Tapping into New and International Markets -

Unit 356 Tapping Into New and International Markets Part 1: The Global Context for International Entrepreneurship Part 2: International Market Entry Strategy Student Name: Violeta ZAMFIR Student ID Number: 19288

Contents Introduction ................................................................................................................................................. 5 Happy Wag Limited – Company Overview .................................................................................................. 6 Part 1: The Global Context for International Entrepreneurship .................................................................. 6 a. The international commercial climate in which proprietors of small and entrepreneurial firms must function ........................................................................................................................................... 6 b. The challenges which small and medium-sized enterprises (SMEs) confront in a global economy that is becoming increasingly competitive ............................................................................................... 7 c. Overview of the global business climate that small and entrepreneurial enterprises operate in, based on factual evidence ........................................................................................................................ 8 d. Threats and opportunities that face SMEs in an increasingly competitive global environment ....... 8 e. Advantages and disadvantages of international trading blocs and agreements ............................... 9 f. Various tariff and non-tariff barriers that exist in the international trading environment ............. 10 g. Advantages of international trading blocs and agreements and their implications for SMEs ........ 11 Part 2: International Market Entry Strategy .............................................................................................. 12 a. Advantages and disadvantages of importing and exporting ........................................................... 12 b. Differences between merchandise and service imports and exports .............................................. 15 c. Apply the appropriate import and export process to an organisation such as Happy Wag Limited and make recommendations on how they could be applied in an international context ......................... 16 h. Compare and contrast the various ways SMEs can tap into international markets, assessing the pros and cons of each method ................................................................................................................ 18 i. Evaluate the various methods by which SMEs can tap into international markets ........................ 19 j. Evaluate different methods SMEs can use to tap into various markets with application to a small business or entrepreneurial venture, making valid recommendations ................................................... 20 Conclusions ................................................................................................................................................ 21 References ................................................................................................................................................. 22 2

Happy Wag Limited – Company Overview One example of a small and medium-sized firm (SME) is Happy Wag Limited Corporation. Since its founding in 2018, this firm has been able to effectively develop a specialist position in the market in the United Kingdom by providing individualised nutritional solutions for both cats and dogs. The brand's high-quality goods and evidence-based, individualised approach to pet nutrition have generated occasional attention and purchases from overseas, notably from pet owners who once resided in the United Kingdom but have subsequently relocated to the European Union as a result of the COVID-19 epidemic. This group of consumers has maintained their commitment to the brand. As a result of this new development, the founder and CEO of the firm is currently considering the possibility of making a strategic entry into the European market. As a consequence of this, the firm needs aid and guidance from knowledgeable individuals to devise an effective strategy for its initial entry into the global market. Part 1: The Global Context for International Entrepreneurship a. The international commercial climate in which proprietors of small and entrepreneurial firms must function The international business environment is rife with market hazards and other factors that can hamper the operations of corporations. Within the context of the contemporary global marketplace, businesses are always looking for innovative methods to expand their presence around the globe. When it comes to expanding their operations on a worldwide scale, businesses have some options accessible to them from which to choose. 'International market entrance modalities' is the word that is used to refer to these many options. When we talk about globalisation, we are referring to the process of evolving towards a global economy that is increasingly integrated and interdependent overall. The self-sufficient economies of individual nations are giving way to a framework that is interconnected and integrated as the global economic system changes. 4

Globalisation of markets refers to the process of bringing together the preferences of consumers in different marketplaces all over the world. This phenomenon is characterised by the coming together of national marketplaces that have been traditionally distinct and independent. Discussions on the "German market" or the "American market" are no longer pertinent in this environment. b. The challenges which small and medium-sized enterprises (SMEs) confront in a global economy that is becoming increasingly competitive Is it important to have a globally interconnected economy? Proponents of more trade and investment across international borders say that these activities lead to decreased prices for goods and services, increased economic growth, increased income for consumers, and new employment possibilities. Concerns have been raised by critics regarding the possible adverse effects of globalisation, which include the growth in unemployment rates, the worsening of the environment, and the domination of multinational corporations and global media. At present, individuals who are opposed to globalisation frequently show up at the majority of key gatherings that are organised by worldwide institutions. As a small and medium-sized enterprise (SME), Happy Wag Limited is exposed to some risks posed by both domestic and international competitors. It has been possible for the firm to endure the rivalry in the local market without experiencing a substantial impact because of the product diversification strategy that it has implemented. According to Damijan et al. (2014), businesses operating in the global market adopt a variety of techniques to captivate and engage clients. These methods vary depending on the size and scope of the business. Some businesses work specifically in the manufacturing and marketing of items that are both reusable and favourable to the environment. Happy Wag Limited is required to take into consideration some market elements to successfully do business in the global market. These market variables include instability in the economy, changing needs from customers, and improvements in technology. At the moment, the vast majority of small and medium-sized businesses (SMEs) all over the world are implementing 5

requirements of the customer. It is possible that doing so will widen its customer base. When there are more consumers, there is a corresponding increase in income. However, there are also some potential dangers. This includes the escalation of financial risks, the growth in expenditures, worries about the environment, and legal impediments that may influence the long- term stability of the firm as well as its financial performance. e. Advantages and disadvantages of international trading blocs and agreements There are some different approaches that nations might take to protect their domestic businesses from global firms. The existence of trading blocs is a crucial element that should be considered. The term "trading bloc" refers to an intergovernmental agreement that is formed when two or more governments reduce or eliminate regional trade barriers, such as tariffs and non-tariffs, to encourage commercial activity. Some benefits come with trading blocs (Dur et al., 2014): There is an increase in the amount of Foreign Direct Investment (FDI) that occurs within the country as a result of this. Additionally, it helps in the formation of expanding markets for both customers and suppliers, which ultimately results in a reduction in the costs associated with manufacturing processes. If the firm can lower its manufacturing costs, it may be able to increase its production capacity. There would be several possibilities for the manufacturers to interact with one another and compete with one another from a variety of locations. As a consequence of this, the organisation is driven to improve both its quality and its efficiency (Brouthers et al., 2015). Through the use of trading blocs, both tariff and non-tariff barriers are eliminated. In addition to this, it provides them with some different alternatives to handle several customers at the same time. Trading blocs improve the efficiency of the market and reduce the probability of uncertainty. 7

f. Various tariff and non-tariff barriers that exist in the international trading environment Tariff barriers and non-tariff barriers are both types of trade restrictions that are imposed on international commerce between two countries or organisations. The imposition of tariffs serves some goals, including the preservation of national security, the retaliation against unfair trade practices, the defence of domestic employment and the local economy, and the protection of customers from unfair corporate practices. The following topics have been broken down into their respective sections below (Gamble, 2016): Tariffs are the form of trade barriers that are imposed on businesses. The customs charges, fees, and taxes that are imposed on goods that are being carried across international borders are included in these responsibilities. Taxes, duties, charges, and other similar phrases are also used interchangeably with one another. Import tariffs and export tariffs are two further classifications that can be applied to these. The first type of payment is the one that is collected by the nation that is hosting the organisation, and it is the one that the organisation is required to pay to engage in commercial activity within that particular nation. If the group seeks to participate in international trade, the native country will apply an export duty to the organisation. To emphasise the significance of this point, it is essential to emphasise that tariff barriers may only be implemented if both countries have established a mutual agreement on trade. In the country that is hosting the event, certain materials are not allowed. On top of that, the standards that are followed in that country can be different. As a consequence of this, Happy Wag Limited is required to consider these aspects when making payments for the trade tariff (Gamble, 2016). Obstacles that are not based on tariffs The term "non-tariff barriers" refers to constraints that are not imposed by taxes and are enforced by the government. These limitations include administrative blocks and state trade. They can take the form of quotas, subsidies, embargoes, and other such policies. There are limits set on the quantity of commodities that can be imported or exported, and these limits are known as quotas. The licence may include a provision that specifies the amount. Version: It is an acronym for optional export restrictions. It is a quota that has been decided and established by the home nation in response to a request from the host nation. This is about the maximum quantity that can be shipped out of the country. 8

products as a result of this, which might increase the risks that the company faces. One of its only capabilities is the capacity to compete based on the introduction of innovative designs and a reputation for being environmentally aware. In addition to this, it may promote its corporate social responsibility (CSR) actions to attract the attention of the customers. Companies are subjected to a variety of additional restrictions that may not be in line with their company operations when they are members of trading blocs. Part 2: International Market Entry Strategy a. Advantages and disadvantages of importing and exporting The term "imports" refers to merchandise or services that are purchased by persons from countries outside of their own. The term "residents" refers to the people who live in the country, as well as businesses and the government administration. It is possible to send the imports through the normal shipping process, send them electronically by email, or deliver them in person. To get raw materials or other items that are not accessible within the country, the nation imports them. Since the government need more cash to offset the surplus of imports, the huge flood of imports is indicative of a trade imbalance. The term "exports" refers to the different goods or services that are produced inside a nation and then purchased by a country that is located outside of that nation. Any items or services that are delivered from a domestic site to a foreign destination are considered to be exports within the context of this article. International trade is not complete without exports as a vital component. When a country's exports and imports are added together, the result is what is known as the trade balance. This suggests that there is a trade surplus due to the huge number of exports. It is important to note that Happy Wag Limited is involved in both the importation and exportation of stationery products, which means that they sell their supplies on international 10

markets. This decision to engage in product exportation was made by Happy Wag Limited since the company's primary objective is to improve the organization's overall competency. The company's board of directors has decided to revitalise the company's operations and adjust the marketing strategies to increase the company's overall productivity. Importing and exporting will provide Happy Wag Limited with some benefits, including the following: a) Importing and exporting will assist the firm in expanding its market reach and increasing its income. b) Additionally, it will improve the company's ability to compete in current market conditions. c) It will make it possible for them to have access to global resources and to entice investments from around the world. Disadvantages that Happy Wag Limited faces as a result of importing and exporting: a) Participating in marketplaces located in other countries may require significant financial commitments. b) Because payments have to be made in foreign currencies, export and import transactions present a substantial issue. c) To be carried out successfully, the procedures for importing and exporting goods must comply with a long list of protocols and documents. With great care and attention to detail, Happy Wag Limited ought to carefully plan out the procedures and operations that are linked with the export and import activities. When it comes to the process of importing and exporting goods, it is of the highest importance for any organisation to adhere to the documentation and permissions that are required. To ensure that activities are carried out without interruption, the resources for investment and finance should be proportionate. The PESTLE analysis is the most effective way to gain an understanding of this within the context of Happy Wag Limited (Kalinic and Forza, 2012). Happy Wag Ltd. must comply with a variety of rules and norms of behaviour concerning forbidden items. It is essential to analyze the current policies on taxation, finance, projects, grants, trade groups, and the consistent operation of the government. The economic factors are components that have the potential to impact the prospects and competitiveness of the company venture. These elements include the economic environment, the 11

 The export and import of physical objects that can be seen and handled.  The products that are exported and imported have a large number of transactions of a lower value.  The number of businesses that are involved in the goods trade is higher since it is more controllable.  The commodities are able to be kept and preserved with relative ease.  The process of exporting and importing intangible items that can only be experienced by the individual.  There are fewer high-value transactions that occur in the context of service exports and imports.  Due to the high level of risk and capital involved, the number of companies involved in the export and import of services is relatively low.  The transaction in services is not possible to be stored and is subject to change. Similarities These are some of the parallels that may be seen between the imports and exports of commodities and services: a) Both include a process of conversion, in which inputs are then changed into outputs after being processed. b) Both make use of technology to facilitate benefits. c) It is the primary goal of businesses that are involved in the export and import of goods or services to guarantee that their customers are satisfied with their products or services. d) It is very necessary to uphold a high-quality level for both the products and the services that are being offered to successfully participate in the market for imports and exports. c. Apply the appropriate import and export process to an organisation such as Happy Wag Limited and make recommendations on how they could be applied in an international context a. Conducting market research and establishing distribution objectives: This entails identifying target markets, choosing export strategies, and selecting suitable channels for the process. 13

b. Choosing the proper channels for the implementation of the export procedure. This section will discuss the objectives for setting the pricing and conditions in the international market. c. Trade regulations: the regulations and procedures on export and import are properly handled. Patents, copyrights, and trademarks are all examples of intellectual property rights that might fall under its purview. d. Establishing connections: Inquiries are initiated with prospective overseas purchasers who have indicated an interest in the product or service. Verification is performed on the history and reputation of the purchaser. e. Quotes and terms: The corporation offers proposals and quotations to prospective purchasers of its products and services. The pricing, the bids, and the conditions of the sales are all determined by the corporation. f. Contract for Sales: The sales contract is checked and double-checked by both parties, and the terms of the transaction are discussed and agreed upon by both parties. g. Contract Execution: This refers to the process of carrying out the production, packaging, and labelling procedures. The documentation required for export has been created, and the cargo has been arranged with the appropriate details. The products are eligible for insurance coverage, which may be obtained. Once the relevant export documentation and export permit have been organised, the next step is to clear customs. a. Payment: Following the payment terms that are outlined in the sales contract, the exporter is required to provide the appropriate parties with the requisite papers to be paid. Steps to do to import: When it comes to price and terms, marketing objectives are established. a. Establishing Market Objectives b. Sourcing Products: This step involves determining the various potential suppliers and distribution channels for the products or services in question. c. Trade regulations: ensuring compliance with import regulations and guidelines is a priority. To complete the transaction, it is important to verify any valid import licence. d. Establishing Connections: Questions are sent to the necessary vendors to establish connections. 14

Licensing Pros Cons  It is a crucial method for SMEs as they need not put their funds in the deal.  It has minimal risk and large profits  The licensee knows better where to invest and how to explore the local market.  The business strategies may be revealed  The licensee may sell their product under the brand name. Franchising Pros Cons  Very minimal political risks  Low promotion cost  Ease of expansion is high  Franchises may turn against the contenders  The company’s brand image may get lost due to the bad actions of the franchisee. i. Evaluate the various methods by which SMEs can tap into international markets To broaden its footprint in new markets, The Happy Wag Limited might implement a variety of tactics, including the following: When it comes to joining the global market, exporting is typically considered to be the most effective strategy. In the future, Happy Wag Limited intends to grow its operations to other countries primarily through the process of exporting its products. The reason for this is that exporting involves fewer resources, and all that is required is a certain amount of market awareness and technical skills. The manufacturing activities of Happy Wag Limited in the host nation will experience a decrease in costs as a result of exporting. However, if the cost of making the things is lower in the nation that is hosting the event, this might also be considered a disadvantage. It is anticipated that Happy Wag Limited will reap major benefits from the economies of scale that will be brought about by the magnitude of its global sales. According to Koopman et al. (2014), Happy Wag Limited will be able to learn knowledge and comprehension 16

from the country that is hosting itself. Happy Wag Limited must comply with the rules and regulations that are in place in the country. Finished projects include: This piece of writing is about the building of a manufacturing plant in the country by two different corporations. The two businesses can build a manufacturing plant by combining their resources, which may include capital, raw materials, and technological advancements. This type of entry is favourable in circumstances in which the government of the host nation sets limits on direct investment from foreign sources. According to Lodefalk (2014), persons who possess large economic resources are in a particularly opportune position to benefit from turnkey projects. This may also improve Happy Wag Limited capabilities and reduce the financial strain that may be associated with investing. A licencing agreement is a contract in which one party grants another party the right to use their intangible property for a predetermined amount of time within the terms of the agreement. This strategy is utilised by Happy Wag Limited to circumvent the costs and risks that are traditionally connected with entering the market of the host country. This entry will allow the firm to avoid incurring expenditures associated with production in offshore locations. This specific method of admittance allows for the circumvention of laws imposed by the government. Franchising is a business model that involves making long-term commitments to another party to provide them the ability to use and sell their products within a foreign country. Trade name licences are the permissions granted to a company by another company to perform commercial operations under a certain name. These permissions are obtained from the other company. For Happy Wag Limited to be able to use franchising as a way of entering the new market, the company must comply with many rules and regulations. To avoid any adverse conditions, the corporation is obligated to protect the organization's credibility and standards of excellence. Relationships based on collaboration: A joint venture is a collaborative corporation that is founded by two or more independent businesses that are working together without any outside influence. Happy Wag Limited must come to a consensus about how the company's income and expenses will be distributed in this particular scenario. The two parties who were involved in the joint venture exercised joint control over the company and made decisions on the enterprise as a whole. This arrangement is beneficial for both businesses since it allows them to make use of 17

understanding of the market that is superior to that of the foreign organisation. Despite this, there are a few disadvantages that are connected to it. Conclusions The strategies that Happy Wag Limited has used for growth are investigated in this paper. Through the utilisation of a SWOT analysis, the internal environment of the organisation was investigated. In addition to this, an analysis of the global environment was conducted, which revealed both the possible threats and the potential benefits. The study included a comprehensive analysis as well as a graphical depiction of the advantages and relevance of trading blocs within the context of the global market. In-depth explanations were provided for some limitations, both tariff and non-tariff. The methods for importing and exporting goods, as well as the practical considerations that are involved with them, are explored in great detail. At the end of the study, a discussion was held on various methods of entering the international market. 19

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