Strategies for SMEs to Enter and Succeed in International Markets

This report examines the challenges and opportunities for Small and Medium Enterprises (SMEs) venturing into international markets, using Verdant Leisure as a case study. It begins by defining the global business environment and analyzing the political, economic, social, technological, legal, and environmental (PESTLE) factors, along with a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report then explores the advantages of international trading blocs and analyzes tariff and non-tariff barriers. Furthermore, it discusses the pros and cons of importing and exporting, comparing merchandise and service trade. Finally, the report evaluates various methods for SMEs to enter international markets, comparing their advantages and disadvantages to provide a comprehensive overview of global market strategies.

UNIT-43
TAPPING INTO NEW AND
INTERNATIONAL
MARKETS

Table of Contents
INTRODUCTION.......................................................................................................................................3
LO1.............................................................................................................................................................3
P1 Explain global business environment in which small and entrepreneurial businesses operate............3
P2 Analyse threats and opportunities that face SMEs in increasing competitive global environment.....4
LO2.............................................................................................................................................................5
P3 Analyse the advantage of international trading blocs and agreements................................................5
P4 Explain various tariff and non- tariff barriers that exist in international trading environment............6
LO3.............................................................................................................................................................7
P5 Advantage and disadvantage of importing and exporting and how to secure a deal...........................7
P6 Differences between merchandise and service imports and exports...................................................8
LO4.............................................................................................................................................................9
P7 Evaluate various methods in which SMEs can tap into international markets....................................9
P8 Compare and contrast various ways SMEs can tap into international markets with pros and cons of
each method...........................................................................................................................................10
CONCLUSION.........................................................................................................................................11
REFERENCES..........................................................................................................................................12

INTRODUCTION
Tapping into new and international market is very challenging for the small and medium sized
organisation. If they want to explore and expand their market into the new place they need to be prepared
a proper plan and executed it very well with more patience. For every business organisation international
market create a great opportunities for earning high profits but at the same time it is very complex in
nature. This report is based on the Verdant Leisure that is one of the prominent firms founded in 1991. It
offers the wide range of holiday options in all budgets. They mainly visit in the Scotland,
Northumberland and County Durham where person can enjoy their vacation with fantastic customer
service and perfect environment. It includes the analysis of opportunities and threats for a company that
exposed into the global environment. It also shows the advantage s of trading blocs and various types of
tariffs and non-tariffs that were exist in the international markets. It also involves pros and cons of
importing and exporting and comparison between merchandise and service imports and exports. at last it
shows the ways that a SMEs use to tap into the international market and gain large amount of profits and
expand their existence in the global market(Najmaei and et. al., 2017).
LO1
P1 Explain global business environment in which small and entrepreneurial businesses operate
Global business environment refers to the environment of the different countries with their
external factors that is different and varies from the home environment of the business firm that influence
the decision making and capabilities of using the resources. It helps in showing the connections with the
different countries in which an organisation wants to explore and expand their business unit by analyzing
all the external factors like economic factor, political, social, technological, environmental etc. It also
showcases the integration of the governments, people on the global level. In case of Verdant Leisure they
wants to open their business outlet in the Germany so that they can offers services to customers in
Germany holiday parks also for this they need to analyse the PESTLE analysis that can be shown
below(Rahman, Zailani and Musa, 2017).
 Political factor – As the organisation is aiming to expand their business in the Germany for this
they need to know the political stability, tax rates, trade blocs that are followed by the company.
due to Brexit occur in the UK in which some European countries are separated from the EU union
due to this many large businesses affected. But for SMEs like Verdant leisure it will create an

opportunity to explore their business in Germany as government of Germany supports them and
due to this they earn high amount of profits and attracting many new customers.
 Economical factor – It includes the inflation rates, tax rates, people spending power etc. as
because of Brexit spending power of the consumers are not so high and there is a problem of
unemployment this will create a opportunity for the Verdant leisure as they offers services in
budgets as per the customers needs and provide employment to the unemployed people so that
company image will be strong on a global level.
 Social factor- It shows the values, belief, customs etc. In this Verdant Leisure wants to explore
their business unit in the Germany where people are more excited to travel and enjoys their
holidays in their own way. So it will create an opportunity to attract the large base customers and
earns a high amount of revenues(Solheim, 2016).
 Technological factor – In recent time this factor is very trending for expanding the business unit
by the Verdant leisure they need to examine the Germany way of using technology. in this
Germany is famous for using new and advanced technology and as they offers their products by
using the advanced technology in their promotions and services that attracts the larges base of the
customers.
 Legal factor – This factor shows the laws and regulations that were imposed by the government
of the country for employees and customers. In case of Verdant leisure they will follow all the
legal laws for the employees benefits so that they will encourage for the good working and
ensures that company will stay in the market for a longer term.
 Environmental factor – It includes the laws related to the environmental safety. in this Verdant
leisure can explore their market in Germany and analyse that it is very attractive and clean that it
helps the company to earns a high profits and attracts the customers for enjoying their services in
the Germany atmosphere(Serra and Theng, 2015).
P2 Analyse threats and opportunities that face SMEs in increasing competitive global environment
Tapping into new and international market is not a cakewalk especially for SMEs. A business
venture needs to analyse various factors that is helpful in expanding the business in the new place. In this
it is very essential to examine the internal environment of the company so that it is easy to make a further
plan for earning high amount of profits and revenues. A manager of a Verdant Leisure can use the SWOT
analysis so it is easy to know the strength and weakness and also helps in knowing the opportunities and
threats that it was containing. in reference of Verdant Leisure SWOT analysis can be explained
below(Poulios, 2015).
SWOT ANALYSIS

Strength Weaknesses
 The main strength of the Verdant Leisure is
that the strong market overlaps between the
environmental and cultural tourism.
 Strength is that it provides the homely
ambience and arrangements add the strong
position in the market.
 The major weakness of the Verdant Leisure
is the lack of management and marketing
skills due to this they may face loss.
 regularly disturbance in the political
conditions create a problem for the
company.
Opportunities Threats
 Technology up gradation is the best
opportunity for the company.
 Expanding market opportunity in the
Germany for the SMEs helps in earning
high profits and sales.
 The main threats of the Verdant Leisure are
the different lifestyles of the different
people.
 Another weakness is the poor distribution
networks because of this they relay on the
outside agencies.
 strategies of rival firms.
After analyzing the SWOT analysis it is noted that the Verdant Leisure can face threats and make
opportunities to expand their market in the new country of the UK which is Germany. As it is the famous
country while providing the opportunity to the new entrants. Because of Brexit they may face some
challenges but at the same time it will create the opportunity also as they helps in the SMEs to expand
their business but due to regular changes in the political conditions companies profits may affects. In case
of Verdant Leisure they provide of self catering holidays and holidays home ownerships to their
customers so that they will enjoy their vacations in a very amusement way. They also offer the high
customer service and excellent holiday accommodations within a budgeted price. In this company can use
the advanced technology to promote their services so that large base of customers may attracts. as there
marketing skills is low for this they hire a new employees who ensures that the many customers get
attracted towards the company and provides the large amount of benefit to the organisation(Ting, 2015).
LO2
P3 Analyse the advantage of international trading blocs and agreements
Trading blocs is a type of intergovernmental agreements that is related to the regional
intergovernmental businesses. The main aim of the trading blocs is to reduce the barriers that were
present in the participating states. It is a type of stand-alone agreements between the different states and
the various parts of the regional governments. It can protect the company from imports from non-

members. In case of the Verdant Leisure they want to expand their organisation in Germany for this they
need to analyse and study all the trading blocs that will helps in giving the opportunity to expand it into
the new state. It includes the various benefits of the trading blocs in which NAFTA and EU Union is the
famous one. Some of the advantage can be explained below(Amagoh and Rahman, 2016).
 The major benefits of the trading blocs are that they will increases the efficiency of trading
between the two region and reduce the uncertainty in this. because of this Verdant Leisure can
freely trade without any uncertainties in the trading that helps in earning high profits and
revenues and also sustainability in the global market.
 It also provides the helps to the small and medium sized organisation by lowering the cost of
production so that firm will enhance the profits and its productivity in the new market.
 The trading blocs also helps in creates the more sales by differentiate their goods and services
from the competitors so that it Verdant Leisure attracts the large amount of customers who can
enjoy their services and due to this company will enhance their market growth(Daniel Jr, 2017).
 This can helps in eliminating all the barriers related to tariffs and non tariffs due to this Verdant
leisure can make more opportunity to handle and attract the customers at the same time.
 This trading bloc helps in increasing the foreign direct investments in the country due to which
its economic conditions shows very strong. This benefitted the company as they build the large
markets with effective suppliers and buyers.
P4 Explain various tariff and non- tariff barriers that exist in international trading environment
Tariff barriers
It refers to the government imposed restrictions on the trade in the international market. It
involves the customs levy that means blockage on products entering into a country and are imposed by
the community. It is generally used by the restrictions on the trade and due to which cost of the imported
products and services are to be increased. it can be used by the some reasons like low foreign wages,
domestic employment, national security, unfair trade, infant industry etc. it can be classified into two
aspects i.e. import tariff and export tariff. In this export tariff is received by the native country form that
business that done their trading in the international market. In import tariff is collected by the host
country and it is paid by the company who trade ion the particular company. It can be done only when the
firm are agreed to trade in international market. In context of the Verdant Leisure they need to pay the
trade tariff due to Brexit occur in the European Countries. It is suitable for the trade liberalization as it is
helpful to generate new opportunities for the business(Kadambari and et. al., 2015).

Non-tariff barriers
It refers to the restrictions that defines the trade barrier for restrict the imports and exports of the
products and services through the mechanisms. It can include the various terms like Quotas, subsidies,
embargoes, levies and sanctions etc. It is used by the many countries to control the amount of trade that
conduct with the other countries(Azad, 2020)
 Quotas – It refers to the limit of amount of quantity that is allowed for the import and export. in
this the quantity of products and services should be mentioned in the license and if the company
can import or export above the limits then they face problems.
 Subsidies- It is the financial benefits that was provided by the domestic country to their
company so that they can compete with the foreign companies and gain their market share. the
benefits are in a terms of cash grant, tax holiday and many more.
LO3
P5 Advantage and disadvantage of importing and exporting and how to secure a deal
Importing
It refers to the process of bringing the products and service offering from one nation for the
objective of resale them in the host country or some other country. It can be done in the various forms like
sent by an e-mail, shipped products and services and carried on a personal level. In this one country can
import the goods which are not available in their country or which cost of production is so high. If the
country can import more products then exports it can shows the trade deficit which is not the good for the
economy of the country. In context of the Verdant Leisure importing can be considered some advantage
and disadvantage that can be shown below(Holslag, 2017).
 Advantage – The main advantage of the importing the products and service offering for the
company like Verdant leisure is earning the high amount of profits and revenues and also helps in
saving from paying the large amount of tax. It also benefitted the host country who imports the
services to the country.
 Disadvantage - The main disadvantage of importing the goods and services is that without
paying the goods and service tax no company can trade to another country and earns a high
amounts of profits. Importing also forces the unemployment in the country as because of high
deficit unemployment is increasing. Due to this many local firms can loose their profits.

Exporting
It refers to study of the process that is showing the offerings of the goods and services that is
made by one country but buy by the other nations. Exports can be done in the various forms like sent the
goods and services through e-mails, air mode and water mode or carried personally. If there is more
exports in one country than it will showcase the strong economic conditions of the company. In case of
the Verdant Leisure they exporting their products and services to the other nations and it also include
some benefits and drawbacks that can be given below(Hietanen and Rokka, 2015).
 Advantage - Exporting helps in expanding the profits and revenues and also increases the large
customer base from the another country due to which a form existence is increases and they can
sustain in the global market for a long time period it is the major trump card of the company. it
can also helps in providing the employment to the unemployed person so that economic condition
of the country increases and spending power of customers also enhances.
 Disadvantage - The main drawback of exporting the products and services is that the payments
that is made on the basis of selling countries currencies. And it also contains the major issue for
creep the use of the products and services and their technology due to this products value may be
reduced.
How to secure a deal in import and exports of goods and services
Securing a deal in import and export of the offerings is very important so that loss cannot be face
by the company and the country. For securing the deal the organisation takes the advance payments of the
goods so that deal will be fixed and because of this no party can face the issue of the trading. Secondly to
secure a deal a company may focus on the packaging of the products and services so that it can be
transferred successfully.
P6 Differences between merchandise and service imports and exports
Merchandise and services both are important part of the company to attract the large base of
customers but both have different criteria and it can be shown below in the comparison table(Khan and
Lew, 2018).
Basis Merchandise imports and
exports
Service imports and exports
Concepts Merchandise can be seen, touch
and feel and that shows the
effectiveness in a tangible way.
Services are the type of
intangible goods and their
exports and imports contains less

focus. it cannot be touched by the
person it only be experienced and
feel.
Valuable The value of the merchandise
exports and imports can be less.
Import and exports of the
services from one country to
another is containing more value.
Manageable The managing capacity of the
imports and exports of the
merchandise is on the high cost
and contains more financial
resources.
Service exports and imports is
manageable at low cost and this
means it contains less financial
resources.
LO4
P7 Evaluate various methods in which SMEs can tap into international markets
International markets contain the various ways for the companies who want to do their businesses
on the global level. There are various ways to enter into the international market and it is very beneficial
for the SMEs to attracts the large base of customers and enhance their profit margin. Some of the methods
for tapping into the international market can be shown below(Lise and Bayramoğlu-Lise, 2020).
 Foreign direct investments – It refers to the investments that is done by the companies in orders
to control the ownership in a organisation in one nation by an entity that is based on the other
country. It can be done in the open market not in the closed market for the investors and it can be
of different types like horizontal, vertical and conglomerate. Horizontal type of FDI is shows the
same type of business whereas vertical FDI contains the different types of businesses.
Conglomerate refers to that business enterprise which shows the unrelated factors. It can be
traced by the Bureau of Economic Analysis. it cannot be suitable for the SMEs as it contains
more cost and capital. in case of the Verdant Leisure it is a type of SMEs if they use this method
for tapping into the global, market than it is not suitable for that because it consumes more cost.
 Licensing - It refers to that method of tapping into the new international market that shows the
company can sign the contracts with the foreign organizations on the basis of license so that it
allows the foreign organizations to legally manufactures the products and services so that the
business venture can earn high amount of profits and revenues within a small period of time. It is

mainly suitable for the firm which is small and medium sized and in context of the Verdant
Leisure that is a type of the SMEs. A company can use this type of method than it earns a high
profit by giving the license to the foreign business for a specific time period. And it is also helpful
to knowing the culture of the people so that selling the services and products will be easy.
P8 Compare and contrast various ways SMEs can tap into international markets with pros and cons of
each method
Joint venture
It refers to that type of ways that is helpful in tapping into the international market. in this two
business firm can joined together to do a business and earns and gets the high amount of returns and
profits with longer sustainability. it can also helps in joining the financial, workforce and capital resources
of the two companies that helps in optimum utilizations of resources so that cost can be reduced and
profit margin can be high. In this one local business can joined together to the foreign company where
they want to expand their market so that they can enhance their market share. It includes some benefits
and drawbacks that can be shown below(Guercini and Runfola, 2016).
 Pros – Using the method of joint venture can helps in earning the more profit margins by
reducing the cost of manufacturing and wastage of the resources. it shows as a flexible nature
where both the company can share profits, risk, expenses.
 Cons – The major cons of this type of methods is that it does not contain equal amount of
distribution in maintenance and place an equal involvement in all the activities due to this
majority of firms don’t prefer to use this methods.
Licensing
It refers to the effective way of entering into the global market in this one local firm can give the
license to the foreign company in which they want to operate their business. So that, they get the high
amount of profits within a small amount of expenses. It is very suitable for the Verdant leisure as they
cannot spend more on the capital but give the license the foreign company so that they can attract the
customers towards their services so that large number of customers can enjoy this.
 Pros – The major pros of this ways of entering into the international market is that it create and
generates the high amount of profits without spending lots of amount in the capital, workforce
and many other resources. It shows the win- win situation to the SMEs because it helps in earning
high amount of profits and revenues and attracting large base of customers.

 Cons – The major problem of this type of method into the global market is the fear of copying the
idea and using the services and products even after it is protected by the legal rights. in this
competitors can add some innovation on the low cost by using local products so that they will
also attracts the customers and make the substitute of the products so that customer can switch the
company(Holslag, 2017).
CONCLUSION
From the above report it is to be concluded that the tapping into new and international market is
very complex for the SMEs in this they need proper analysis on the global environment so that they can
make more new opportunities. It can suggest the various opportunities and threats by using PESTLE and
SWOT analysis so that it is easy to operate the business. Further it explains the trading blocs that were
present in the international markets so that firm may earn high growth. It can enhance the knowledge
related to the importing and exporting of goods and services and tips to secure a deal so that company
may earn profits and revenues. it also suggest the various and different way that a firm may use to enter
into the international market like joint venture, licensing etc. so that they earn high returns without
spending more and sustain in the new market for a long term period(Holslag, 2017).

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