by SMEs for fulfilling demand within
home nation and export merchandise and service are done by SMEs for raising global presence
for improving organisational image. With reference to Ella's kitchen, it emphasises on delivering
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excellent services to their clients while in case of export merchandise and service, it help in
improving the positive reputation in different parts of the country especially in Australia.
List of documents requires in export and import procedure:
Letter of credit: It is a letter that has been issued by a bank to another bank that act as a
guarantee for payment made to particular person. In case of non payment by buyer, the bank is
liable to pay full amount as guarantee is provided.
Packing list: It is a list that contain information about the content of package. It provides
detailed description regarding the quantity, weight of a product.
Commercial invoice: It is the document between the supplier and the customer that
provide description about goods sold and amount dues to a customer.
Terms of payment: It is a document that provides information about the amount due to a
customer and period of payment. It provides a condition in which seller completes a sale and
allow buyer to pay the amount due.
Discuss the various methods of tapping into international market
In a global market, the business environment in which company carry out its operation is
regarded as dynamic. Tapping into international market offers many advantages like growth
opportunities, expansion and diversification (Webb and et. al., 2014). Due to advancement of
technology and transportation facilities, there is intense movement of capital. One of the
advantage is that small and medium enterprises can promote their products in international
market so that they can increase their sale and profits. Thus, they can increase the brand
awareness of the products and gain large exposure of market. There are various methods of
tapping into international market that are described as follows:
Licensing : Licensing is very important for a business for expansion and diversification
of a business. Licensing is a arrangement in which company sells the right to use intellectual
property. Ella's kitchen has acquired licensing in order to provide intellectual rights to its
business and thus help in diversification of a business. In the context of Ella's kitchen, the same
is presented as follows:
Pros of licensing
The major advantage of licensing is that it provides business with multiple revenue
streams.
Disadvantages of Licensing is that trade secrets can be leaked out.
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Franchising: Franchising is an agreement in which a person(franchisor) allows another
person(franchisee) to use a brand name. franchising charges fee in return for a service rendered.
This is very necessary for Ella's kitchen so that it could expand its operations regionally and thus
enhance the brand name across the globe. In the context of Ella's kitchen, the same is given as
follows:
Pros of franchising
Advantage of franchising is that it contains low risk and gives larger access in to market.
Cons of franchising
One of the biggest disadvantages is that a wrong franchisee may spoil the company's
name.
Joint Ventures: Joint Venture is an arrangement in which two or more parties combine
together for achieving a common goal. Firm use their resources like capital, workforce which
help in expanding their resources (Westerlund, Rajala and Leminen, 2008). Joint venture is
made for long duration in which co-venture share profit and loss at the end of period. The firm
can gain access to innovative technology which increases the productivity and efficiency of a
business. The main purpose of SMEs tapping into international market is to reduce the risk of
heavy investment and to expand their business globally by joint venture. This could help Ella's
kitchen and help in raising the resources and therefore increase the profitability within the
confines of food industry. In the context of Ella's kitchen, the merits and demerits are given
below:
Pros of joint ventures
Advantage of joint venture is that it helps an firm in achieving economic scale that results
into increase in output
.
Cons of joint ventures
Disadvantage is that joint venture can result into misunderstanding due to lack of
communication.
Direct Exporting: This means exporting goods directly to the buyer by the manufacturer
itself to capture large market share in international market. Organisation can sell their products to
wide range of customers and dealers like wholesalers, distributors and dealers in order to boost
the sale of products and increase the profits of a company. Ella's kitchen directly acquires
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products or services from wholesalers in bulk quantity so as to decrease the cost of production
and increase the profit margin. The pros and cons are as follows:
Pros of direct exporting
Benefit of exporting directly is going to be that a firm is able to gain larger control
over the aspects that are provided with transaction. It also provides protection of patents,
trademark and copyright.
Cons of direct exporting
Major disadvantage of exporting directly is that in such method cost applied is more and
also time is consumed alot. Risks are also involved in it which is majorly in payment collection
and effectiveness in production for collection.
Compare various methods of tapping into international market with their pros and cons
There are various methods of tapping into international market like licensing and
franchising, joint venture and direct exporting. Each method provide growth opportunities to a
business which help in expanding, modernization and diversification of a business. This provide
economic growth and increases the efficiency of business. Today, Globalization has grown due
to advancement of technology and infrastructure facilities and it has led to the concept of new
emerging market. This achieve large economy of scale and help firm to run the operations
smoothly and successfully.
Comparison of licensing and franchising: Licensing and franchising provide growth
opportunities which help in diversification of a business while franchising is an arrangement
where franchisor grants rights and authorities to franchisees. One benefit that franchising provide
is that it helps to find intelligent people so that they can run their business successfully at a
suitable location. Also, there is little risk in case of franchising and generate high financial
returns. The drawback of franchising is that there is possibility of conflict as everyone have
different point of views. In case of licensing, it provides new business opportunities which help
in expansion of firm. The drawback of licensing is that it provides competition in the market.
The major difference between licensing and franchising is that training is required in case of
franchising but no training is required in case of licensing. Franchising is considered as an
appropriate method by Ella's kitchen because it provides vast opportunities to it expand its
business at a convenient location but at the same time there is lack of communication which
results in creating misunderstanding and confusion among them.
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Comparison of Joint venture and Direct exporting: Joint venture is an agreement
between two or more companies which combine together to achieve the task in an effective
manner. One advantage of joint venture is that the firm can gain competitive advantage and at the
same time there is possibility of cultural clashes and conflict among the members. Direct
exporting means direct selling of goods by producers in order to increase the profits of a
business. One of the benefit of direct exporting is that it leads to increase in sale which thus
increase the profits of a company but drawback of direct exporting is that there is high risk and it
is difficult to break the market in trading blocs. In respect of Ella's kitchen, direct exporting is
regarded as a convenient method as goods are directly purchased from manufacturers at a low
cost which in turn increases the profit margin. This help in increasing the goodwill and thus
improve the overall performance as it could plan to expand its business at different locations.
CONCLUSION:
From the above information, it can be summarised that export and import is very
important for a business as it provides growth opportunities and help in expansion and
diversification of a business. Thus, it increases the productivity of a business and help in
conducting smooth operation of a small and medium enterprises. With the rise of digital
technology, organisation have to make wide range of decisions to expand the market
internationally.
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