BTEC HND Unit 43: Exploring New and International Markets Report

This report analyzes the potential for small and medium-sized enterprises (SMEs) to expand into international markets, using the example of Airdri Ltd., a UK-based hand dryer manufacturer, seeking to enter the German market. The report examines the global business environment through PESTLE analysis, assessing political, economic, social, technological, legal, and environmental factors. It identifies opportunities and threats using SWOT analysis, considering factors such as market competition, financial resources, and technological advancements. The report delves into international trading blocs, import/export processes, and various market entry methods, evaluating their advantages and disadvantages for SMEs. It provides recommendations for Airdri Ltd. to successfully navigate international expansion, considering factors like tariffs, barriers and consumer behavior, emphasizing the importance of adapting to local market conditions and leveraging technological innovations for enhanced competitiveness. The report concludes with a discussion of how to effectively use these methods to increase profit and achieve sustainable growth.

Tapping Into New and
International Markets

Table of Contents
INTRODUCTION.......................................................................................................................................3
LO1.............................................................................................................................................................3
P1 Explain global business environment in small and entrepreneurial business operate.........................3
P2 Analyse threats and opportunities face by SMEs in increasing competitive global market................5
M1 Provide evidence on global business environment in which small and entrepreneurial businesses
operate.....................................................................................................................................................6
M2 Critically analyse implications of threats and opportunities face by SMEs in increasingly
competitive global environment..............................................................................................................7
LO2.............................................................................................................................................................7
P3 Determine the advantage of international trading blocs and agreements............................................7
P4 Explain various tariff and non-tariffs barriers that exist in international trading environment...........8
M3 Evaluate advantage and international trading blocs and agreements and their implications for SMEs
.................................................................................................................................................................9
D1Critically evaluate SMEs are able to take advantage of international opportunities and overcome
barriers.....................................................................................................................................................9
LO3.............................................................................................................................................................9
P5 Determine advantage and disadvantage of importing and exporting and how to secure a deal...........9
P6 Differences between merchandise and service imports and exports.................................................11
M4 Apply appropriate import and export process in organisation and make recommendations............11
D2 Produce valid and justified recommendations for use of different approaches in international
context...................................................................................................................................................12
LO4...........................................................................................................................................................12
P7 Evaluate various methods in which SMEs can tap into international market....................................12
P8 Compare and contrast the various ways SMEs can tap into international markets with their pros and
cons of each method..............................................................................................................................13
M5 Evaluate different methods SMEs can use to tap into various markets with application of small
business or entrepreneurial venture.......................................................................................................14
D3 Justify recommendations with supported critical consideration and evaluate of implementation of
different methods...................................................................................................................................14
CONCLUSION.........................................................................................................................................15
REFERENCES..........................................................................................................................................16

INTRODUCTION
Exploring the new markets is one of the best opportunities to jumpstart the business share
and growth of the organisation. In this time, a firm faces issue to find the new opportunity and
new customers along with threats and weaknesses. International market refers to the
geographical region where one enterprise operates their business that is outside the boundaries of
the domestic market. The main aim of this report is to find the opportunities to enter into the new
global market by the SMEs firm. it helps the reader to know about the implications that is faced
by the organisation at the time of entering into the global market. This report is based on the
Airdri Ltd. It is one of the SME Company in the UK that deals in hand dryers. It has large
experience of manufacturing the innovative hand dryers and they want to open their business unit
in Germany to enhance their profits and market growth and also the longer sustainability of the
business. This report includes the opportunities and threats for firms that are helps in increasing
the profit in global market. it also helps in knowing the advantage of trading blocs for the
organization. Further it shows the importing and exporting process and their practicalities that
help in exploring the enterprise. It also includes the various ways that helps in entering the
international market. all this factors helps in enhancing the profits and growth of the
company(Deng and Yang, 2015).
LO1
P1 Explain global business environment in small and entrepreneurial business operate
Globalization refers to the framework that helps in integrating the market into the
international level. It shows the connection with different countries for expanding and exploring
the business venture in the form of economic, cultural and political activities. It is the integration
and interaction between the different people, governments and companies on a global level.
It may be influence many factors including political, social, technological etc. In this
Airdri wants to operate their business in Germany for this they analyse the global business
environment by using PESTLE analysis that has to be shown below(Izberk-Bilgin and Nakata,
2016).
 Political factor – this factor shows that the political condition in UK is unstable due to
Brexit, that means some of the European countries are separated from the EU union

because of this large business affected. But at the same time it creates the best
opportunities for small scale business to expand and explore their business. In this Airdri
wants to explore their venture in the Germany, UK. This helps in earning high profits and
sales by attracting large customer’s base because it is supported by the
government(Najmaei and et. al., 2017).
 Economical factor- this factor in UK suggest the economic condition of the UK,
because of Brexit it will affects the person’s income due to this customers spending
power on brands is low. For Airdri that is a SMEs firm will give the employment
opportunities to the local people where they operate their business so that want to attract
the customers and increases the sales and also benefitted the country’s economy.
 Social factor – As UK is one of the largesse consumers market in the world expanding
their venture into the UK is one of the best opportunities for earning high profits. In this
Airdri wants to expand their business in Germany where people are more conscious about
their health and hygiene and because of this firm wants to open their outlet in there to
attracts large customer base and at the same time fulfilling all the demand of the society
by providing best quality products at reasonable price.
 Technological factor – In terms of using the advanced technology UK is one of the
famous country especially Germany. Due to this factor it will create the best
opportunities for the Airdri that is a SMEs firm because they innovate and modify their
products to meets the customers’ demands by using modern technology so that they
exports their products into the other countries and also expand their business in Germany
this helps in earning high profits and revenues.
 Legal factor- It explains the legal laws that a government was imposed for the benefit of
employees. In this Airdri follow the act related to equal pay so that all the employees are
motivates to work and give their best because of this they expand their business unit in
Germany and attracts customers for tier innovative products. If employees are motivated
than they will achieve the task and helps in earning higher profits.
 Environmental factor- This factor shows the environment condition in the global
market in this when a Airdri wants to expand their business in Germany they firstly
examine the environment so that it is easy to deal in the market and earns a high profits.
Environment in Germany is very effective and clean so that firm wants to use those

resources that do not harm the environment resources and so that that could the place
where there is positive environment this helps in operating the outlet and earns a high
amount of profits.
P2 Analyse threats and opportunities face by SMEs in increasing competitive global market
It is very essential to identify and analyse all the opportunities and threats that is face by
the company on a small and medium scale in the global competitive market. If it is not examined
properly by the firm that they cannot survive for a long term and cannot earns high amount of
profits. TO IDENTIFY TH EOPPORTUNITIES AND THREATS BY THE Airdri it is very
essential to do a SWOT analysis so that it is easy to expand their business in the Germany, UK.
SWOT analysis helps in showing the opportunities and weaknesses that was present on a global
level it can be shown below(Solheim, 2016).
Strength Weaknesses
 The major strength of globalization
of business for SMEs firm is that it
gives the free flow of information
regarding the market and it helps the
Airdri to increase their performance
and productivity to attract the large
customer base.
 Internationalization helps the Airdri
to trade in both i.e. tangible and
intangible goods.
 This globalization helps in attracting
the large customer base for the
Airdri so that it will increase the
profits and revenues.
 The major weakness that a firm
may face it the small financial
resource and the narrow capital
structure that create the hindrances
to operate and expand the business
on global level.
Opportunities Threats
 The major opportunities that are
capture by the Airdri is that it gives
the large opportunity to expand their
 The major threats that were face by
the Airdri in the global market is
that large competition present in

market and attracts the large
customer base with the increment in
the profits and market growth.
 It also creates the opportunities to
reach the large market and capture
large base of the customers by
expanding their business venture.
 Using advanced technology helps in
improving the brand image in the
new market(Lu, 2017).
the market due to these small and
medium firms face more problems
in their existence.
 Another threat for Airdri to expand
their business in Germany is that
the taxes and excise duty that was
imposed by the government to
maintain the country’s economy,
because of this firm may increase
their prices and customers cannot
afford this.
 Another threat is due to Brexit in
UK affect the consumer
purchasing power this will reduce
the sales of the firm on global
level.
These are the opportunities and threats that was faced by the Airdri in their
expansion of business in different country of UK i.e. Germany which is one of the largest
and the high GDP company but due to Brexit it also affect the local market of the
country. Due to this firm may face some challenge like large competition present on the
market with more advanced technology. In this Airdri may use high quality hand dryers
that attract many customers to purchase who are very conscious about the hygiene and
their health. Using advanced technology helps in increasing the manufacturing process
and boosts the innovation this helps in enhancing the sales. it also strengthen the
customer relationship with the company this will benefitted the SMEs to explore and stay
in the market for longer term.
M1 Provide evidence on global business environment in which small and entrepreneurial
businesses operate
From the above scenario it provide the evidence for small and entrepreneurial business on
a global business environment that shows increasing and enhancing the profits and market
growth company wants to trade on a global level for this they need to analyse the global business

environment by using PESTLE analysis by the country in which the firm establish and expand
their business unit. This helps in understanding the needs and wants of the market with their
economic condition that is more important to know. It also helps in giving the knowledge related
to the replication of resources according to the demand of the global market. for this venture may
invest more on the research and development to research the whole market and this will develops
and modifies the manufacturing process. It is benefitted to the small and entrepreneurial firm on
the high extent when they expand their business in the new market(Schreinemachers, Simmons
and Wopereis, 2018).
M2 Critically analyse implications of threats and opportunities face by SMEs in increasingly
competitive global environment
The revenues and the profits of the business depend on the various factors like financial
resources, capital resources, workforce and their manufacturing and distribution process. For
Airdri it is very important to notify the opportunities and threats so that when they expand their
business they face no problem for this they need spend more on research departments and their
innovation in their products. This will helps in attracting the large customer base. For this
company want to analyse the SWOT which is very helpful in knowing the various threats and
weaknesses along with their strength and opportunities that will helps in longer sustainability of
the business enterprise.
LO2
P3 Determine the advantage of international trading blocs and agreements
Trading bloc refers to a type of agreements that is placed between governments of
country in which business can trade. In this government join the hands to eliminate the trade
barriers, duties, taxes etc. to facilitate the smooth functioning of the trade and helps in enhancing
the profits. in this Airdri expand their business in Germany at this time they can examine all the
trading blocs and agreements that place benefits for the firm. There are various advantage of the
trading bloc and agreements in which famous trade are European Union or the NAFTA(Ernst
and et. al., 2015).

 The major benefits of the trading bloc and agreements are the detecting the cost of
production due to which firm may enhance its productivity and earns a higher amount of
profits.
 It helps in trading free between the geographical countries and also leads to high growth,
high profits, low productivity and greater competitions. All this helps in enhancing the
market share of the Airdri and also helps in longer sustainability in the marketplace.
 In this European Union can also helps the small and medium sized firm in a way that they
offers a integrated trading block that means free trade with common regulations in the
European countries. In Airdri they expand their business in Germany and this trade bloc
helps more in free trade with common regulations(Nielsen and Wilhite, 2015).
 Due to trading blocs efficiencies in market is increases and uncertainties are eliminated
so that Airdri can trade freely and earns a high profits and with large productivity.
 In this, manufacturing process creates a ample amount of profits and differentiate their
products from their competitors this would helps the Airdri to capture the opportunity
related to attracting the large customer base without any trade barriers.
Types of trading bloc
 Free Trade area- It refers to that trade in which two or more countries in a particular
region can mutually agreed to eliminate the barrier to trade on every goods and services
that is coming from other countries.
 Customs Union – It refers to the elimination of the trade barrier between the members of
the countries and accept the unified tariff for the non- members of the countries. it means
only agreed party can remove the trade barrier and it is not for all the members.
Regional trade agreements and their role
It refers to the process of agreement that is signed by the two or more countries to
eliminate the restrictions in the movements of the goods and services in the world. it helps in
removing the trade barriers in import and export of goods. it can plays an various role for
facilitating the SMEs so that they can enjoy the globalization of business and maintain their
sustainability in the market place.

It plays an effective role for the SMEs firms as it allows them to move their goods from
one to another without any extra cost and enjoy the internationalization of the business.
It can facilitating the growth of the SMEs like Airdri and enhanced their profit margin
and sales in the other countries and it also helps in attracting the large base of customers.
This factor can encourage the SMEs for using high technology and create a new
opportunity so that they can enhance their market share.
Porter’s national competitive advantage
It includes the various aspects that can show the location advantage for certain industries
in the different national posses. It can be shown below.
 Firm strategy, structure and rivalry- In this context Airdri can use the innovative
products and services with high technology used so that they can easily enter into the
international market. and because of using advanced technology they can fierce the
domestic competition and compete it on the foreign level.
 Factor conditions- It shows the resources available with the company in this Airdri is a
SME firm that have a small amount of financial resources but have high technology
because of this they can enter into the Germany market where the people are more
conscious about the using technology. This helps in earning high profits.
 Demand conditions- In this Factor Germany is very demanding as there people are very
hygienic in nature due to this Airdri place their hand dryers so that they can attracts the
large base of customers because of high demands of the products.
 Related and supported industries- in this factor company can notify their supporting
industries like in case of Airdri the supporting industry is transporting company who can
safely transport the products to the customers so that they can enjoy the products.
 Government- It is an essential factor as without the permission of the community no
business can survive for a longer time period. in context of Airdri government of the
country supports and puts all the efforts to become a successful. as it is an SMEs firm due
to which they can encouraged more to sale their products so that company can earns
profits and it benefits the economy of the country.

P4 Explain various tariff and non-tariffs barriers that exist in international trading environment
Basis Tariff barriers Non- tariff barriers
Meaning It refers to the tax on certain
imports in this prices of goods
are high when they import to
become a less competitive.
It refers to the more rules and
regulations in which trade is
difficult.
Classification Specific duties, import duties
and valorem duties(Agarwala,
2015).
Licensing, quota in imports
and formalities etc.
Usefulness This trade is not much useful
as it s not increasing the
demand of the product and
also not increasing the price.
It is more useful as they helps
the firm to regulate the import
of quantity goods.
Capacity of earning
revenues
Trade effects
It helps the firm to earn high
revenues
In this t=it cannot contribute
more on earning high
revenues.
Adaptability It is not adaptable It is more adaptable as they
remove it easily.
Affect on price It helps in increasing the price
of goods that was imported.
it does not lead to increase the
amount of a goods and
services.
M3 Evaluate advantage and international trading blocs and agreements and their implications for
SMEs
Trading bloc and agreements are suitable for those where liberalization is follows
because it offers the opportunities and also helps in enhancing the profits. It is beneficial to
attract large customer base abut at the same time it contain more risk related to the competitors
that was already present in the market and sale their goods and services in an innovative way. It
is the major issue face by the Airdri. From the above information it is to be evaluate that trading
blocs place an important role in global business in this if company may follow CSR and provide

those goods that benefitted the customers it is helpful form them and also enhances the
sustainability in the market(Calkin, 2015).
D1Critically evaluate SMEs are able to take advantage of international opportunities and
overcome barriers
From the above research it is critically evaluated that SMEs plays an important role in
expanding the business and contributes in economy in this they adopts the major advantage like
they use advanced technology in their manufacturing process this is the major benefit for the
firm to attracts large customer base and enhance the profits in the new market. due to this it also
improves the competitive advantage in the new market with large customer base(Literat, 2017).
LO3
P5 Determine advantage and disadvantage of importing and exporting and how to secure a deal
Importing – It refers to a bringing of goods and services from foreign countries and then sale it
to the home country or consumes itself. It can be shipped, carried personally and by using e-
mails. In this a person can import those goods that are not available in the home country or those
products that contains large cost. Increasing number of imports shows the deficit situation of the
country(Le Saout and Daher, 2016).
 Advantage – The major benefit of importing the goods and services for the Airdri is that
it helps in enhancing the profit margins and also saves to pay the high tax rate. And in
importing the goods and services there is no government involvement that saves the time
and cost of trading.
 Disadvantage – the major drawback of importing is that there is a need to pay a GST
without it no goods and services are to be transferred. It also enhances the unemployment
in the country and also the local manufacturer’s loss their business because of importing
the products.
Exporting – It refers to those products offerings that is made by one country and buy by
residents of the company. It can be sent by e-mail, plane or carried in personal luggage. The
large number of exports shows the surplus of benefits to the country. in context of Airdri there
are advantage and disadvantage that can be shown below.

 Advantage – The main advantage of exporting the goods and services is that it helps the
firm to expand their market and also helps in attracting large number of customers in a
very short period of time. It also generates employment opportunity to the country and
also for the company as they get skilled and knowledgeable labor who can achieve the
target on a time.
 Disadvantage – the major disadvantage is related to the payments that are made by the
other countries in their currencies. Because of exporting the products there is a fear of
copying the latest technology that a company can use in their products.
How to secure a deal in importing and exporting the goods and services
It is very essential to secure a deal at the time of export and import of products and
services by a company so that they cannot bear any type of loss at the time of trading. For
securing a deal it is very important to take a payment in advance so when the goods are
delivering than customer cannot create any problem regarding payment. Focusing on the
packaging of goods at the time of export and import so that goods and services that were
transferred are not damage. Do marketing to secure the deal as they attracts the large customer
base who attracts the variety of customer’s because of good services they offers at the time of
trading. Do following aspects at the time of doing exports and imports for securing the deal in
which company only opens a letter of credit for the customers and examine that the methods that
was used in payments in letter of credit is according to the FEMA guidelines or not. In this
company can issue a letter of credit if the other country user does not have any IEC number.
Examine all the factors related to the country where the goods have been export and import like
their behavior, culture, values, political stability all this helps in securing the deal in an effective
way. it is a significant term to place all the documents like invoice, airway bill, shipping bill,
certificate of origin etc with the products to the importer so that it is secure from placing to one
place to another.
P6 Differences between merchandise and service imports and exports
Merchandise and service both are different from each other it is very important to
examine by using comparison table. It this company can use their concepts , its contain value and
to what extent they need management. By using this firm need to know the various things about
product and services and it can be shown below(Rafflegeau and et. al., 2015).