Tapping into New and International Marketing: Derwent & Sons Case

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This report analyzes the global business environment for SMEs, focusing on Derwent & Sons Stationery's potential expansion into South Africa and South Asia. It utilizes PESTLE and SWOT analyses to assess opportunities and threats, examines international trading blocs and tariff/non-tariff barriers, and evaluates various market entry methods like importing and exporting. The report also considers the advantages and disadvantages of different internationalization strategies, providing recommendations for Derwent & Sons to secure deals and succeed in new international markets. The document is available on Desklib, where students can find similar assignments and study resources.
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UNIT 43 TAPPING INTO NEW AND INTERNATIONAL MARKETING
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Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................5
P1 Explain the global business environment in which small and entrepreneurial businesses
operate..........................................................................................................................................5
P2 Analyse the threats and opportunities that face SMEs in an increasingly competitive global
environment using Derwent & Son's stationery as an example...................................................7
M1 Provide evidence-based analysis of the global business environment in which small and
entrepreneurial businesses operate using specific examples.......................................................8
M2 Critically analyse the implications of threats and opportunities that face SMEs in an
increasingly competitive global environment..............................................................................9
Task 2.............................................................................................................................................10
P3: Determine and analyse the advantages of international trading blocs and agreements for
Derwent & Sons Stationery in South Africa and South Asia....................................................10
M3: Evaluate the advantages of international trading blocs and agreements and their
implications for SMEs Using Derwent and Sons Stationery as an example.............................12
Task 3.............................................................................................................................................13
P5: Determine the advantages and disadvantages of importing and exporting and how to
secure a deal for a business such as Derwent & Sons Stationery in their new International
Market........................................................................................................................................13
P6: Explain the differences between merchandise and service imports and exports.................14
M4: Apply the appropriate import and export process to an organisation such as Derwent &
Sons Stationery and make recommendations on how they could be applied in an international
context........................................................................................................................................15
Task 4.............................................................................................................................................16
P7: Evaluate the various methods by which SMEs can tap into international markets.............16
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P8: Compare and contrast the various ways SMEs can tap into international markets, assessing
the pros and cons of each method..............................................................................................17
M5: Evaluate different methods of SMEs can use to tap into various markets with application
to a small business or entrepreneurial venture, making valid recommendations......................19
Conclusion.....................................................................................................................................20
References......................................................................................................................................21
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Introduction
The main aim of the management report provided below is to identify and analyse the
opportunities that are available for SMEs in the global environment. The report will effectively
help the reader to analyse the implications that might be faced by the business in doing the same.
In order to construct the report, the example that has been taken by the researcher is of Derwent
& Sons Stationery. The company is a UK based SME which is planning to penetrate into
international business industry of South Africa and South Asia. The company works on the base
of innovation and trendy products which has helped the company to achieve its saturation point
in its home market i.e. UK. In order to increase the profits, it has been suggested that the
company should globalise their operations for which the management report will provide a brief
industry analysis of South African and South Asian Nations.
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Task 1
P1 Explain the global business environment in which small and entrepreneurial
businesses operate.
In order to analyse the global business environment, the PESTLE analysis of South African and
South Asian Markets have been provided below as follows:
Factors South Africa South Asia
Political It has been found that in terms
of political factors, there is a
high level of corruption in
South Africa. This can be a
negative factor for the
company and cause
inconveniencies.
The South Asian democracy is
counted as one of the largest
democracies in the world with
countries like China and India.
The political stability is quite
enhanced which can help the
business to expand and
flourish.
Economic In the terms of Economic
Factor, it has been found that
the value of Rand is quite low
in the global market which is
another negative factor of
Derwent & Sons Stationery.
It should be noted that the
South Asian economy is not
on significantly stable but also
holds an important place in the
global exchange market. This
would make it easy for
Derwent & Sons Stationery to
facilitate trade.
Social Socially it has been analysed
that the population has a high
spirit of entrepreneurship
which also increases the
purchasing power of
consumers. This a positive
factor for the company to look
In the terms of Social factors,
the nations follow the western
trend which will help the
business to be at ease while
operating in the economy
(Kalinic and Forza, 2012).
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forward to.
Technological In the terms of technology, the
development in South Africa
has taken place at moderate
levels. The manufacturing
activities are thin and the
economy is reliant upon
imports from other nations.
In the terms of technology, the
Asian Nations surpass the
African nations which would
be an added advantage for the
company.
Legal The labour laws in the country
are majorly similar to the laws
in UK. This would make it
easy for the company to
expand in this region (Rodrik,
2015).
IN the recent past there is a
number of legal changes
which have been witnessed by
South Asian nations. This
factor has further helped in
enhancing the appeal of
country towards globalisation.
Environmental In terms of environmental
factors, it has been found that
the country is open to outside
business developments. The
location provided is good but
weak economy is a major
drawback here.
IN the case of environmental
stability, it has been found that
the quality of air has been
adversely affected by
urbanisation and
industrialisation. This also
gives rise to various health
problems as well. This might
be a negative factor to the
company as environmental
laws are strict.
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P2 Analyse the threats and opportunities that face SMEs in an increasingly
competitive global environment using Derwent & Son's stationery as an example.
In order to analyse the opportunities and threats that are being presented by the global industry
for Derwent and Sons, the tool of SWOT analysis has been used which has been presented below
as follows:
Strengths
The major strength that the business
will achieve from globalisation is the
free flow of information. This
connectivity can help Derwent and
Sons to increase their productivity.
The globalisation will also help the
company in trading both tangible and
virtual goods.
It has been analysed that the innovative
platform of the company is not found in
the target markets. This can be utilised
by the company to increase their
consumer base easily.
Weaknesses
The major weakness of the company is
its capital structure which is small. This
prohibits the company to start its
operations from big levels.
Another weakness of the company is
weak structure of economy as
compared to that of its home market.
Opportunities
The major opportunity that has been
presented by the global markets is of
business expansion and increment of
the revenue streams of the company.
The globalisation will also help the
company to expand its reach towards
the more potential markets.
It will allow the business to harness
new technology and increase its
productivity.
Threats
The major threat that has been posed by
globalisation is the threat of increased
competition which might affect the
sustainability of the business.
Another threat that might pose issues to
the company is the taxes and duties
which might be implied by the native
government of targeted countries. This
increases the price of goods for the
consumers.
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M1 Provide evidence-based analysis of the global business environment in which
small and entrepreneurial businesses operate using specific examples.
It should be noted that in the current scenario around each and every business is trying to
penetrate the global industry and in such a case many SMEs are presenting a great example. This
can also be referred to as the born global firms and companies which are the business
organisation that has been developed themselves in such a manner that they are effectively and
efficiently able to derive significant competitive advantages from the resources and sales made in
other countries (Koopman, et.al, 2014). One such example of Born Global firm is Logitech
which started as a domestic company but now is one of the renowned hardware manufacturers in
the computing world.
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M2 Critically analyse the implications of threats and opportunities that face SMEs
in an increasingly competitive global environment.
It should be noted that in the global environment, one of the largest threats that are currently
being faced by the small companies in the global environment is the threat from high levels of
competition that are posed by the local and big MNCs. It should be noted that the major impact
of this high level of competition is seen in the sustainability of the business that opts to operate in
the global industry. In the case of Derwent & Sons, this competition can have a major impact on
the functioning of the company in the new target market and might disrupt the revenue streams
of the organisation as well.
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Task 2
P3: Determine and analyse the advantages of international trading blocs and
agreements for Derwent & Sons Stationery in South Africa and South Asia.
A trading bloc can be defined as an intergovernmental agreement in which the governments of
two or more countries join hands in order to remove trading barriers such as taxes, duties, etc. for
selected states and countries in order to facilitate effective and smooth trade. In case of Derwent
& Sons, it should be noted that the economy of UK is being governed by the European Union
and trade barriers are applied accordingly. These trade barriers are also applied in the case of
South Africa and South Asian nations.
The trade blocs and trade barriers can help small companies like Derwent & Sons to facilitate
smooth trade. With the implementation of trade agreement, the globalisation is made easy and
the cost of goods via import is also reduced up to significant levels. This not only poses a
lucrative opportunity but can also help the companies to increase their profit margins even in the
international markets (Baier, et.al, 2014).
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P4: Explain the various tariff and non- tariff barrier that exists in the international trading
environment for Derwent & Sons Stationery as they go into South Africa and South Asia.
The tariff and the non-tariff barriers can also be stated as the trade barriers which are used by the
government in order to encourage and protect the domestic industry of the country from the
international competition. These trade barriers can have a positive as well as a negative impact
on the trade that occurs in the country. It should be noted that there are various kinds of tariff and
non-tariff barriers which are implied by the countries in order to regulate the trading practices.
These barriers can hamper the motive of small companies that tend to globalise their operations
into the new market (Sui and Baum, 2014). The tariff and non-tariff barriers which are implied
by South African and Asian nations have been explained below as follows:
Import Licensing: This is one of the most important non-tariff barriers which implies
restrictions or prohibitions on trade. In order to facilitate trade, this barrier can be crossed by the
means of obtaining an import license.
Standard, testing, labelling and certification: This is a rule applied by the government of
countries in which there are certain products which can only be sold if they have authorised
standards, are tested, have certified labels and are certified by the government of the country.
Export Subsidies: Export subsidies are the tariff barriers which are applied on the exporting of
goods such that domestic support can be provided to the companies internally so that they might
be able to compete on international levels.
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M3: Evaluate the advantages of international trading blocs and agreements and their
implications for SMEs Using Derwent and Sons Stationery as an example.
Usually at regional level, sovereign countries club together in order to make free trade
agreements. Free trade agreements lower down the barriers in bilateral trade and trigger the trade
between the two member nations. For Derwent and Sons Stationery, it is a golden opportunity
to expand its business. Generally, trade agreements overcast positive effects on the business, but
many a times it gives birth to competition from the other country. Trading blocs are groups of
nations that agree to lower down the trade barriers among the members. The benefits include
tariff reduction, tax reduction, trading privileges, etc.
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