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Introduction Of Unit 43 – Tapping Into New And International Markets Assignment
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Having a global business environment practice is very important for a small and medium sized company because any activity or situation in the global market directly affects the business of the domestic market and small-medium size. International business is much more influential because here all the companies are connected to each other in one way or another, and as a result, if a company's performance is good or bad, it will have an equal effect on other companies. This study will discuss how the international market can influence the start-up of small and medium sized businesses in the United Kingdom market. This study will also discuss in detail what factors or approaches can be considered in starting an exporting business.
Part 1: Business report
1. Introduction to the chosen country and region
A number of important factors can be considered in understanding the business environment in the United Kingdom, such as
Political factors
The company does not have to face many problems to start a startup here as the political factor in the United Kingdom is very stable. As mentioned by Epede and Wang (2022), the political factors of a country are very influential in the business environment of that country because the more unstable the political environment, the more difficult it is to make business decisions. Due to the fact that the political environment in the United Kingdom is very stable, there is no problem for start-ups.
Economical factor
The entire business economy of a country depends on the economic situation of that country, and a country's economy judging by how much risk that companies in that country can maintain (Naradda Gamage et al., 2019).
The United Kingdom's GDP has returned to the mainstream after Pandemic, due to the much better financial and financial situation in the United Kingdom (statista, 2021).
Social factor
The social factor is also much more advanced in the United Kingdom because of the high literacy rate and the people here are very supportive of any startup. Getting market support from the start makes it much easier for a startup company to take the business forward, and as a result, the risk-taking capacity of startup companies is greatly increased (Kot et al., 2020). Therefore, the United Kingdom market is considered to be a much more effective market for starting a startup company.
Technological factor
Implementing technology is becoming more and more important for a company to start a startup nowadays because it helps in reducing the cost of the company as well as maintaining the production and servicing system (Liu and Yang, 2019). The United Kingdom market is far ahead in terms of technology advancement and so there is no problem in doing business in this market.
2. A critical analysis of the global business environment and the influence of key global drivers specifically in UK
There are a number of trends in global business today and they are naturally affecting the United Kingdom, such as
Human migration
The topic of human migration is a very important topic at the moment. Many foreign employees are going to work in the United Kingdom, and there are a lot of candidates in the United Kingdom who are going to work in other countries. While this is due to globalization, it is also indirectly increasing the foreign reserves of the United Kingdom, and the fact that the United Kingdom is also boosting the economy is a very good thing (Hudakova et al., 2018).
Trade in goods and service
Business has grown exponentially in the United Kingdom over the past few years, and at the same time the import and export of this country has increased a lot (bbc, 2021).
The higher the import and export of a country, the greater the economic penetration into the market of that country, and all of these market startups are far more suitable for development (Azudin and Mansor, 2018).
International capital movements
At present, there is a lot of movement of the dollar in the international market due to inflation, and the issue is having a much more negative impact on the United Kingdom and the market (Liñán et al., 2020). International business is totally dependent on the dollar, and as a result, the United Kingdom has to spend a lot more on the international market, which is not a good thing for the economy.
Trend of global economy integration
One of the new trends in the current market is to make the economies of different countries dependent on each other through globalization, and this economic integration trend is having a somewhat negative effect on the United Kingdom and the market. Although the economic integration process is very advanced, the risk factor is much higher, and as a result investors do not want to invest in the market which is a big loss for the market at all (Sedej, 2019).
3. Discuss the rationale for SMEs to expand their business internationally
In order to expand business in the international market, small and medium sized companies have to follow a special strategic approach, such as
Increase the sales of product
In order to expand the business in the international market, it is necessary to increase the price of the product because increasing the popularity of the company in the market will help to strengthen the position of the company in the international market (Yusoff et al., 2019).
Limit the impact of market fluctuation
Market fluctuations are one of the biggest risk factors for small and medium sized businesses. This is because frequent market changes affect the customer's income and as a result market demand is greatly reduced. Therefore, it will be much more important to get the support of investors in this situation and it will be easier to implement it in the market of the United Kingdom (Tiwari and Tiwari, 2019).
Reduce the risk
Risk control is one of the most challenging issues for small and medium sized companies. This is because in this case the financial condition of the company is not adequate, and the organizational structure of the company is very weak (Das et al., 2020). Therefore, in order to expand the business in the international market, it is necessary to make every effort to reduce the risk factor.
Learn how to compete with others
Commissions are high in the international market, so it is very difficult for new players to grow their business. In order to expand the business in the international market, it is necessary to be careful about how other competitors can be tracked. In this case marketing, supply chain improvement, product quality or any other unique service implementation can be provided (Kise?áková et al., 2019).
4. Critically analyze the opportunities and challenges for global growth
There are multiple advantages to growing a business in the international market, such as
Customer support
Targeting in the international market means targeting customers from multiple countries and this can increase the number of customers (Su et al., 2022). Increasing the number of customers means more profit margins which are more profitable for the company.
Higher revenue margin
If the business is able to grow successfully in the international market, it will greatly increase the sales of the company's products, and as a result, the financial support of the company is much stronger and it is much easier to expand the business. Expanding business in the international market also makes it much easier for the company to attract foreign investors (Dvouletý and Blažková, 2020).
Brand value can increase
By expanding business in the international market, the company's capability market can be easily understood, and this helps greatly in increasing the brand value of the company in the market (Ludigdo et al., 2021). Increasing brand value makes it much easier for a company to attract investors.
However, increasing the business in the international market may increase the company's multiple problems, such as
Competition issues
The biggest problem in the competitive market is when multiple companies try to sell a specific product or service, and as a result, competition in the market is likely to increase a lot. Due to the high level of competition, even small and medium sized companies have more difficulty in making strategic decisions (Lin et al., 2020)
Uncertainty market
Due to the interconnectedness of the economies of multiple countries with the international market, the potential for uncertainty in this market is very high. Therefore, when making a decision while working in this market, there are many problems to implement, and this greatly increases the company's risk (Stude de Mello Vidal, 2021).
5. Evaluate a range of trading blocs and agreements
In the case of the trading bloc, multiple issues are affecting the UK and the business environment, such as
Free trade area
The United Kingdom government has signed free trade agreements with certain countries to keep pace with globalization (such as South Africa, and UK countries) (Hudáková and Dvorský, 2018). This free trade agreement has greatly increased imports and exports to the United Kingdom market, and as a result, it has a much more positive effect on the economy of the United Kingdom.
Custom union agreement
In this case, the government of the United Kingdom has given freedom to small and medium sized companies, so that all these companies can expand their business by dealing with the direct international market (Arsawan et al., 2020).In this case, however, no tax is paid to the Government of the United Kingdom, However, in order to expand the business in the external market, the company has to pay some special taxes.
Single market agreement
In this case, the intervention of the government is an attempt to control the whole matter. The company is allowed to do business with a particular country by taking all decisions on behalf of the government (Thaha et al., 2021). However, even in this case, the biggest advantage is that there is a possibility of increasing the profit margin as no tax is levied by the government.
All of the above trade blocs have an equal advantage, and that is that the government pays very little tax. Due to the non-collection of taxes from the government, there is an opportunity to develop a lot of startups in the Kingdom Market, and all these approaches are strengthening the country's economy by increasing the income of companies, reducing unemployment in the country (Alberti et al., 2018).
6. Critically evaluate how trade blocs help in global growth
The issue of trade blocs is creating multiple opportunities for economic and business growth in the international market, such as
“Tariff removal leads in trade creation”
Multiple free trade agreements are being signed by different countries for globalization. In this case, it helps a lot in developing new business ideas for entrepreneurs to avoid business charges (Epede and Wang, 2022). Due to this, there is a lot of opportunity to develop startups in the market which is having a positive impact on the global market.
“Higher economic growth and lower cost”
The company has the advantage of being able to target multiple international markets due to non-imposition of business charges by the company, and this is making it much easier to reserve foreign capital in the United Kingdom, which is a very good thing for the country's economy (Naradda Gamage et al., 2019).
“Catch-up effects”
The international market has created a lot of opportunities for the company as a result of making the international market much more flexible, and at the same time, it is providing much more support to attract international investors (Kot et al., 2020). The company's financial position is being greatly improved in order to gain the support of investors in the domestic market as well as in the international market.
“Gravity theory of trade”
The greater the openness of the international market, the greater the opportunity for the company to make flexible decisions, and as a result, understanding the culture and business environment of different countries makes it easier to make informed decisions (Liu and Yang, 2019). As a result, it is becoming much easier for companies to succeed in the international market.
“Increased competition”
New companies are trying to put pressure on big companies by delivering good quality products or services at low prices, and as a result, there is no problem for small companies to come forward in the market, which is a very good thing for small companies (Hudakova et al., 2018). Due to all these factors, it can be said that the international market is currently creating opportunities for new companies as well.
Part 2: Guide to small businesses
A. Advantages and disadvantages of the different types of exporting processes for exporting services
In the case of exporting services, there are multiple advantages and disadvantages to the exporting process, such as
Advantages:
Helps in market expand
One of the purposes of exporting service is to deliver a product from one country to another, and this helps a lot to expand the market of the company (Alberti et al., 2018). Maintaining exporting services is very important for international business. This is because in addition to increasing the company's profits, Marlet also has the opportunity to increase the company's profit margins and brand value.
Helps in greater production
In the case of exporting services, the company is strictly targeted to deliver a certain amount of products or services, and fulfilling this target and striving for more production helps the company build capacity (Thaha et al., 2021). The more the company's production process improves, the easier it will be for the company to expand its business in the international market, and this helps greatly in increasing the success of the company.
Budget can be increased
The company's budget is always kept upward to maintain the exporting service and this increases the risk control capacity for the company. As stated by Arsawan et al., (2020), having adequate financial support in a company helps a lot in controlling the risk of the company. Therefore, in this case it can be said that there is a good chance that the financial support of the company will be improved in case of exporting services.
Although there are so many advantages as well as multiple problems with exporting services, such as
Disadvantage:
Focus issues
In the case of exporting services, the company has to give equal importance to the internal and external market, and as a result, the company has to face a lot of problems in maintaining the objective stabilization (Thaha et al., 2021). Exporting business requires reliance on international customers as an external factor and domestic production processes as an internal factor, and since this is an attempt to target two different markets, it is Stable Strategy Development that creates the biggest problem.
Administration cost can be high
The company has a lot of potential to increase its costs if it develops products in the domestic market and specializes in the international market, and because of the high cost of living, it can greatly reduce the company's profit margins if there is no adequate income (Arsawan et al., 2020).
B. Documentation required for exporting business
In the case of exporting business, special commercial documents are given much importance, such as
Letter or credits
In case of business, the product is delivered before the payment and the payment is made after the next due date. In this case an agreement is written about how much product the client company owes and how long it will take to pay, and this agreement is called 'Letter of Credit' (Hudáková and Dvorský, 2018).
In this case, if the client company does not repay the balance within the stipulated time, a suit is filed with the International Court of Justice on the basis of this agreement.
Packing list
In this case a document specifies how many products were shipped to the client company, and in this case, after the product is manufactured and exported, the managers of both the companies match the quantity of the product (Stude de Mello Vidal, 2021). Attempts are made to make this advancement more transparent so that both companies can understand their own products and payments by analyzing this document. Creating this document is considered a sustainable approach, as it demonstrates the company's credibility.
Commercial invoice
The commercial invoice details the companies that have agreed to deliver the product to each other. As opined by Lin et al., (2020), commercial invoices contain product and payment details as well as company details and company objectives, and since the government has the responsibility to analyze this document, this document is of special importance. This document covers product quality, quantity, delivery process, time and more, so that there is no dispute between the two sides about the exporting service.
Terms of payment
In the case of exporting business, two client companies pay each other in multiple ways, such as cash payment, online payment, dollar-based payment, own currency-based payment, bond payment, or credit payment (Ludigdo et al., 2021). In this case the two companies dealing with each other will record how they will pay each other in a document, and in this case both companies try to pay each other like this agreement. This is because it is much more convenient to maintain transparency in exporting services.
Customs document
Custom documents contain information about the two companies' support, the government's legal permissions, and tax policy and security maintenance. This custom document is very important because if they do not show this decimal, the product will not be able to move from one country to another. Even in the country where the company receives the product, the customer document details are checked before the product is received. This is why these documents are so important in the export business, and without these documents, all these exporting services would never have been completed, and these basics would have added to the many risk factors. Therefore, in the case of international business, it is virtually impossible to conduct international business without these documents.
C. Evaluation of the methods of tapping into new international market
Following certain methods to review the international market can be very important, such as
Use localization
In this case, the domestic company should collect the information of the company through the local network of the country dealing with the international company. In this case, the actual situation of the international market will be better known and it will help in developing the strategy by understanding the market (Dvouletý and Blažková, 2020).
Advantage:
It will be useful to know a lot more detailed information to collect information from international markets and local guides, and as a result, it will be much more convenient to make strategic decisions.
Disadvantage:
Large communication gaps can be faced by the company in collecting information from local sources, and as a result, it will be much more difficult to collect proper information.
Use local social media
In this case, information about the company and the market can be collected by analyzing the various social media platforms of the international market, and with the help of social media, it will be much easier to develop a strategy by understanding customer feedback and demand (Ludigdo et al., 2021).
Advantage:
Making good use of social media will help to make informed decisions by communicating well with the local market and customers, and as a result, much more relevant information is available from the international market.
Disadvantage:
There is a lot of emphasis on influencing issues on social media so it can be difficult to get relevant information from here.
In addition to this, the company's website analysis makes it much easier to understand the international market. As mentioned by Dvouletý and Blažková (2020), to understand the international market, one can easily understand the product quality and market demand of the market by tracking the websites of different companies. Therefore, it is much easier to understand the various websites of the international market and make the right decision.
D. Recommendation on appropriate methods and countries to meet specific business requirements
In order to make a decision according to the business requirements of the international market, appropriate decisions can be made by understanding the activity of different competitors. Many experts believe that understanding the activity of different competitors in the market and making appropriate decisions helps in strategy development for the company.
Overall conclusion
After discussing the above entire study, it can be concluded that the political factors of a country are very influential in the business environment (especially for international business) of that country because the more unstable the political environment, the more difficult it is to make business decisions. It is also known that the higher the import and export of a country, the greater the economic penetration into the market of that country, and all of these market startups are far more suitable for development. The international market has created a lot of opportunities for the company as a result of making the international market much more flexible, and at the same time, it is providing much more support to attract international investors.
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