BUS301: Tapping into New and International Markets - Report

This report provides a comprehensive analysis of international market expansion strategies for small and medium-sized enterprises (SMEs), focusing on the case of Rowlinson Knitwear. It begins by defining the global business environment and examining the factors that influence SMEs operating internationally, including PESTLE analysis. The report then delves into the threats and opportunities faced by SMEs in a competitive global landscape, utilizing a SWOT analysis to assess strengths, weaknesses, opportunities, and threats. It explores the advantages of international trading blocs and agreements, as well as tariff and non-tariff barriers. Furthermore, the report evaluates the advantages and disadvantages of importing and exporting, including securing deals and differentiating between merchandise and service trade. Finally, it assesses various methods for SMEs to tap into international markets, comparing and contrasting their pros and cons to provide strategic recommendations for successful expansion.

Tapping into New and
International Markets

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain the global business environment in which small and entrepreneurial businesses
operate....................................................................................................................................3
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment............................................................................................................................6
TASK 2............................................................................................................................................7
P3 Determine and analyse the advantages of international trading blocs and agreements....7
P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment............................................................................................................................9
TASK 3..........................................................................................................................................11
P5 Determine the advantages and disadvantages of importing and exporting and how to secure
a deal.....................................................................................................................................11
P6 Explain the differences between merchandise and service imports and exports............14
TASK 4..........................................................................................................................................15
P7 Evaluate the various methods in which SMEs can tap into international markets.........15
P8 Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method.........................................................................................17
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
In Today's Global Environment, businesses are looking forward to expand their
organisations internationally. When the product based business starts doing well, it is natural to
look new markets to increase expansion and growth (Al Abdulrazak and Razak, 2020). For
Tapping into International Market, the entity should have a good domestic track record. There
are various factors which should be considered while entering into international market they are
culture, regulatory and legal barriers, foreign government considerations, etc. The firm should
understand the market personality, market trends, financial cost pattern and other factors before
entering into market. The Rowlinson Knitwear is expanding its business into USA, the
organisation should consider these factors before entering into new market. Rowlinson Knitwear
Ltd is a textile and apparel products industry, it produces knitwear and school wear for school
students. The company was incorporated on 20 September 1972. In the Report we will discuss
about the swot analysis of the company, tariff and non-tariff barriers, advantages of imports and
exports and methods of entering into new market.
TASK 1
P1 Explain the global business environment in which small and entrepreneurial businesses
operate.
Global Business environment is defined as the environment and surroundings in which
varied sovereign countries participate on commercial basis for conducting business activities by
making more productive use of resources which are exogenous in home environment and are
necessary for conducting effective business activities (Global Business: Origins, Viewpoints and
Six Cornerstones, 2012). The Global Business Environment can also be defined as an activity
zone of respective organisation which is influenced and exposed to global power and factors
such as resources (Definition of Global Business Environment, 2020). This study focus on the
Rowlinson Knitwear Ltd which is a small entrepreneurial business is going to start new
operation in the U.S. business environment (Charpin, Powell and Roth, 2020). Global Business
Environment is described as the environment in multiple sovereign nations with factors outside
the organisation's home environment, influencing the decision making for how to use its
resources. The global environment is classified into the external environment and Internal
environment. The external environment includes social, environmental, political, technological,

legal and economical environment. To analyse the factors influencing an organisation from
outside, pestle analysis is best suited.
Small and medium enterprise (SMEs) are businesses that maintain revenues, assets or a
number of employees downwards and below a certain threshold or the break-even point. Every
country has different definition of a Small and medium enterprise (SMEs) (Owen, Deakins and
Savic, 2019). All the definition of different countries constitute some size criteria which needs to
be met by the businesses to fulfil an agreeable criteria. In United Kingdom the Small and
Medium sized organisations are denoted as heart of its economy as it holds of around 99.9% of
the business population in the nation (Kaawaase and et. al, 2019). Thus, as per the United
Kingdom the definition of and Small and Medium sized enterprise (SME's) is those entities
which have fewer employees them 250 that is who have less than 250 employees engaged in the
business and are having turnover of €50 million (What is an SME, 2020).
The Small and medium enterprise (SMEs) are the key contributors to economies around
the world and thus addressed as the pillars of the economy brining employment, money, revenue
as well as international connection and most importantly innovation too in the region where they
are being operated. More specific contributions of an Small and Medium sized enterprise
(SME's) to economy is as follows:
 Bring in innovation and employment within the nation, as with creative approaches the
company needs experts and skilled Human Resources. Hence, employment is created for
both skilled and unskilled individuals to conduct day to day activities of the operations
(Sinkovics, Sinkovics and Archie-Acheampong, 2021).
 Moreover, another contribution is on purchasing power of people and growth of
economy. With engagement of Small and Medium sized enterprise (SME's) within the
economy employment if generated offering individuals a higher purchasing power. Once
people have money they start spending it as per their needs and requirement of their
family. Hence, money flow improves within the economy offering new opportunities to
all along with a healthy and safe life to lead (Sigcha and et. al, 2020).
PESTLE ANALYSIS:
 Political Factor- Political factors are the factors which includes anything connected to
government. This include government policy, stability, tax policy, trade policy, labour
law and trade restrictions. Since apparel industry is all over the world so it greatly

influences by the global market and political forces. Rowlinson Knitwear Ltd is going to
enter in a new US market with its product. A recent election was happened in US and
newly elected PM Joe Biden it is expected to reduce the trade threats by lowering the
tariff against Europe and China which is a good news for the Rowlinson Knitwear Ltd.
 Economical- Economic factors are the factors which affects the economy performance.
The economic factors include economic growth, exchange rates, inflation rate, interest
rate and unemployment rates. The economic factor affect the purchasing power of the
consumer. Economical is a major factor for deciding the investment is to be made or not.
United States is the world's largest economy, ahead of China (Jadan, 2020). Since the
partial trade agreement in January 2020 is already approved but trade tensions are still
existing between the China and US which make it a unstable environment for every
businesses.
 Social- Social factor is also known as socio-cultural factor that involve beliefs and
attitude of the population. These factors include population growth, age distribution,
income distribution, career attitude and lifestyle attitude. These factors are helpful for the
marketers to target the certain customer. Social factor is a cause of concern for SME
because inequalities among people are rising and infrastructure are getting affected from
these issues, which becoming a hurdle in slowing down GDP growth. Due to variety of
social change and trend, so to catch on customer’s choice this, volatility will be going to
remain in the company.
 Technology- Technological factor may affect the industry by new advanced technology.
The organisation must be aware of upcoming technologies in the market. The changing in
technology can be a threat to the organisation. Being advance in technology have brought
many new opportunities to SME. By entering into the world’s largest economy it is
assumed that to compete in market Rowlinson Knitwear Ltd have to get on latest
technology as per market requirement which makes it little costly and give it a
disadvantage and advantage on others. Rowlinson Knitwear Ltd have to focus on Data
security in an international market so it is a cause of concern from company (Nongolola,
2020).
 Legal- Government policies and legislation also directly impact on businesses. For eg:
Following the government standards of product labelling, advertising standards and

several other standards which makes the works rigid because they can't invest sufficient
time in other important work and sometime it also consumes cost. Rowlinson Knitwear
Ltd organization is going to trades cross countries which make it a very tricky area to be
correct as each country has its own rules and regulations
 Environmental- Environment factor are the factors which affect the industries smooth
functioning. The environment factor includes climate change, consumer health,
availability of energy, etc. This factor is more important for the industries like tourism,
agriculture or food production. Due to lack material, high pollution level and health
hazards are increasing which then mix up with water and air and leads to certain negative
results. Government is pressuring to Small industries to reduce their carbon foot prints
and increase environmental friendly practices. Rowlinson Knitwear is investing in
minimizing the waste produced in their stores by making people aware.
The meaning of SME is small and medium sized enterprise with fewer than 250
employees. They make up around 99.9 percent of all businesses in UK. Small business employ
over 16.3 million people in UK which accounts for 60 percent of all private sector employment
(Sisodia, Alshamsi and Sergi, 2020).
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment.
SWOT analysis is a tool used for analysing and examining the internal and external
factors of a respective business organisation commonly. But the framework can used in separate
scenarios and situation as well. Hence, it will be use for examining the strengths, weaknesses,
opportunities and threats which Small and Medium enterprises (SME's) face while they are
dealing in or plans to deal in a global business environment.
SWOT ANALYSIS:
 Strength- In today's rapidly changing world Small and medium enterprise (SMEs) are
growing at far more rate comparing to other large businesses. Small and medium
enterprise (SMEs) is far more flexible then comparing organisation. The owner or
Managers of Small and medium enterprise (SMEs) whole and sole decision makers and
this results in perfect alignment in decision-making process.
 Weakness- In Small and medium enterprise (SMEs) the entity at operational level may
face lack of technology in the respective field of work in comparison to large scale

companies. At some point starting a new Small and medium enterprise (SMEs) can face
competition in pricing of products in comparison to other economies in global
competitive market. While expanding into new markets the operation of Small and
medium enterprise (SMEs) find hard to get loan at better rate or if they get a loan it will
be on higher rate comparing to others which make its profit in doubts in global markets
and global business environment.
 Opportunity- Small and medium enterprise (SMEs) have access to new market which
leads to better sales and new opportunities which will leads to large number of customer
base. A Small and medium enterprise (SMEs) has the option and the opportunity to
engage in market as joint venture or provide franchise to some other retails operator will
be helpful in brand building. Small and medium enterprise (SMEs) will always be in
advantage by moving into markets and new place of work where it can take innovative
approaches for developing its brand and enable to gain higher revenues and profits in
foreign markets (Ariansyah, Asrul and Eymal, 2021).
 Threats- While single person owned responsibility of all work some time it is not
possible for Small and medium enterprise (SMEs) to take care of all legal responsibilities
which leads to government take action against them. Small and medium enterprise
(SMEs) try to avoid as much as unwanted expense it can avoid but sometime unexpected
cost can cripple the entire business. For e.g. A recession which lead many close their
business and firstly affects an Small and medium enterprise (SMEs).
TASK 2
P3 Determine and analyse the advantages of international trading blocs and agreements.
Trading blocs are the agreement between the countries to reduce and remove the barrier
to trade within the member country (Kawasaki and Tsubota, 2019). It is an Intergovernmental
agreement, where regional barriers to International Trade are eliminated among participating
countries and allow them to trade with each other. International trade agreement opens up new
opportunities for the exporters. There are different types of trade blocs such as free trade area,
customs union, common market, economic union, etc.
TYPES OF TRADING BLOCS AND AGREEMENTS:

 Preferential Trade Area- This form of trading bloc exist when countries in particular
geographic region agrees on reducing the tariff barriers on chosen articles and offerings
which are being imported from other member countries. This is a common type of trading
bloc which is used by countries for offering easy access to trade in their location and
areas. Free Trade Area- This is a trading bloc in which member countries of a geographical
areas agrees on reducing trade barriers for all importing goods form different countries
with which business relations are developed and who are member of the agreement. Customs Union- As per this trading bloc the member countries agrees and removes tariff
barriers and also with agreement adds common external tariffs against those who are not
part of the agreement and do not holds the membership.
 Common Market- This is a practice taken place for one unified and integrated economy
which develops when member countries are in trade with free accessibility to all
economic resources which are both tangible and non-tangible in nature (Trading blocs,
2021).
THE ADVANTAGES OF INTERNATIONAL TRADING BLOCS AND AGREEMENTS: Free trade within the bloc- The trading blocs enable the users that is businesses like
Rowlinson Knitwear Ltd is free flow of trade with less of barriers and hindrances. This is
a huge benefits for organisations as it allows them to engage in larger market with easy
access to larger customer base and more resources. Wider Market access- As discussed that the businesses gets hold of wider market and
resources it is a benefits as the organisations can easily get hold of better importing and
exporting services and even enjoy more productive resources for their business to be
conducting appropriately. In the same manner the entity that is Rowlinson Knitwear Ltd
will be benefited and can have more access to resources and better productive customer
base (Strange, 2020).
 Economies of Scale- Another major advantage which is imposed and offered by trading
bloc to both businesses and consumers is economies of scale. Here, the manufacturer of
products are benefited with reduced cost of production and procurements of raw materials

through trading blocs. This ultimately impacts upon reduction in costs of end products
and services will help the organisation that is Rowlinson Knitwear Ltd to capture more
audience and attract larger customer base.
 The prices go down due to heavy competition. Consumers can buy at best price and even
they can buy more which helps to boost the economy. This will help Rowlinson Knitwear
in increasing their sales because of higher customer base.
 When trade barriers let fall, different countries manufactures compete directly with each
other. This will help an organisation in reducing the legal issues that result in
achievement of better outcomes within minimum time period. In context of Rowlinson
Knitwear, lack of trade barriers helps them in its business expansion in USA successfully.
P4 Explain the various tariff and non-tariff barriers that exist in the international trading
environment.
Tariff and Non-Tariff barriers are the restrictions which is imposed between the countries
in the movement of goods. In simple words, Tariff is a tax. The taxes owned on imports are paid
by the domestic customers and it is not imposed directly on the foreign countries export. The
Goods from abroad are cheaper as they offer cheap labour cost and capital. Tariffs are created to
protect the industries and economies but is also used by more modern economies and developed
Industries. The tariff and non tariff barriers will affect the Rowlinson Knitwear as their are many
restriction which will be faced by the company while entering into new market. The organisation
have to pay the custom duty, transit duty, export duty and various other taxes. There are also non
tariff barriers which will restrict the company to enter into new market. The Tariff and Non-
Tariff Barriers in International Trading Environment are as follows:
 Tariff Barriers- Tariff is a tax, custom and duty which is imposed on the goods that
move across the countries boundary. It is an instrument which is used to control the
imports and exports. Here are the following tariff barriers:
◦ Import Duty- It is a custom duty which is imposed by the country on goods which is
being imported. A tax is collected on the products by importing country. Import duty
is also known as custom duty, import tax, tariff and import tariff. It is charged to raise
revenue and save the domestic industries (Chen and Mao, 2020). These import duties

are needed to be paid by Rowlinson Knitwear Ltd while doing business in global
environment and serving its offerings in an international marketplace.
◦ Export Duty- It is a tariff which is forced by the exporting countries on the goods
which is being export. The tax levied on agriculture products and minerals. The
export duty will be paid by Rowlinson Knitwear Ltd in domestic market to the
government for conducting business in international environment. These tariff barrier
can be removed as well if the global country is member of the same trading bloc as of
the United Kingdom.
◦ Transit Tax- It is a tax which is imposed on the commodities passing through one
countries, cross another and route to another. Transit tax are charged by the countries
through which the products are passed. It increases the cost of the commodities and
reduce in amount of goods traded.
 Non-Tariff Barriers-Non-Tariff Barrier is an another way to restrict trade using trade
barriers other than tariff. Some countries use non-tariff barrier as their political and
economic strategy to restrict the amount of trade they lead with other countries. Non-
Tariff barriers includes quotas, embargoes, sanction, etc. The following are the non-tariff
barriers-
◦ Quotas- It is a limit on quantity of goods which is being exported or imported during
a specific time period. If the importer exceeds the amount of import, then they have to
pay a penalty and fine. Rowlinson Knitwear Ltd can be facing consequences of this
non-tariff barriers where they have to limit their exporting units of goods (Yean and
Yi, 2019).
◦ Voluntary Export Restraint- It is a quota that is fixed on the export by exporting
countries on the request of the country that is importing the goods. The exporting
countries fix a quotas of maximum quantity of products that is being exported to
concerned nations.
◦ Subsidies- It is a payment that is made by the government to the domestic producer
so that they can compete with foreign trader. It can be tax holiday, cash grant,

government equity participation, etc. It helps the domestic producer to reduce their
cost and have control over the market.
TASK 3
P5 Determine the advantages and disadvantages of importing and exporting and how to secure a
deal.
IMPORTING
Importing refers to buying of goods and services from other countries, rather than buying
domestically produced items whereas exporting means goods or services are produced
domestically but then sold to customers residing in the foreign countries.
ADVANTAGES OF IMPORTING:
Importing means purchasing a product or services from another country. There are taxes
which is levied on the goods being imported. The advantages of Importing are as follows-
 Introducing product to new market- Rowlinson Knitwear is expanding its business in
USA, they are introducing their products to new market. The Entity look out the market
size and purchasing power of the consumers in USA. If the products are attractive
enough, they can import it. The Rowlinson Knitwear Ltd can conduct market research
before importing certain products. Rowlinson Knitwear Ltd can get the advantage in
introducing the product and enhance its profitability level (Tien and Ngoc, 2019) .
 Save cost- It is a major benefit of importing, that it reduces the manufacturing cost of the
product. Businesses find importing products, parts of products and the resources
affordable instead of producing them locally. It minimise the cost as they get the goods at
better price with good quality so, they don't have to invest into expensive machinery, they
choose to import goods. Rowlinson Knitwear Ltd find the best option for itself option
which can be produced at low level and try to import those product which incur high cost
in producing.
 Acceptance and Approval- While importing quality goods, the consumer generally
accepts the goods if they are of better quality. For Rowlinson Knitwear it is important to
satisfy the people of USA with their products. If the people accept the product,

Rowlinson Knitwear Ltd sales and growth will automatically increase, the firm has to
grab the customer’s loyalty towards themselves.
DISADVANTAGES OF IMPORTING:
 Dependency- The dependency on other countries arises due to import and export of
products and services. It is not good for the exporters and the growth of country. The
Rowlinson Knitwear has to depend on the other countries which will result in increased
cost of products and ultimately customer will going to bear it (Kim and et. al, 2019).
 Out flow of foreign exchange of country- It is a biggest disadvantage of importing as
when country purchase the products from other countries they have to pay them in their
currency and when the importers buy foreign currency it leads pressure on domestic
currency which leads to reduction in foreign exchange of the country. Rowlinson
Knitwear Ltd have to bear the currency conversion cost and other sort of taxes which
affect the profitability level.
EXPORTING
Exporting is another business practice which is carried out and belongs to the global
business environment where the entities are engaged in sending products out of their domestic
market to a new international market for the purpose of making sales and earning revenues.
ADVANTAGES OF EXPORTING:
 Increase Goodwill- If the products of Rowlinson Knitwear are successful in USA, it
builds name, reputation and goodwill in the market. The goodwill earned by the
Rowlinson Knitwear Ltd is the assets of the manufacturers. The company will also get
benefited with getting loan at lower interest rates (Wu, Wei and Wang, 2021).
 Opportunities- When the new product is launched, it just grabs all the attention of the
importers and exporters all over the globe. In such times, it is an opportunity for the
Rowlinson company to earn maximum profits with new ideas and innovations.
Rowlinson Knitwear Ltd get access to new market and can easily sell its unique product
all over there.