Strategies for Tapping into New and International Markets for SMEs

This report delves into the strategies and challenges associated with international market expansion for small and medium-sized enterprises (SMEs). It begins by examining the global business environment, focusing on political and technological factors, and analyzing the opportunities and threats faced by SMEs, particularly in the context of market share growth and competition. The report then explores the advantages of international trading blocs and agreements, differentiating between free trade areas, customs unions, and common markets, and evaluating the benefits of economic leverage and technology transfer. Furthermore, it explains various tariff and non-tariff barriers encountered in international markets. The report then discusses the import and export processes, comparing merchandise and service trade, and recommending suitable strategies. Finally, it assesses different methods for SMEs to tap into international markets, comparing their pros and cons and providing recommendations for effective market entry. The report aims to provide a comprehensive understanding of the complexities and opportunities involved in expanding SMEs into international markets.

TAPPING INTO NEW
AND
INTERNATIONAL
MARKETS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Explanation of global business environment for the operation of small and entrepreneurial
businesses...............................................................................................................................1
M1. Analysis of global business environment in which small businesses operate................2
P2. Analysis of threats and opportunities which is face by SMEs in increasing competitive
global environment.................................................................................................................3
M2. Critically analyse the implications of threats and opportunities faced by SMEs...........4
TASK 2............................................................................................................................................4
P3. Advantages of international trading blocs and agreements..............................................4
P4. Explanation of different tariff and non-tariff barriers which exist in international market
................................................................................................................................................5
M3. Evaluate the advantages of international trading blocs and agreements.........................6
TASK 3............................................................................................................................................6
P5. Advantages and disadvantages of importing and exporting process and how a deal can be
secured....................................................................................................................................6
P6. Difference between merchandise and service imports and exports.................................7
M4. Application of suitable import and export process and provide suitable recommendations
................................................................................................................................................8
TASK 4............................................................................................................................................9
P7. Different methods in which SMEs can tap into international markets............................9
P8. Comparison of ways by which SMEs tap into international markets and also assess the
pros cons of each method.......................................................................................................9
M5. Evaluation of various methods which is used by SMEs and also provide valid
recommendations..................................................................................................................11
CONCLUSION..............................................................................................................................11

REFERENCES..............................................................................................................................12

INTRODUCTION
Market is defined as an area which includes buyers and sellers under its consideration.
Here, two or more parties are collected to exchange their products and services. Market can be
either physical outlet in which people face to face meet or online market in which no direct
contact between buyers and sellers (Lo and Campos, 2018). An international market refers to the
geographically defined market which is situated outside international borders of country. It is the
application of marketing principles in which one or more than one country include and it is based
on extension of the strategy of company with special attention of marketing identification and
targeting. This report is based on small businesses and their expansion in other country as it
helps in analysing the global environment and it also examine the challenges and opportunities
for the growth of company in particular region. In addition to this, it also explains the advantages
of trading blocs agreements with related region and also explain different tariff and non-tariff
hurdles which exist in international market. Despite from this, differences between merchandise
and service imports and exports are discussed and also evaluate different methods in small
businesses tap into international markets.
TASK 1
P1. Explanation of global business environment for the operation of small and entrepreneurial
businesses
Global business environment refers to the environment in which various countries and
regions include who influences the decision making of company regarding the use of resources
and capabilities. Thus, it is important for each and every organisation to examine the global
environment in effective and appropriate manner which describe the facts and surroundings of
region that impacts the growth and success of company (Zhang and Tse, 2018). This report is
based on the expansion of SMEs in Europe, specifically in Romania as it is believed that this
region is prominently very effective for the expansion of business operations in suitable manner.
Here, various aspects are considered for the expansion of SMEs which are concerned with global
business environment which are as follows: Political Factors: This factor is related with the political condition and stability of
country in which business operates and so it is important to examine it. In addition to this,
Europe has a favourable political condition and environment for the expansion of new
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and small business organisations as they provide huge amount of opportunities to small
businesses because of its political stability and progress. For instance, the legal laws and
regulations of country are favourable for the expansion of small businesses in context of
investment and trading as it proves beneficial for organisations.
 Technological Factors: It is the most important aspect which is considered by each and
every organisation as for this, the technological elements are examined such as
digitalisation and advancement of technology in country. In this context, Europe acquired
updated and advanced technologies in all over the world which is helpful for operations
of organisations (Milner-Gulland and et. al., 2018). This factor helps the company to
expand their business at global level and reason behind this is automation and
information about ICT and it become benefit for the enhancement of market in proper
manner. For this, one of the most prominent technologies is Artificial Intelligence (AI)
which is helpful for organisations in order to secure their details and transactions and it
becomes an opportunity for small organisations.
M1. Analysis of global business environment in which small businesses operate
By considering the above information, it is analysed that global business environment is
essential to analyse and examine because it helps in identifying the positive and negative aspects
for small business which are associated with business environment. For this, analysis cover the
key drivers which firm experiences in concern with the expansion in Romania. Thus, various
factors are as:
 Growth of market share is the primary key driver which is concerned with the success
and growth of market share and it is possible only when huge amount of market area is
acquired by organisations at global level. For this, company can achieve growth and
success with the help of new customers and products (Pizarro Milian and Davidson,
2018).
 Another key driver is competition which is arising from both local and international
market and it become threat for small organisations. For this, companies should come
with innovative approach to expand their business in different regions in order to make
sure the effective growth and sustainability in the dynamic business environment.
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P2. Analysis of threats and opportunities which is face by SMEs in increasing competitive global
environment
Developing business face some sort of challenges and threats in their expansion as it
describe that business face various problems and opportunities as it grows and also need unique
and new solutions for their success and growth which becomes best approach for company. It
include recognition and overcoming the common barriers as after analysing them as it is
concerned with growth and development of business (Backaler, 2018). For this, effective
leadership is useful as it helps in developing and making new opportunities for sustainable
growth for future.
Opportunities Planning ahead: It describe that planning is important for achieving growth and success
of business and to achieve the sustainability in competitive business environment then it
is important to do planning in advance which helps in providing insight or vision to
managers in their expansion. It also helps in eliminating the risk factor which can become
barrier in attaining success and growth for SMEs in their expansion.
 Keeping up with market: It describe that company need to get updated and advanced by
analysing the changes which take place in the market conditions and also continuously
keep analysing them (Steffen and et. al., 2018). This can become opportunity for SMEs
as it helps in eliminating the risk factor for taking any sort of decisions regarding the
business and it also require updated information.
Threats Change: It define the change which arise at the time of operations in business and it can
be related with any change which describe technological, plans and policies, trends and
many more. Changes are very normal as it develop complexity which can become major
threat for the growth and development of business (Sinha and Sheth, 2018). Because of
regular changes, modifications takes place in business plan and this leads to increase in
cost which can become barrier for the SMEs in their success and growth.
 Business interruption: It can also become threat for company as it describe the
involvement or interruption of business such as threat from existing companies and new
ones in market. It describes that SMEs face threat in their expansion and also face more
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and more risk because of other businesses. It describe that organisations always consider
new and existing businesses in order to eliminate risk.
M2. Critically analyse the implications of threats and opportunities faced by SMEs
From the above discussion, it is analysed that in the expansion in international market
many small organisations face threats and they have chance to convert it into opportunities. For
this, SMEs need to critically analyse their threats and opportunities which is useful for them in
order to deal with any change which occur while expansion in global market (Lin, 2018). Thus, it
is determined that planning and keeping updated can bring more and more opportunities for
small organisations meanwhile, changes and interruption of businesses can become threat for
small businesses. But for all this, it is required that organisations should have efficient leaders
and apply suitable leadership for effective management.
TASK 2
P3. Advantages of international trading blocs and agreements
Trading blocs defines the grouping of nations or countries that made agreements regarding
their trading among themselves to have barrier free trade deals. Thus, there are three kinds of
trade agreements which can be considered by small businesses are as follows: Free trade area: This trade agreement is free from tariff among members and no outside
tariff is involved in it. Thus, the member of country can bargain on their own trading
(Khan and Lew, 2018). Custom union: It depicts the free trade area and the common unified outside tariff as the
members of trade block can easily negotiate with other party for better deal.
 Common or single market: This trade block is suitable for elimination of all barriers of
trade for transferring products and services, workers and capital. Despite of this, non
tariff barriers also eliminate the suitable level of harmonisation in the economy.
From the above types, suitable agreement for Romania is common market as it helps in
providing free trading of products and services across the nation which leads to development of
efficiency of products without any barrier of national borders.
Advantages of Trade Blocks and Agreements
Size of market: It describes the enhancement of foreign direct investment which is
beneficial for economy of involving country. It is an overall improvement in scope and size of
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small businesses. Therefore, it leads to development in market share and provide better
opportunities for organisations who are involving nation of trade block.
Economic leverage: This factor allows the production which assists in creation of
economic scale by passing mass production as tends the reduction of cost of production.
Therefore, trade block helps in increasing the economic leverage of the engaging countries of
trade agreement (Steiner and Fan, 2019). Despite of this, rapid transfer of technology is also
useful for trade blocks which help in increasing the effectiveness and efficiency of production
procedure. Therefore, it tends to better productivity and accomplishment of economic scale for
companies of involving countries.
P4. Explanation of different tariff and non-tariff barriers which exist in international market
While running business in the international market many tariff and non tariff barriers
which are faced by small organisations. Few of them are discussed as under:
Tariff Barriers:
These barriers are basically depends on the custom text and duty which is imposed on the
trading of product and services at the time of transferring a moving them across the domestic
borders which is relies under government and public bodies of the country with the purpose of
protecting small organisations and maintain balance among the payments (McCollum and
Findlay, 2018). Few of them tariff barriers are discussed is under: Specific tariff: It describes the fixed fees and duty it is applicable on the important export
of goods and services on one unit. In addition to this it can vary according to the type of
product which is imported charged on the basis of physical entity according to the weight
and measurement of the transferred product and services. . Ad valorem tariff: It is useful in assisting equitable trade barriers as the customs and duty
is is applicable on the costly items as comparison to cheaper products. Therefore it
eliminates the burden of tariff for the smaller organisations.
Non Tariff Barriers:
These are considered as the non tax restrictions which are imposed by government and
public bodies’ rules and regulations in order to have control and monitoring on overseas trade
(Prashantham, Kumar and Bhattacharyya, 2019). Some non tariff barriers which exist in the
international trading are discussed is under:
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 Licenses: It depicts the written permission which is granted by the government is it
allows businesses to transfer and deal in the specific type of goods and services in Global
market (Glare and O'Callaghan, 2019). Utilisation of licence and policies are made by
government in context of country to create restrictions in the flow of trade with the
purpose of the management of competition and increment in prices which is faced by the
domestic customers and organisations.
 Import quotes: This type of hurdle is mainly imposed on the amount of specific product
and services which are imported by the organisation or firm from other countries.
Therefore movement of products are allowed but only on the particular limit of quantity
which is fixed by the government and legal authorities.
M3. Evaluate the advantages of international trading blocs and agreements
From the above discussion it is evaluated that creation and formation of trade blocs and
agreements between the different preferable countries provide many advantages to small
business organisations and also create positive implication for them. Trade blocs and agreements
also create an opportunity for small businesses in order to have access which associated with the
updated technology regarding their participation Nation as it leads to increase their efficiency in
operations and manufacturing (Hollinshead, 2019). Despite of this free flow of workers are also
profitable for small businesses as they have labour in cheap terms which helps in in reducing the
cost of production process and also lead to the economic leverage buy meeting the goals of
economics of scale in SMEs.
TASK 3
P5. Advantages and disadvantages of importing and exporting process and how a deal can be
secured
Export is a procedure which includes exchange and selling of goods and services to
customers in specific areas in regions with the purpose of having more and more market share
and profitability. Two types of export process is discussed as under in the context of small
businesses:
Direct exporting: This procedure of exporting includes the sale of goods and services
which are developed in abroad without the involvement of any mediator (Dwyer and
Vongvisouk, 2019). Under these small organisations take responsibilities for selling goods and
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services across the country and also responsible for dealing in the foreign organisations directly.
Its advantages and disadvantages are as follows:
Advantages:
 Intermediaries are eliminated from the process of exporting so profits are more for the
organisation. It assists in providing huge control over the transaction of sales and makes it more
effective and efficient in terms of developing direct connection with customers.
Disadvantages:
 It needs more time and money e in order to attract customers who belong from foreign
countries without help of middleman. These organisations are completely responsible for the safety and risk which are involved
in the transaction of manufacturing in logistics.
Indirect exporting method: This method depicts the movement of goods with the help of any
mediator in foreign countries and region. For this independent agents and export management
companies are responsible to sell intermediaries and also responsible for exporting and moving
products at foreign countries (Uncles, 2018). Some of them advantages and disadvantages are as
follows:
Advantages:
 It assists in facilitating less risky to export their products and services with the help of
middleman and sale intermediaries. Despite of this limited amount of investment and time is needed in comparison to direct
investment.
Disadvantages:
 It reduces the margin of profit as in this process commission agent and middleman is also
involved (Lo and Campos, 2018).
 It also control over the sale of transactions is it lead by the direct exporting.
In order to secure the deal in export process use of direct method is recommended two
small organisations as it lead more control over the sales and transactions full stop despite of this
efficient and effective market research and examinations also done by small businesses in order
to identify better export opportunities at international market.
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P6. Difference between merchandise and service imports and exports
Basis Merchandise Service imports and exports
Definition It is a practice or procedure it
is concerned with the sale and
movement of goods and
services which are tangible in
nature across the border of
retail customer (Zhang and
Tse, 2018).
The services are considered as
the procedure which is
concerned with the movement
of intangible product and
services across the
international border of
country.
Class of things old Under this, only tangible
goods and services sold and
moved among different
countries.
Under this export and import
of intangible things are
concerned with transfer and
providing services at various
regions of world and countries
(Milner-Gulland and et. al.,
2018).
M4. Application of suitable import and export process and provide suitable recommendations
The procedure of export is lengthy in terms of activity which includes various steps. As it
is started with providing the export order with types of written agreement among exporter and
importer and after that analysis and confirmation of order is made by considering the terms and
conditions of contract (Pizarro Milian and Davidson, 2018). Furthermore next step include
clarifying the process from the central excise indifferent legal formalities which are required to
make by the exporter. For this waste documentation are required which are discussed as under: Letter of credit: It is written agreement which is issued by bank ok in terms of guarantee
buyers who is the importer in the context of payment to seller who is exporter which
suitable amount. Packing list: It is the detailed list which describes and includes various information about
the products and the packaging which is associated with shipment.
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 Commercial invoice: It is considered as the legal document among the exporter and
importer which depicts the information about the selling of goods and services and the
amount of export which is imposed by government in terms of custom duty. Terms of payment: It describe all the concerning terms and conditions associated
payment and also define the allowed period for payment, due amount, mode of payment
and many more (Backaler, 2018).
 Customs document: It depict all the suitable details regarding the shipment like airway
bill, commercial invoice, insurance certificate and other associated documents which is
required to clear custom.
TASK 4
P7. Different methods in which SMEs can tap into international markets
The different methods which can be opted by SMEs in order to type into the international
market which are as follows:
Exporting: This process is concerned with the production and manufacturing of product
and services in the domestic country in shipping them and moving to other Nation across the
border (Steffen and et. al., 2018). It is useful in providing in easiest way which is helpful for
small businesses in order to enter into an international market.
Franchising and Licensing: This is a process in which small organisations allow few
other firms and individuals in the terms of country to imitate and sell their goods and services at
international level. Until licensing and franchising, duty and fees is charged by other person as it
is the making and imitating fees of the idea and product. This method can be used by SMEs to
sell their products and earn more profit in the international market.
Joint Venture: It is the business procedure in which two or more parties are involved in
the making or formation of an agreement with the purpose of attaining and accomplishing the
particular target (Sinha and Sheth, 2018). For this some organisations development agreement
for joint venture with other organisations that belongs to international market or operates at
global level in order to tape and get access in the international market.
P8. Comparison of ways by which SMEs tap into international markets and also assess the pros
cons of each method
Methods Advantages Disadvantages
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