Unit 43: Analysis of New and International Markets for Business Growth

This report, focusing on Unit 43, delves into the intricacies of tapping into new and international markets, particularly for small and medium-sized enterprises (SMEs). It begins by examining the global business environment in which these businesses operate, using the UK as a case study, and highlights the opportunities and threats faced by SMEs in an increasingly competitive global landscape. The report explores the advantages of international trading blocs and agreements, such as CARIFORUM-UK and SACUM-UK, and discusses the impact of BREXIT. It also provides a comprehensive overview of tariff and non-tariff barriers that influence international trade, emphasizing their effects on SMEs' growth and development. The report concludes by summarizing the key findings, emphasizing the importance of understanding these elements for successful international market entry and expansion. The report also highlights the importance of global growth for SMEs by engaging in international trade agreements.

Unit 43– Tapping into New
and International Markets

Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Explaining the global business environment in which small and entrepreneurial businesses
operate..........................................................................................................................................1
P2 Analysing the threats and opportunities that SMEs face in an increasingly competitive
global environment......................................................................................................................2
P3 Advantages of international trading blocs and agreements....................................................3
P4 Tariff and non-tariff barriers..................................................................................................4
PART 2............................................................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Trading overseas is a practice of tapping into new and international market with the aim of
growth and development of the business. This concept is related with the efforts made by an
organisation to export and import products from international regions (Cantwell, 2013). The
main aim of this report is to build an understanding about global environment and various
opportunities or threats which are exposed in that environment. In order to achieve this aim,
Barclays organisation is selected in this report which is a financial services company having
headquarters in London United Kingdom. For the purpose of preparing contents for this webpage
of this company, United Kingdom is selected as the country of Europe region to analyse its
global environment in which SMEs operate.
In this report, global business environment of UK is analysed along with its opportunities
and threats. Benefits of international trading agreements is also analysed in this report along with
various tariff and non tariff barriers.
PART 1
P1 Explaining the global business environment in which small and entrepreneurial businesses
operate
United Kingdom is a country of Europe region which despite of facing current global
economic turmoil and challenges remains to be a positive, forward looking and open for
business. Government and authorities of this region are committed to provide facilities to the
small businesses as they think that the small medium businesses are the backbone of the
economy and they must be developed so that they are contribute towards GDP and employment
of the country (d’Hauteserre, 2011). United Kingdom is led forward by its private sector and is a
six largest economy of the world. UK economy is one of the most globalised nations which is
considered as financial centre of the world. Service sector of this country contributes
approximately 80% of the total GDP and most of the organisation of this sector are SMEs.
Small and mediums enterprises are the organisation which operate their activities at a small
scale which are limited to few regions only. In context of United Kingdom, small business
comprises employees less than 50 and turnover less than 10 million pounds. Medium businesses
comprises employees less than 250 and turnover less than 50 million pounds. These organisation
operates in a global environment where they are import products from different regions to
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operate effectively and export their manufactured produced goods two different regions of the
world. SMEs and entrepreneurial organisation of UK operates in a global environment where
they are supported by the government. SMEs of UK are the total of 98% of the entire business
population due to which UK government aims to spend 1 pound for every 3 pounds generated by
these businesses (UK’s global business environment, 2011). Majority of the SMEs of UK has the
global environment in which they operated within the boundaries of Europe. Business of UK
generally exports their products or services to the other countries of Europe involving Spain,
France, Netherlands etc. as they are the native countries which reduces transportation cost and
due to European Union, they pay minimal cost of exporting and interest.
SMEs of United Kingdom has broadened their global business environment by which they
trade with markets of Asia, America and even some region of Africa. This environment has
enhanced the chances for these organisations to grow and develop and ultimately contribute to
the GDP and national income of UK.
P2 Analysing the threats and opportunities that SMEs face in an increasingly competitive global
environment
Global business environment and the influence of key global drivers
Global business environment of United Kingdom is dynamic which changes with the
external environmental factors. This environment has recently faced major changes due to the
policies of BREXIT (Filippov and Duysters, 2011). SMEs of UK were allowed to freely trade in
other countries of Europe without any restrictions but after the implication of BREXIT policies,
SMEs and entrepreneurial business of UK has to pay a reasonable interest rate and exchange
rates. There are various key global drivers in context of UK which influences this nation’s
economy. These drivers are labour force, productivity and investment. Labour force in United
Kingdom is expensive due to which SMEs of UK procures labour from Asian countries which
allows them to reduce their labour costs which results in a positive influence on the economy.
Other global drivers such as productivity and investment relies upon the efforts of the individual
businesses which influences the industrial growth of UK.
Rationale for SMEs to expand their business internationally
SMEs of UK intends to expand their businesses internationally so that they can increase
their sales revenue by inflating their target market. Another rationale for SMEs to expand their
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businesses internationally is to save the cost by procuring cheap labour from few Asian and
African regions.
Threats and opportunities in competitive global environment
SMEs are small in staff and turnover due to which they have to face various challenges
while operating in a global environment. The most influencing challenge which these
organisations face is lack of resources such as finance, skilled labour and market accessibility
due to which management of a small organisation have to restrict their operation which impacts
their overall productivity and profitability. Another challenge is lack of economies of scale
which restricts the SMEs from attaining the benefit of increased profit by manufacturing large
number of products. Due to low network area and low turnover, SMEs operating in global
environment also faces the challenges of increased market competition, instability and inability
to compete against large firms (Guimón, 2011).
Along with the above mentioned challenges, there are few opportunities as well which
SMEs enjoy. In context of United Kingdom, government has initiated various policies in which
SMEs can operate without paying high taxes and can get loans at discounted rates. SMEs can
even take advantage of the international opportunities which allows them to trade without facing
customs (Hilmersson and Jansson, 2012).
P3 Advantages of international trading blocs and agreements
Trading blocs are the type of inter governmental agreement in which limitations and
restriction to trade among different nations are eliminated and evaded for the participating states.
Trading blocs and agreements are contracts between nation which allows all the participating
states involved in that agreement to trade freely which each other in order to facilitate
industrialisation and improvement of economy (Izberk-Bilgin and Nakata, 2016).
Trade blocs and agreement facilitates the businesses of a region to trade in other regions
without paying any tax. United Kingdom was a member of European Union which allows United
Kingdom to trade in any European state. But after the implementation of BREXIT, UK has
signed various trade agreements which will allow them to connect with rest of the world. One of
these trade bloc involves CARIFORUM-UK economic partnership agreement. By using this
trade agreement, SMEs of UK will be able to trade freely in nations of Barbados, Bahamas and
other eleven countries.
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Another trade agreement in context of United Kingdom is SACUM-UK economic
partnership agreement (EPA). With this trade bloc, businesses of UK will be able to trade with
southern nations of Africa. It is considered that the Southern African regions are rich in natural
components and by using this agreement UK can import these products without paying any tax
which will result in benefit of cost savings (Jensen and Pedersen, 2012).
After the BREXIT implementation, United Kingdom is liable to trade under the regulations
of World trade organisation (WTO) which is also considered as trade agreement between
United Kingdom and other 163 members. This trade bloc is beneficial for businesses of UK as
this will result in fair trade on fair prices (UK trade agreements, 2019).
Stimulation of global growth for SMEs
International blocs and agreements stimulate global growth for the SMEs as by trading
under the free trade agreement small organisation can import or export from foreign countries by
paying less or no taxation which result in low cost expenses and ultimately lead to higher profit
margins and growth.
P4 Tariff and non-tariff barriers
International or global business environment is the combination of trading surroundings in
which businesses of various nations trade with each other. This procedure of trading is restricted
by imposing barriers which includes tariff and non tariff barrier. On one hand, tariff barriers are
imposed with the aim to earn relevant revenues by the custom duties and interest rates. Non tariff
barriers are imposed with the aim to limit the export of import of specific kind of product
(LiPuma, 2012).
Tariff trade barriers are the restrictions which limits the businesses to trade from exporting
the products. These barriers include levying a tariff on goods before allowing their entry in a
specific region. There are various tariff barriers in international trading environment in which
limits businesses to trade due to which they have to pay heavy taxes and interest rates. These
barriers include licensing requirements, price controls and many more. Custom and taxation rates
are the barriers which has to be paid by the SMEs prior trading (Mahajan, 2012).
Along with above mentioned tariff barriers, there are various non tariff barriers as well
which restricts the businesses to trade in international market. These trade barriers are not
imposed in order to earn revenues from taxation or interest. Examples of these barriers includes
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administrative procedures, quantity restrictions, procurement rules, product labelling
requirements, subsides and many more.
Above mentioned tariff and non tariff barriers are the influences which impacts growth and
development of small medium organisations (Stiglitz, 2014). Despite of being the barriers, these
restrictions are important to maintain a discipline in the context of industrialisation. These
barriers ensure that every nation is earning relevant profits from trade. And it also helps nation to
restrict exporting or importing of products with unreasonable packaging and labelling. The
reason behind imposing these barriers is to maintain the stability in legislations of trade which
are occupational health and safety, employment law, import licensing, overvalued currency and
many more.
PART 2
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CONCLUSION
From the above report, it has been analysed that global business environment includes
various elements of rules and regulations which restricts and limits the free trade between
nations. Small and medium organisations are the enterprises which gains various opportunities
and threats from the trade agreements and blocs. It has been also observed that United Kingdom
is a region which is involved in various trade agreements which facilitates its businesses to trade
with other nations as well without paying any taxation. In has been also concluded from the
above report that there are two types of trade barriers which restricts to trade in international
markets which includes tariff barriers and non tariff barriers.
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REFERENCES
Books and Journals
Cantwell, J., 2013. Multinational corporations and innovatory activities: Towards a new,
evolutionary approach. In Technological Innovations, Multinational Corporations and the
New International Competitiveness (pp. 33-70). Routledge.
d’Hauteserre, A. M., 2011. Politics of imaging New Caledonia. Annals of Tourism Research,
38(2). pp.380-40.
Filippov, S. and Duysters, G., 2011. Competence-building in foreign subsidiaries: The case of
new EU member states. Journal for East European Management Studies, pp.286-314.
Guimón, J., 2011. Policies to benefit from the globalization of corporate R&D: An exploratory
study for EU countries. Technovation. 31(2-3). pp.77-86.
Hilmersson, M. and Jansson, H., 2012. International network extension processes to
institutionally different markets: Entry nodes and processes of exporting SMEs.
International Business Review. 21(4). pp.682-693.
Izberk-Bilgin, E. and Nakata, C. C., 2016. A new look at faith-based marketing: The global halal
market. Business horizons. 59(3). pp.285-292.
Jensen, P. D. Ø. and Pedersen, T., 2012. Offshoring and international competitiveness:
Antecedents of offshoring advanced tasks. Journal of the Academy of Marketing Science.
40(2). pp.313-328.
LiPuma, J. A., 2012. Internationalization and the IPO performance of new ventures. Journal of
Business Research. 65(7). pp.914-921.
Mahajan, V., 2012. The Arab World Unbound: Tapping into the Power of 350 Million
Consumers. John Wiley & Sons.
Stiglitz, J. E., 2014. Tapping the brakes: Are less active markets safer and better for the
economy?.
Online
UK trade agreements. 2019. [Online]. Available through: <https://www.gov.uk/guidance/uk-
trade-agreements-with-non-eu-countries-in-a-no-deal-brexit>
UK’s global business environment. 2011. [Online]. Available through:
<https://ccbjournal.com/articles/uk-business-environment-positive-and-forward-looking>
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