Tapping into New and International Markets: A UK SME Perspective

This report provides an analysis of the global business environment, with a specific focus on opportunities for Small and Medium Enterprises (SMEs) in the UK. The report begins by defining the global business environment and the rationale for SMEs to expand internationally, highlighting the advantages and disadvantages of global operations. It then explores various aspects of international trade, including different methods of entry such as exporting and mergers, along with potential threats and opportunities. The report also covers trading blocs, tariff and non-tariff barriers, quotas, and embargoes, and how they impact international trade. Porter's Five Forces model is applied to assess the competitive landscape. The report concludes with recommendations for SMEs to effectively operate in the global business environment, emphasizing the importance of market research, strategic alliances, and a proactive approach to address opportunities and threats. References from academic journals and books are included.

Tapping into New and
International Markets
Part 1

Introduction
 UK is selected as the nation for this analysis as it is recognized that a
large number of small and medium scale organizations pertain to this
national economy.
 This is a prosperous and constantly evolving nation which belongs to
the continent named Europe.
 As per the reports of 2019, it is seen that this nation stands at 6th
position within the largest economies of world in terms of nominal
Gross Domestic Product (GDP).

Global Business Environment
 Global business environment can be defined as the environment
pertaining to sovereign nations, with aspects that are exogenous to
domestic territory of the company, which holds impact over the
decisions associated with capitalising on capabilities and resources.
 This consists of a wide variety of external factors that place a
significant influence on the business operations of entities.

How SME operates
Global business environment consist of numerous of opportunity, so for its
expansion and growth SMEs approach international market,
 By transforming business model, product or go-to-market strategy
using technology development at the level of big companies.
 By acting as a supplier to large MNC's by performing the supportive
role in international trade.

Rationale for SMEs to expand their business
internationally
 There are many reasons behind SMEs aiming to expand in an array of
foreign markets. The foremost reason behind the intent to facilitate
expansion at global level is the increment in volume of sales.
 It is seen that foreign countries are a storehouse of new technologies
and systems. This provides small and medium sized organisations with
the scope to enable savings of cost.

Advantages Of Global Business Environment
 Improve sales:- Performing business operations at global business
environment provide SME's a benefit to approach more customers with
its product or services that support in increasing sale.
 Achieve competitive edge:- By entering into global market it become
easier for SME's to learn competing with competitors which support in
enhancing the performance and at last help in achieving competitive
edge.

Disadvantages Of Global Business
Environment
 New regulations:- For performing work in new, SME's has to follow
all its governmental laws and regulations related with trade in order to
perform operations.
 Cultural barriers:- Major drawback of operating business at global
environment is difference in culture that may affect the performance of
company at marketplace due to variation in choice and preferences.

International Trade And Ways Of International
Trade
International trade is exchange of goods, services, resources and capital
across international border. It support in growth of country's economy
and this international trade is performed using several ways such as,
 Exporting :- It is one of the most easiest way to enter into international
market where a firm sale its product or services from home country to
foreign customers.
 Merger :- It is defined as an agreement which unites two existing
company into a single entity that are working over similar level in order
to expand business.

Thread for SME in International Trade
 High competition:- The major threat for SME's entering into untapped
market is increasing competition from the existing big players.
 Consumer norms and values:- This is another threat to SME's as each
country follow different culture that form up different norms and values
which directly influence their choice related with product or services.

SMEs take advantage of international
opportunities
 There are numerous opportunities and challenges linked to facilitation
of growth of business at international level.
 In this regard, it is seen that when corporations seek to enter a range of
foreign markets, their overall cost of operations tend to rise.
 To deal with this, the opportunity that can be leveraged by SMEs is
making use of a global strategy and with its assistance, inflating their
existent sales volume.

Trading blocs and agreements and advantages
 Trading blocs can be referred to as the formal type of agreements which
are devised with a view to expel trade obstructions between at least two
territories and nations. Some points of merits of these agreements are
given underneath in a detailed manner:-
 Inflate economic development
 Technology transfer
 Improvement of exchange

Tariff barriers
 Transit duties – This can be referred to as the taxation which is
charged by governmental authorities on products transmitted from one
location to another. This is regarded as one of the biggest barriers that
are faced by organisations while operating in global trade environment.
 Specific duty – This can be referred to as a barrier that affects the sale
and profitability of company. This is charged by governmental
authorities and tends to raise the overall cost for business.

Non tariff barriers
 Import policy barriers – These can be classified as non tariff barriers
and tend to affect the business performance in a negative manner. In
this relation, it becomes crucial for companies to tackle these barriers so
as to effectively carry out importing of commodities.
 Service barriers – These encompass the various types of barriers
that are placed by governmental authorities over product and service
distribution across the international boundaries.

International trading blocs and
global growth for SMEs
 Trading blocs reduce unnecessary restriction on trade affairs by making
uniform policies for the nation. Owing to Brexit, UK has signed
agreement with various countries in relation to trade practices.
 CARIFORUM-UK economic partnership agreement is a trading bloc
that helps SMEs to trade in Barbados and Bahamas and execute the
option to trade freely.

QUOTA
 Definition:- It is a restriction on amount of goods that can imported
into a country. Implying quota over goods leads to shortage which in
turn increases its price. It is mainly imposed to encourage people to buy
domestic product instead of foreign goods.
 Example:- A country may limit the import of car from other country up
to 500000 per year. This in turn increase the cost of imported car and
people prefer to buy car from home country only.

EMBARGO
 Definition:- It is a kind of trade barrier where government completely
restrict trade practices from another country due to political issue with
an aim to hurt country economically.
 Example:- In year 1986, United State imposed embargoes over trade
practices with South Africa in oppose to government's long-standing
policies related with the racial apartheid.

Porter's Five Force
In order to enter into global market SME's must perform Porter's five force
model which support in analyzing the favorable as well as unfavorable
factor that leads to success or failure of a firm. This model consist of
five forces:
 Threat of new entrant:- This factor perform analysis about the number
of barriers present in global market that restrict a new firm to enter into
market.

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 Threat of substitute product:- This force perform evaluation to
determine the substitute of product offered by a firm that is already
present in the market.
 Bargaining power of supplier:- This factor represent information
regarding the power that supplier hold to influence the price of raw
material they supply to company.

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 Bargaining power of buyer:- This force put emphases toward
determining the power that buyer hold to influence the price of product
offered by a company.
 Existing Rivalry:- This forces evaluate information regarding the
number of competitors already present in the industry that may affect
market performance of a firm.

Recommendation
For operating at global business environment effectively SME's must
consider following recommendation,
 It must perform market research before entering into new market.
 It should enter into new market using strategic alliance with already
established players as main strategy
 It should study about opportunities or threats present in global market
and then enter with strategic plan to deal with them for achieving
sustainability.

Conclusion
On the basis of above discussion, it can be said that gaining access into
new and international markets is important for small firms to attain growth
and development in rapid course of time. Further, it is analysed that there
are various tariff and non tariff barriers that need to be timely tackled by
companies.

References
 Fatehi, K. and Choi, J., 2019. The Management of International
Business. In International Business Management(pp. 3-35). Springer,
Cham.
 Ibeh, K., Crick, D. and Etemad, H., 2019. International marketing
knowledge and international entrepreneurship in the contemporary
multi speed global economy. International Marketing Review, 36(1),
pp.2-5.
 Mostafiz, M.I., Sambasivan, M. and Goh, S.K., 2019. The antecedents
and the outcomes of foreign market knowledge accumulation–the
dynamic managerial capability perspective. Journal of Business &
Industrial Marketing.