Unleashing Business Growth Through International Trade 

If you're one of the UK businesses that trade internationally, then you're probably aware of the benefits of expanding your business overseas to drive growth. According to the Office of National Statistics, the exports of products increased by £1.6 billion (1.7%) in Quarter 2 2023. The number of businesses exporting goods and services in the SME sector is growing year-on-year. 

Whether you're an established business or a small UK exporter, doing business internationally brings unique benefits and challenges. Let's look at some key considerations and business strategy when trading internationally. 

International trade refers to the exchange of products and services across borders. It is a licensed activity that involves the establishment of trade agreements and policies. These agreements and policies encourage harmonious relationships between nations that rely on one another for better living across their population.  

The European Union demonstrates how countries can use free trade agreements to strengthen their international market standing and grow GDP while contributing to the global economy. When member states of a union become borderless in terms of trade, no taxes are imposed on imports and exports. Since leaving the European Union, the United Kingdom has been striving to strike trade deals with countries worldwide.  

International trade is important because countries rely on other countries to import goods that are not readily available in their own country. If a country focuses on exports, it may have more supply of certain raw commodities than demand in its own markets. Or it may have a specific competence, such as in technology or manufacturing, which drives demand in the international market. International trade generates the worldwide marketplace on which the global economy is built. 

The International Trade Centre (ITC) publishes trade statistics on imports and exports across 200 nations, organised by product group. It's a great free resource for understanding certain countries' specialisations and helping to establish trade development strategies. 

Several factors can affect international trade and business expansion, and these can be broadly categorised into both external and internal factors. Here are some of the key factors:

International growth demands careful planning, a deep understanding of foreign markets, knowledge of trade agreements and regulations, and a tailored go-to-market strategy. It's not just about seizing occasional ad hoc deals; it's about establishing a sustainable presence in international markets. 

Before taking the leap into international expansion, businesses should conduct thorough market research, assess their readiness, and develop an approach that aligns with their long-term goals. It's a journey that requires commitment, resources, and a well-thought-out strategy to ensure success and mitigate potential risks.

Let's look at some of the important organisations and treaties in international trade that involve the exchange of products across national borders. 

General Agreement on Tariffs and Trade (GATT): GATT is significant because it promotes freer and fairer international trade. It establishes the concept of the "Most Favoured Nation" (MFN) designation, which means that when one country offers favourable trade terms to another, it must offer the same terms to all GATT members. This helps UK businesses access international markets with lower tariffs and better trade terms. It is considered a success because it has a large number of member countries, covering around 90% of world trade. 

United States-Mexico-Canada Agreement (USMCA): USMCA, a renegotiated version of the former North American Free Trade Agreement (NAFTA), is essential for UK businesses that trade with Canada, Mexico, or the United States. This agreement aims to remove trade barriers between these countries, making it easier for UK businesses to export their goods and services to North America. It has also improved conditions for UK banks and offers better protection for intellectual property. UK businesses should pay attention to the USMCA because it affects their trade relationships and access to the North American market. 

Trade and Cooperation Agreement with the EU: After leaving the European Union (Brexit), the UK and the EU reached a trade agreement signed on 30 December 2020 that governs their economic relationship. This agreement is of utmost importance to UK businesses, as it governs the economic relationship between the UK and the EU. It includes provisions to eliminate tariffs and quotas on most goods, making it easier and more cost-effective for UK businesses to trade with their biggest trading partner. It also covers various other aspects of trade and cooperation, impacting how UK businesses operate in the European market. 

World Trade Organization (WTO): The WTO is an international organisation that regulates and promotes international trade. The WTO is significant because it establishes rules and agreements that govern trade among nations. These rules cover areas such as tariffs (import taxes), subsidies, and intellectual property rights, which directly affect how UK businesses engage in international trade and protect their interests. Being a member of the WTO helps the UK maintain a rules-based and predictable global trading environment. 

Evaluate the following variables for each country:  

• GDP Growth: This should encompass the country's growth prospects in terms of infrastructure development and the demand for products relevant to your business, especially in the tourism sector. 
• Country Risk: This includes an assessment of potential political or social unrest, security concerns, and currency devaluations that could impact your operations. 
• Political Factors: Examine the degree of political state in business decisions, political and social stability, and any possible alliances or trade agreements with your home country that might be advantageous. 
• Other Factors: Consider geographic proximity and the similarity of the country to your source market in terms of social and business culture. 

In the pre-selection phase, focus on countries that pique your interest or exhibit substantial market potential. Subsequently, rank these countries based on: 

• Market Appeal: Consider the demand for your product and the associated risks. 
• Operational Difficulties: This involves an evaluation of market legislation, state-level protectionism, ease of doing business, procedures for establishing a business, tax regulations, administrative costs, and the level of local competition. 

To analyse the competitive landscape in your chosen market: 

• Identify your primary competitors and provide a detailed description of their operations. 
• Analyse their economic performance and sales trends over the past three years. 
• Identify the distinguishing factors that set them apart, such as pricing strategies, distribution channels, market maturity, financial stability, development potential, and future expansion plans. 

A thorough analysis of current and potential demand for your product in both your home market and the selected international markets is essential. This analysis should define the product's profile and its expected evolution over time. It should validate the success of your pre-selection process and confirm that the chosen markets are indeed suitable for your product. 

This data will inform your subsequent marketing strategy, encompassing aspects such as pricing, presentation, promotion, and distribution. It is advisable to supplement this initial analysis with further on-ground research in the target market, potentially through intermediaries, to verify the accuracy of your initial assessments. 

A market’s attractiveness is a measure of its potential for long-term success and its alignment with your overall business objectives. When evaluating a market's attractiveness, include the following questions: 

• Is this market profitable for my business? Can it sustain growth and profitability? 
• Are customers in this market willing to pay for my goods or services? 
• What is the size of the addressable market? Make a top-down analysis of the market's size and composition or a bottom-up analysis using data from initial sales efforts to gauge sales potential. 
• How much of the addressable market can we capture? Analyse competitor data and market share to ascertain if there's ample opportunity for your business. 
• Can we forge valuable relationships with this customer base? Depending on your business model, consider whether it's feasible to secure the right deals with the right number of customers. 
• Is repeat business viable in this market? Given the high cost of acquiring new customers, assess if this new market offers opportunities for repeat purchases or engagement with your other products and services. 

Market accessibility measures the logistical complexity and potential costs associated with serving a particular market. To gauge market accessibility, reflect on the following questions: 

• Is expanding into this market feasible? Consider regulatory constraints and logistical challenges. 
• Do legal obstacles hinder business establishment in this market? Scrutinise local laws, regulatory bodies, and the operations of successful brands for insights into the local landscape. 
• Can we manage the language barrier? Assess your capacity to conduct business in new languages and within unfamiliar cultural contexts. 
• Is it financially viable to operate in this market? In certain markets, government approvals may entail upfront investments before seeing returns. 
• What are the infrastructure requirements? Collaborate with local partners to navigate distribution needs, leverage third-party providers, and connect with vendors. 

Once you've established the preliminary viability of your business in a global market, start developing your go-to-market strategy. 

A go-to-market strategy is a plan that incorporates various strategies and marketing methods to ensure the successful entry of a product into the market. To provide you with a clearer understanding of robust go-to-market strategy, this guide outlines key components to develop during the process. 

At the heart of any marketing strategy lies the customer. Whether you're launching a new product or improving an existing one, it is important to begin by researching and identifying your target market. This is a group of individuals who share common features, such as demographics or psychographics. This process, known as segmentation, involves understanding the characteristics of individuals or organisations most likely to purchase your product. 

Key questions to address when identifying your target market: 

• Is your product intended for everyday customers (B2C) or other businesses (B2B)? 
• Will you employ demographic, psychographic, or other segmentation methods to define your target market? 
• What are the pain points of your target market, and how does your product address them? 

A product's value proposition defines the benefits it offers consumers and the problems it solves. As you prepare your go-to-market strategy, a clear understanding of your product's value proposition is essential to direct your marketing efforts. 

Key considerations for defining your value proposition: 

• What pain points does your product address? 
• How does your product stand out from competitors? 
• What unique features or experiences does your product or service offer to potential customers? 

Pricing is a critical factor for any product. Striking the right balance is essential to avoid selling your product for too much or too little. Understanding your target market and the value your product offers will help determine an appropriate price point. 

Questions to ponder when developing your pricing strategy: 

• What are the manufacturing costs for your product or service? 
• What price is required to generate a profit? 
• What do your competitors charge for similar products or services? 
• How much are your target customers willing to pay for your product? 
• Will you use a subscription or transactional pricing model? 

Your promotion strategy outlines how you will market your product to your target customers. The techniques you choose will depend on the type of product or service you are offering. 

Considerations when crafting your promotion strategy: 

• Which channel is the most effective for reaching your target audience: online or offline? 
• Does your customer engage better with outbound marketing methods or inbound marketing efforts? 
• Where does your target audience spend most of their time, and which marketing channels reach that space? 

• What marketing methods can you implement considering your current budget? 

Sales channels are where customers can purchase your product, and distribution channels are how your product reaches your customers. The choice between in-person and online sales, direct or indirect distribution, or variations of these depends on your product's unique requirements. 

Points to consider when selecting sales and distribution channels: 

• What are the specific sales and distribution requirements of your product? 
• How do the manufacturing needs of your product impact its sales and distribution? 
• Where does your target market typically buy products? 
• How can you sell your product as seamless as possible? 

The success of your go-to-market strategy hinges on the goals you set and the metrics you use to measure your success. Continuously track these metrics and make necessary adjustments as your strategy unfolds. 

Common metrics for measuring the performance of a go-to-market strategy include: 

• Return on Investment (ROI) 
• Return on Marketing Investment (ROMI) 
• Market Share 
• Customer acquisition cost (CAC) 

An export-ready business may benefit from international trade in a variety of ways that boost productivity and growth, including:

Pursuing international business opportunities can be a lucrative strategy for businesses as the world continues to recover from the economic recession of the last decade. With new and emerging markets opening up to foreign trade and investment and consumers in long-established markets regaining purchasing power, it is essential to capitalise on new international business opportunities. 

However, international business expansion is not simply about taking your existing model and replicating it in a new location. It requires a deep understanding of the local market dynamics, regulatory environment, and customer preferences. This comprehensive approach, from understanding trading deals to crafting a prioritised go-to-market strategy, empowers your business to navigate international challenges and seize opportunities effectively. 

gigCMO is a growth marketing consulting firm that offers comprehensive support across all facets of your business. We harness intellectual understanding, employing a meticulously structured process and a wealth of capabilities to provide practical, timely, and active support to embed the marketing concept in businesses. Contact us today, and let us be your strategic partner in global success.