Unit 43: Sykes Holiday Cottage and International Market Strategies

This report, focusing on Unit 43, examines how Small and Medium Enterprises (SMEs) can leverage international market opportunities while overcoming associated barriers. Using Sykes Holiday Cottage as a case study, the report evaluates the impact of political, economic, social, and technological factors (PEST analysis) in a globalized environment, highlighting both threats and opportunities. It explores the advantages of international trading blocs and agreements, as well as tariff and non-tariff barriers. Furthermore, the report analyzes the advantages and disadvantages of importing and exporting, including securing deals, and differentiates between merchandise and service imports/exports. Finally, it outlines various methods for SMEs to tap into international markets, providing a comprehensive overview of the subject matter.

UNIT 43 TAPPING INTO
NEW AND
INTERNATIONAL
MARKETS

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
Section-1..........................................................................................................................................1
Evaluation of the way SME are able to take advantages of international opportunities and
overcome barriers...................................................................................................................1
Various threat and opportunities available for company in globalised environment.............2
Advantages of international trading blocs and agreements....................................................3
Tariff and non tariff barriers existing in international environment.......................................4
Section 2...........................................................................................................................................5
Advantages and Disadvantages of importing and exporting and securing deal.....................5
Difference between merchandise and service imports and exports........................................6
Section 3...........................................................................................................................................7
Methods to tap into international market................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
International market is geographical region where particular organization operates its
business in order to earn more market share and profitability. Small medium enterprise are firm
that have employees around 50-250 that are continuously working for growth and operation of
business in international market. Sykes Holiday cottage is an enterprise that has a portfolio of
11000 properties across Ireland and UK that emphasized on providing better services to
customers so that end objectives can be achieved. It has covered essential information related to
several threats and opportunities business has to suffered while exposed to global environment.
Moreover, consist information related to import and export process used by organization and its
advantages and disadvantages. At last, it has highlighted points related to method related to SME
with pros and cons related to international market.
Section-1
Evaluation of the way SME are able to take advantages of international opportunities and
overcome barriers
Global business environment can be termed as environment of different foreign countries
in which company operates in order to earn maximum profitability and market share. Global
business environment is dynamic in nature as there are various changes in external environment
that directly impact on business operation. Likewise, social, technological, political and
economical that has both positive and negative effects on company (Walkshäusl, Weißofner and
Wessels, 2019). Therefore, the way SME that is Sykes Holiday cottage has taken advantages of
global opportunities and overcome barriers can be illustrated through use of Pest model such as:
Political Factor: It specifies about policies, rules and regulation that are made by government
related to business so that no harm can be caused to others in any circumstance. Likewise, Sykes
Holiday cottage is operating in UK and government has implemented Brexit policies that has
caused loss to company. As it has decreased movement of people therefore company in order to
cope up with threat has make use of digital technologies to generate awareness among people
that are living in different parts of world.
Economic Factor: Recently, UK economy is suffering from economic slowdown due to
uncertain political condition therefore people are less interested to make unnecessary expenses
resulting in decreasing overall sales. On contrary, there are various people that are interested to
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come UK in order to have fun and entertainment so it has provided them opportunities to expand
business by meeting their respective expectancy (Du and Jaw, 2018).
Social Factor: It can be stated that taste and preferences of people keep on changing so
company in order to sustain needs to meet requirement of customer's beyond their expectancy.
Such as nowadays, most of the people like to spend time out of their home or move to several
destinations to have fun and leisure time. Therefore, Sykes Holiday cottage by seeing social
factor as opportunities has planned to provide information to people about qualitative services
provided by company to fulfil their needs.
Technology Factor: At last it can be stated that Sykes Holiday cottage is Small medium
enterprise in United Kingdom so it has limited financial resources to invested in innovative
technologies for better outcome. Such as the company in order to make the best use of
opportunities has emphasized on digital marketing that contribute in generating awareness
among maximum number of individuals.
Various threat and opportunities available for company in globalised environment
Global environment is wide in nature as there are numerous factors that keeps on
changing and directly impacting on growth and operation of business. Threat is term that
explained about the things that acts as a threat to an individual while opportunities is alternative
options that could yield maximum benefits to company (Meier, 2019). Therefore, various threat
and opportunities available for Sykes Holiday cottage in global environment can be explained
below as:
Opportunities Threats
 Digital marketing: The company have
opportunities to expand its business by
making use of digital marketing. As
there are various individuals that spend
lot of their time in playing games,
watching videos and gathering
information through social platform.
 Global expansion: Moreover it can be
illustrated that globalization has
provided opportunities to Sykes
On contrary, it can be stated that there are
various threat that company is facing in recent
scenario such as:
Covid-19: It can be stated that it is an
pandemic and uncertain situation that has acts
as a threat for Sykes Holiday cottage.
Therefore, company in order to promote its
business operation has focused on ensuring
safety of people by regularly cleaning of
rooms, sanitizing them. Thus, all these helps
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Holiday cottage to enter into
international market through different
methods so that company can enjoy
maximum market share (Frei, Loder
and Bening, 2018).
influencing people to select it rather than other
competitors.
High competition: Another major threat
faced by Sykes Holiday cottage is increasing
competition level within industry. As there are
various firm that are providing better services
so it has lead in threat to company. Thus,
Sykes Holiday cottage to safety, security and
quick services to customer's.
Advantages of international trading blocs and agreements
International trading bloc can be termed as group or different countries that work
together to provide special deals from trading. In another words, it can be stated that countries
within European Union can free trade with each other without any tariff or tax. Free trade
agreements can be stated as exchange of good and services between international borders with
little or no government quotas, tariffs and subsidies. So, there are advantages of both
international trading blocs and agreements that can be enjoyed by Sykes Holiday cottage such
as:
Internation specialisation: The advantages of international trading blocs and agreements is that
it lead in international specialisation as there are different countries that are manufacturing
different products and services. Thus, trade between them contribute in sharing of services and
facilities thereby satisfying needs of people beyond their expectancy level.
Linkage between countries: It is second advantages as free trade agreements between countries
helps in interchange of resources, knowledge and culture among several nations. Thereby,
developing strong interconnection or relationship between countries due to share of resources
(Castaño and Flores, 2019).
Benefits to customer's: Moreover, it can be stated that international trading blocs helps in
providing maximum benefits to people that are living in society. As they have more choice or
option to select in order to satisfy their respective requirement in the best possible manner. Thus,
it can be stated that people can easily get products or services of Sykes Holiday cottage at
minimum price possible.
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Optimum utilization of available resources: Through free trade agreements and international
trading blocs countries are able to make best use of their available resources thereby providing
maximum benefits to people. Or companies in order to export products or services to foreign
market make optimum utilization so that they can be provided to customer's in minimum price
possible.
Tariff and non tariff barriers existing in international environment
The tariff barriers existing in international environment are as follows:
a) Import tariff: It is the custom duty which is imposed by country importing goods from
outside businesses. This is done basically to protect usage of domestic goods within the country.
b) Specific duty: This tax is basically decided by the physical characteristics of the goods. The
amount of money to be levied is decided by the weight of the goods.
c) Transit duties: They are levied on goods which are produced in one country and are passed
from one country to another. They are levied on the goods which are passing by another country.
This leads to an increase in prices and reduction in number of goods being traded in lieu of tax
(Cheong and Tang, 2018).
d) Ad Valorem duty: These duties are imposed according to value of commodities being traded
between countries. It is generally a percentage of the invoice value of the goods traded.
The non-tariff barriers which exist are:
a) Red tape: There are number of restrictions when a company does business with other
country's business. There can be excessive tedious paperwork involved in launch of a business
branch with 'n' number of permissions required to get license. The rules and regulations to be
followed of a country can be rigid and redundant which can lead to discouragement. Also the
bureaucracy of the country can hinder the process for self gains (Kinzius, Sandkamp and Yalcin,
2019).
b) Quotas: It is the number limit on the quantity of goods which can be imported or exported. If
an importer is importing more goods than allowed, a penalty or fine will be imposed.
c) Voluntary export restraint: This quota is fixed on the exports by the exporting country on
request of importing country. This will define the maximum number of goods which can be
exported.
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Section 2
Advantages and Disadvantages of importing and exporting and securing deal
Advantages of Importing:
a) Cost saving: The cost of manufacturing goods get saved by the importing country. The
country although gets dependent on another for the product but still the costs of procurement and
manufacturing goods get saved. This also saves cost of having set up of machinery and the
environmental implications.
b) Global relations: A country while trading goods with another develops a business relation
with another. They can mutually benefit from the trade and can also come in contact with mutual
friend countries (Cheong and Tang, 2018). The Sykes holiday cottage houses people from
different countries which builds a positive image of the nation as a whole by the service catered.
Disadvantages of Importing:
a) Dependency Increases: It happens that a country comes in contract with another country of
certain products. Now, problems may arise sometimes when the other country is not able to
supply goods timely. This leads to disruption in supply and demand.
b) Domestic Market: Scope for domestic market decreases as the market may get captured by
other country and customer can get used to other brands. The domestic retailers will have to
make extra efforts to make their brand popular then.
Advantages of Export:
a) Business expansion: If a country has ample resources of a commodity it can get profits by
exporting the products in excess to other countries and improve business relations. There lies a
market for the country in another country's customers (Kinzius, Sandkamp, and Yalcin, 2019).
Sykes holiday cottage can open up branches in other adjoining countries as it entertains
international guests and through mouth of word,may be able to get famous in other nations as
well.
b) Bonus benefits: The country's GDP increases and companies gets revenues for the exports.
This helps in growth of the economy and lessening of the current account deficit which is the
difference between total exports and imports.
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Disadvantages of Export:
a) Foreign Exchange of rate: The fluctuation in currency rates of the countries trading may
hamper profits. The revenues estimated on number of goods may decrease and lead to profit
decline.
b) Return of Goods: It happens that if a country's exports could not match up with quality
standards then goods may get returned. This leads to a loss for production costs gone in the
goods.
Securing a deal
The deal can be secured in the following ways:
a) Having a contract: It happens that new businesses in know of each other, may do a deal
verbally. This may cause problems later on. The best way is to follow the legal procedure of
having a written contract or agreement with the trading partner.
b) Right Invoices: The invoices exchanged have to be firstly decided between the parties
regarding the format which has to have all particulars clearly mentioned. This will give a formal
approach to the trade deal (Veeramani and Aerath, 2020).
c) Legal formalities: The trade of goods have to be approved by the countries where the
exchange of goods shall take place. This makes the companies free from all hassles which may
occur later on.
Difference between merchandise and service imports and exports
Merchandise goods are tangible products exchanged of certain brands which are sent out for
exports or imports. These goods are relatable to the customers as they use them and a customer
brand relation occurs if the quality of the brand suits them. A country can be dependent on some
other country for a particular goods segment. They can be measured on a census or Balance of
Payments basis. These goods require transportation from one country to another. For e.g. usage
of organic products in neighbouring countries as exports (Hrechyshkina and Samakhavets, 2019).
Service imports and exports represent non product global earnings. Customers make
payments for usage of services to the company they took service from. The companies which
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have established branches in different countries are in different businesses offering a variety of
services. It may be a form of financial service or it may be a hospitality service. For e.g. a
customer staying at Sykes Holiday cottage who is from a different country than UK will be
paying for the service to the organisation. This will be referred to as a service export.
Section 3
Methods to tap into international market
International market are denoted as trading across the boarder. This involve utilising the
scale of market at the international level to sale the products offer by organisation. Following are
the techniques and practices can be used by the Sykes Holiday Cottage to expand its business at
the international level.
Joint venture
Joint venture is among the major policy part of the business expansion. Under this
practice company can develop strategic partnership with other SME operate business in the
similar sector. This will favour the organisation to understand market condition effectively.
Analysing and assessing market play huge role for the organisation to entertain business
objectives. Joint venture is the practice where two similar organisation come together to deliver
business objectives (Katekele, 2018). Expansion is always a risky practice as it require plenty of
resources. Joint venture will provide an opportunity to entity buy business overseas. Sykes
Holiday Cottage can expand its growth possibilities by entertaining this option for business
growth.
Pros of joint venture
 This practice help in allowing new insights and expertise in market.
 This allow the organisation to allocate better resources at different functional or
operational area of practice.
 This is a key option to mitigate the short term losses organisation entertain at new
location.
 Both the parties contribute in sharing risk of business that strengthen the growth
possibilities and stability of company.
 This is a flexible approach to tackle the business risk at the beginning of the operations.
 Joint ventures can easily closed with the proper consent of both the parties.
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Cons of Joint venture
 Many times joint venture prove as a vogue objective for business expansion.
 This can restrict the flexibility of business transactions (Fraszczyk, Weerawat and
Kirawanich, 2020).
 Business principles do not believe that there is such thing call as equal involvement.
 This can create imbalance between both the entities.
 It can limit outside opportunities of the business.
Franchising
Company can use this technique where it can allocate its franchise in the overseas
market. This will also be an effective business expansion option where company can give its
franchise to other business houses and investors. This will save potential resources of the
organisation to achieve the success of the entity (HR and Aithal, 2020). Under the franchising
policy company do not require investing on their own rather it needed to motivate other
investors to invest in company's business. Under this practice local investor of the location and
the business houses buy the franchise of the Sykes Holiday Cottage and start the same business.
Pros of franchising:
 Franchise minimises the risk involve in business.
 This technique restrict the investment required to expand business further.
 This motivates the company's brand value.
Cons of franchise:
 This can demolish the brand value of company.
 Franchise agreement in many cases imposes restrictions over how to deliver business
operations.
Partnering
This is another key approach that Sykes Holiday Cottage can use in order to expand its
services. Under this approach company can form strategic alliance with other investors and
organisation. In this practice company can enter the new market under the partnership with other
companies in the same market place (Hung, 2020). Sykes Holiday Cottage can form partnership
with local business houses in the new market so that company can easily study the whole market
and channelises policies apparently. Partnership business make a significant advantage in favour
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of the organisation that Sykes Holiday Cottage do not require to invest the entire money to open
up business under new location. Risk is also distributed in all partners under this practice.
Pros of partnering:
 This allow sharing risk of business.
 Investment is also shared by partners that also minimize risk of business.
Cons of partnering
 This technique causes to issues between partners.
 Ownership also challenges under this method.
Buying company
Sykes Holiday Cottage also carry a strategic option where it can buy a company or an
organisation at the new location. Under this approach company can buy the business houses that
in under loss. This technique or strategy is an effective option as Sykes Holiday Cottage do not
required to construct a new building to deliver its own service (Huo and Chaudhry, 2021). The
organisation that will be bought by the company will also have its own customer base which will
ultimately becomes a key customer base of Sykes Holiday Cottage due to the strategic advantage
of this policy. In case of hospitality organisation customer base play a huge role for the company
to gain success in the market. If the organisation get a potential customer base even at the initial
stage of business that will boost up the further growth opportunities of such respective business
house.
Pros of buying company
 This will favour the organisation to expand at the international level.
 This is well effective to attract customers at the new market.
Cons of buying company
 It is very expensive as a choice to expand business at international level.
 This is among the most risky approach to achieve business expansion.
CONCLUSION
Business expansion is about to expand the business at new locations. This involve going
beyond the existing limit of delivering business operations. Business environment at the
international level is more challenging than the local or domestic market. Competitors at the
international market are also more powerful that provide huge competition to the organisation
which further challenge the business entity to achieve success against the business expansion.
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Company can use different practices like buying company, partnering, franchise technique and
such related approaches to successfully expand business at the new location.
REFERENCES
Books and Journals
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