UNIT 43 TAPPING INTO NEW AND INTERNATIONAL MARKETS,Undergraduate assignment, University level assignment , Assignment solution, Plagiarism free, Cheap rate, BTEC-HND, UK,
Introduction:
Marketing strategy has been very significant to derive
success in the business. It is very necessary to understand about the internal
efficiency and capacity to cope with the changing situations of business (Mrazova
et al., 2017). Global marketplace is adorned with competitive analysis. Derwent
& Sons Stationary is going to be analyzed by the author to evaluate the marketing
strategy and plan. In this context, strengths, weaknesses, opportunities and
threats will be discussed here. Moreover, process of international market is
going to be discussed here. For developing the implication of international
business, there needs proper plans and strategies. Thus the author is going to
demonstrate the requirements for having success in the international market.
Company background:
The author has selected Derwent & Sons Stationary
to evaluate the concerns of going into the international market. Derwent &
Sons Stationary has already gained much popularity in UK for serving unique
stationary products to the consumers. Along with stationary products, this
organization also serves fashionable items also (Mrazova et al., 2017). The
main customers of Derwent & Sons Stationary are the students and artists. Those
customers prefer to get such products from Derwent & Sons Stationary
regularly as this medium enterprise can meet the demands. From the success in
local market, the management of Derwent & Sons Stationary is very Keen to expand
the functions into international market.
It can be pointed more specifically in India.
Serving the international market is recognised as very strategic concept and it is very crucial to be maintained. Any failure of maintenance can disrupt the development of the business.
The author has evaluates PESTEL analysis of Derwent
& Sons Stationary for understanding global business environment.
Political factors: Political factors
are very crucial which can hinder as well as support the idea for expanding the
wings of business in new markets. Taxation, tariff rate, environmental law and
so on are included under political factor. Derwent & Sons Stationary want
to expand the business into Indian market. The organization must evaluate the
impressions of the government about the state where they want to enter so that
the plan for entering into the market can be effective (Mrazova et al., 2017). It
is important for entering in any new market the manager should evaluate the
entering system for foreign business organization. Actually India is a large
country where the population size is 1.30 billion. So there is no doubt that it
is a big market. Hence, India has achieved the best democratic nation in Indian
region. India has followed progressive taxation system.
Economic factors: As Derwent &
Sons Stationary has a plan to enter into Indian markets. Interest rate, tax rate, exchange rate, and government
ruling over the policy and so on needs to be concerned by the business
organization. As the products are unique of Derwent & Sons Stationary, it
is expected that it can handle the requirements effectively (Mrazova et al.,
2017). The average exchange rate of India against USD is 70-75 INR to 1USD and
corporate tax rate is 25.17 percent in India. But the GDP growth rate is
falling per year in last three year.
Social factors: This factor will
offer a great challenge for Derwent & Sons Stationary. Perception of the
customers will be a challenging factor. Buying power of customers, behaviour,
social patterns and so on must be evaluated properly (Allen et al., 2014).
Technological factors: Derwent
& Sons Stationary has already attracted the local customers with excellent
qualities of products due to have better technological development. However,
the organisation wants to develop the pattern for manufacturing process,
communication technology and so on.
Figure 01: Content of PESTEL
Source: (Mrazova et al., 2017)
Legal factors: Derwent & Sons
Stationary is a UK based company. As a new place is going to be served, legal
factors will be a great issue. International legislations and regulations must
be maintained (Allen et al., 2014).
Environmental factors: At
present, environmental factors influence the growth of the business a lot. Derwent
& Sons Stationary have to be aware of protecting the environment by
applying water management properly
In order to expand the business globally, it is very significant
to grab all available opportunities ahead for business functions. Internal
strengths should also be evaluated in a better hand. Thus SWOT analysis is very
important for measuring the degree of scopes for entering into the international
market (Mrazova et al., 2017).
The author here evaluates the SWOT analysis of Derwent
& Sons Stationary:
Strengths:
·
Unique products
·
Loyal customers
·
Better pricing policy
·
Left-handed persons are served special products.
Weaknesses:
·
Less control over costing technique
· The manufacturing process needs more technical
Opportunities:
·
Opportunity to enter into new markets
·
Opportunity to grab more customers from Indian
market..
Threats:
·
New competitors are also emerging
·
Present economic aggression is very high
·
Recession and exchange rate issue
It is acknowledged that global strategy of business is
quite opposite comparing to the local strategy. What is an efficient way of
attracting the customers of locally cannot be effective at a same degree at the
international market. It is derived due to demographic factor. International
customers have not similar taste of the related products. Moreover, customers’
buying ability here plays an influential role. Again, customers’ perception is
not same here. In international market, same products may fail to attract the
customers. Thus, Derwent & Sons Stationary must take effective strategies
to get success in India. Better understanding with the customers and better
technological advancement a derive expected result for the firm.
It is very important for an SME to analyse and
understand the internal efficiency in details. By procuring SWOT analysis, an
SME can do it effectively. However, there should be more focused points for an
SME. It has already been mentioned that Derwent & Sons Stationary has
decided to expand the business in Indian market (Allen et al., 2014). The fine
has better reputation in the local market for unique products. However, global
market place is different than the local market. It will be imperative for
Derwent & Sons Stationary to improve the product differentiation strategy
so that the firm can able to derive new products for the new customers.
It has no doubt that every firm faces some risks for
entering into global environment. It is a natural process of business
environment because of high intensity of global competition. However, there
lies several opportunities also for an SME. What is needed here is to apply
effective strategies so that all the opportunities can be grabbed and at the
same time associated threats can be lessened. For Derwent & Sons
Stationary, there are some underlying opportunities. Derwent & Sons
Stationary provides unique products and it has already been known to the target
customers slightly. There are scopes for deriving more unique products to
attract the targets customers. However, the firm will face some threats also.
Tariff policy, exchange rate, political instability and so on can posse’s great
threats to the firm. However, Derwent & Sons Stationary must face those
threats with effective strategies.
There are several factorss for operating international
business in order to expand the wings. Actually business bloc is a process of
being agreed with the terms between two or more nations. The agreement is
generalized by reducing trade barriers between the counties so that
organizations between the agreed countries can perform business well. It is
done to eliminate the aggression of international companies. European Union can
be stated as a great example of trade bloc.
It materializes some advantages. Those are here:
Manufacturing
cost:
The countries being in the agreement can reduce overall manufacturing cost. As
a result, more products can be manufactured. It has already mentioned that
population size of India is too big so there are more change getting more
demand of Derwent & Sons Stationary’s product. If an organization can
increase the production then variable cost would be increased but fixed cost
will be same. As a result the manufacturing cost will be reduced.
Maintaining
quality: There is positive competition among the companies to
maintain quality of the goods. If organization produces for a new nation then
organization should be focused on quality more to improve brand value and
create brand awareness to the consumer.
Increasing
profitability: As production can be increased,
profitability can also be increased. (Baker and English, 2013). Organization
increases production when they forecast that the demand of the product has
increased then they produce more and sells more. Derwent & Sons
Stationary can enter in India market then they could be increased sales and
their profitability will be also increased.
The
reason of trading bloc is reducing the asscociated barrier. So, the firm does
not face the pressure of excise duty.
Associated agencies and authorities impose some
restrictions by enabling excise duty and other factors of international
business. Actually, the authority imposes such barriers to improve the state's
business process and remove aggressions.
There are various duties and factors levied on
international business.Those are here:
Tax barriers: Multinational business
firms obtain some obligations in the context of tax, custom duty, fess and
other charges when the business is operated between two nations. Tariff
barriers are imposed so that the government can earn more for running the state
and at the same time can remove unnecessary competition to save the local companies.
Tariff barriers can be segmented as import tariff and export tariff. The
country being exported to another country has to pay export tax to the related government
and it is good for the native country. At the same time, important duty is
generated by paying import duty to the government of host country. Derwent
& Sons Stationary is planning to launch business in India. So they have to
follow import taxes rules. Actually they will not manufacture any product in
India rather they will bring it from their host country.
Thus, before entering in the international market,
tariff barriers must be evaluated. Derwent & Sons Stationary needs to
analyse the tariff barriers of India..
Non-tariff barriers: The
government of related country can impose restrictions of trading as non-tariff
barriers by following:
Quota: Government
can make restrictions that there is a certain limit of products that can be
imported or exported (Mrazova et al., 2017). Derwent & Sons Stationary will
be some restriction to import from UK because of there are some local company
such as JK paper, Kangaroo group and so on are running business. Government
also need to balance in business.
VER: Voluntary
Export Restraint refers the agreement between two countries for trading maximum
amount of products. Both governments are in an agreement to export highest
number of products between the countries.
Subsidies: To
improve the efficiency of the local companies so that competition with the
international companies can be faced, host government eases restrictions for
the local companies as a matter of subsidies. But Derwent & Sons Stationary
doesn’t need to be made any contract with local company to run a joint venture
business.
Administrative dealings: To
maintain a good shape of the local business, government always wants to import
less. That is why, for any process of imports, administrations of government
checked the imported products whether there are any violation of rules.
State trading: State
trading policies are not same like trading between the local companies. There
are specific rules and regulations that must be incorporated by the states for
trading of goods and services (Bertoletti et al., 2017).
Though terms of international business obligations
have become essential for improving the business viabilities of the large
companies, SMEs do not get so many benefits in this context. Trading blocs reduce
barriers for international trade. As a result, large and established companies
get the scope for expanding business. Thus, an SME like Derwent & Sons
Stationary gets severe challenges to get success from this context. However,
with determined plans and strategies, an SME can also be successful (Bertoletti
et al., 2017). Derwent & Sons Stationary should innovate new manufacturing
process and ideas to derive more unique products to get new customers. Trade
blocs here play a great role also. Because of trade blocs, SME like Derwent
& Sons Stationary gets the opportunity to enter into international business
and more precisely in India.
At first, Derwent & Sons Stationary will not get
expected customers and profits due to increased cost of the products. However,
the firm must generate strategic actions to capture more customers.
Every small and medium firm has to accept a lot of
challenges to compete with local companies in terms of international business.
There are several barriers in this context. The main barrier derives
financially. An SME does not have enough find to improve R&D, communication
technology and so on like large companies. Derwent & Sons Stationary has to
face such challenge also. In this case, the management of Derwent &Sons
Stationary must be strategic. Agreement has to be adopted with local companies.
It can reduce the overall cost. The government of his country has to be ensured
that the products are eco-friendly and it will not possess any threat for the
environment.
For operating business, imports and exports are both integral
processes. International business includes drifting for deriving products as
well as other factors from other states whereas export refers to the process of
sending goods and services to other countries. Due to globalization, import and
export get more précised (Bertoletti et al., 2017).
Derwent &Sons Stationary wants to enter into
Indian market to expand the business. Thus the firm has to enable both
importing and exporting. There are some advantages and disadvantages for
Derwent & Sons Stationary in this context. Those are here:
Advantages:
·
Tapping into international market will be
easy.
·
It will derive wide range of products and
services.
·
More areas can be served which will ensure
more revenues.
Disadvantages;
·
More funds are required in this context
for Derwent & Sons Stationary.
·
More tariffs have to be paid. As a result,
price of the products will need to be increased also.
·
It is a very crucial process.
However, to secure a deal in the international market,
Derwent & Sons Stationary must evaluate the legal procedures properly. Necessary
find must be raised to tap into the international market. Agreement must be processed legally for smooth
operation of the business (Bertoletti et al., 2017). They can recruit legal
advisor who will deal this import and export operation to reduce the cost by
finding gap of taxation system. Every nation has own import category of
product. But a product would be categories into various sections. So the legal
advisor can find the perfect category to reduce the tax.
It has become a very common process of international
business in order to impart importing and exporting of products.. International
trend of business is associated with importing as well as exporting of products
with each other. There are some certain measures into where differences can be
attributable. Those are here:
|
Merchandise |
Service |
|
The
mentioned terms are associated with tangible product. |
The
associated terms are not tangible goods a nation or an organization. |
|
Example:
Goods. |
Example:
Franchise |
|
Merchandise
needs to follow several number of laws of import and export |
Service
needs to follow less law than merchandiser. |
|
Merchandise
needs to wait a long time for shipment of goods. |
Service
doesn’t need to wait a long time. It requires documentation time only. |
Merchandise international trade and
external trade: Merchandise
international trade is the process of improving tangible or physical products
from foreign country. Physical assets are the examples of merchandise imports
in this context. Organizations and individuals agree on the terms between each
other to import and export of physical goods. Both organizations and
individuals related in the process have to pay related tariffs, custom duty and
so on.
Service exports and imports: It
is an international factor from deriving
non-product service Organisation or individuals earns from the other county or
individual in exchange of providing service. At the same time, payment has to
be made to individual or
organization for receiving services which are not tangible. Examples of such
are accounting services, tourism and so on (Bertoletti et al., 2017).
Thus there underlies significant difference international
trade and external trade for international business.
Import process:
·
Gathering sources of fund
·
Availing import license
·
Managing transportation documents
·
Making an offer to the buyers
·
Providing legal documents with LC
·
Appointment of clearing agents
·
Receiving documents
·
Preparing bill of entry
·
Getting delivery order
·
Clearing goods
·
Payment to clearing agent
·
Payment to exporter
·
Following up
Export process:
·
Obtaining IEC (Importer-Exporter Code)
number
·
Getting export registration
·
Sending samples to the importer according
to the order
·
Starting manufacturing goods
·
Obtaining quality control certificate
·
Dispatching goods for transit
·
Contacting clearing agent
·
Handing the goods over the clearing agent
·
Making port payments
·
Providing legal documents of the importer
to the bank
·
Getting payment from the importer
Derwent &Sons Stationary needs to process the
above mentioned points to process import and export. As the firm is going to
Indian market, the import-export process must be enabled. The author recommends
that Derwent & Sons Stationary should avail all legal permissions and
documents so that the import-export process can be lethal.
It has been recognized that mainly four different factors
for global business prevail such as ethnocentric, polycentric, geocentric and
Regiocentric.
Ethnocentric approach: Ethnocentric
approach refers that the mission, vision and recruitment process will be done
from the parent country in terms of international business.
Polycentric approach: Polycentric
approach refer the international business concept of applying host country’s
mission and vision in terms of applying actions and recruitment of employees (Kehoe
et al., 2013).
Geocentric approach: For
international context, geocentric approach is very significant. It refers to
materializing idea irrespective of any nationality or rulings. The most
suitable objectives and staffing process are processed under this approach (Kehoe
et al., 2013).
Regiocentric approach: This approach implies of applying same
strategies for a group of countries. It is done when an organisation has
several branches in different countries having similar characteristics.
The author urges that geocentric approach will be very
suitable for Derwent & Sons Stationary.
There are several methods for tapping into
international market. Those are here:
Licensing and franchising agreement: Derwent
& Sons Stationary can go to global context by licensing and franchising
agreement. Licensing and franchising will give Derwent & Sons Stationary to
get the rights of operating services of other companies.
Creating joint ventures: Crating
joint ventures is another way for going to global context. This process gives
an opportunity to carry business jointly with another company (Kehoe et al.,
2013).
Partnership with larger companies:
Partnership with larger companies is another scope for going into international
market. The SME can get opportunities to operate large scale of business (Kehoe
et al., 2013).
Establishment
of branches: This is a wide spread opportunity. An SME
can expand branches to another country for tapping into international arena.
An small and medium organisation can go into
international market in associated with licensing and franchising, joint
ventures, partnership with large organisation and establishing branches into foreign
countries. Every method has some pros and cons (Kehoe et al., 2013). Those are
here:
Licensing and franchising:
Pros:
·
No loss will be suffered
·
No need to make any investment for the
licensor
·
Evolving better knowledge from the
licensee
·
No risk of getting copied by another
company.
Cons:
·
Licensee can leave the agreement and start
own business as same prospect of licensor
·
Privacy will be revealed
·
Raising conflict of interest
Joint ventures:
Pros:
·
Scope for enjoying more resources
·
Sharing of risks
·
Flexible opportunities
·
Large scale of trade can be possible
·
Enhancing
communication channels
Cons:
·
Imbalance of ownership
·
Conflict of interest
·
Leaving
is not easy as for legal constraints
Partnership with large organisation:
Pros:
·
Larger fund
·
Large scale of production
·
More profitability
·
Better control
Cons:
·
Less scope of pertaining plans
·
SME becomes a subordinate here
Establishment of branches:
Pros:
·
Enhancing business wings
·
Having more customers
·
Serving in more markets
Enabling own vision
Cons:
·
Having trade barriers
·
Facing
more challenges from local firms
Derwent & Sons Stationary will go into Indian
market for expanding business. Being an SME, the firm can go for international
market by licensing and franchising, joint venture, partnership with larger
companies and establishing branches to international market. Here, the author
recommends that establishing branches will be better for Derwent & Sons
Stationary. As this firm wants to expand business into global market place, it
will be imperative for not going with other companies because of the firm has
its own value and uniqueness. Already there are several unique stationary
products by which the firm can attract the Indian customers. Other methods like
franchising, joint venture and partnership will not derive the expected value
to the firm.
The author has already recommended that Derwent &
Sons Stationary will get expected result of more branches will be established. Joint
venture is not suitable because of the firm will have less control and cannot
have innovation (Kehoe et al., 2013). Licensing and franchising cannot derive
better opportunities to grab customers as per own values and ideas. Partnership
with larger business will make Derwent & Sons Stationary as a subordinate.
Thus, enhancing branches to international markets will open more opportunities
and functions. By enabling this, Derwent & Sons Stationary can enter to the
global business and can get expected goal as well.
Conclusion:
For entering into international market, there prevails
some certain considerations. A firm must evaluate the scopes and opportunities
to get success from the business. At the same time, weaknesses and threats have
to be analysed to reduce disadvantages. Proper marketing plan must be derived
so that it can be able to the firm to generate better plans and derive
effective strategies. An SME has to be more precise in this context to
determine more strategies (Kehoe et al., 2013). An SME has to compete with
larger companies. Thus it is very crucial for an SME to get success from the
business. The author has demonstrated such considerations for Derwent &
Sons Stationary. As the firm wants to expand the business in international context,
the required criterion and processes have been described by the author in this
report.
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