Critical analysis of global business environment and key global drivers of the chosen country
Region of South-East Asia consist of over 670 million people and is considered home to various emerging market and is becoming a popular destination for the global business. It is characterized as a high growth economy with digitally savvy population. With a promising talent pool, growing economy and highly engaged customer base, the region offers a lucrative opportunity to the business. South-East Asia is amongst the region of the fastest growing economy and for any growing business, expansion in this particular region should be on the agenda. Singapore can be leveraged by the companies as a base to innovate, build customer insights and commercialize solutions for the region. For the fastest growing start-ups and SMEs, the country continued to be the gateway as it is the global hub for innovation. The country has the ability to create a resilient and motivated workforce and the new opportunities being captured by competitiveness, business transformation and capacity. In order to boost the productivity, firms can turn to the technology (Cindawati 2018).
Singapore provides one of the most business-friendly regulatory environment of the world and is ranked amongst the competitive economies. The service and manufacturing sector remained the twin pillar of the high value-added economy of the country. For the prosperity and security, the country relies on targeted innovation, trade and higher quality education. Workers and foreign investment are attracted due to the absence of corruption and stable government. Companies are attracted to its knowledge hub and as a strategy of strengthening the economy, centre low-cost manufacturing is established by the country (Naradda et al. 2022). Major focus of Singapore is shifted to trade and the strategic location is leveraged in Malacca traits with an intent to become a second largest shipping centre of the world. In addition to this, changes in the strategic direction can be successfully executed by the forward-looking government that periodically assesses the areas to be developed. The key growth driver lies in the value-added manufacturing particularly in the precision engineering and electronics sectors (Unctad.org 2022). Two pillars of the high value-added economy of the country are the service and manufacturing sector.
International expansion by SME provides them with the greater breadth of opportunities and new revenue potential alongside improving their competitiveness in the local market. Since, electronic is the major sector underpinning the country’s economic growth, it provides the opportunities of the manufacturing electronic companies as the sector witnessed continuous growth amidst the pandemic as well. For the electronic manufacturing SME such as Speedboard Assembly Services, expanding in the market of Singapore would provide them impetus to enhance their productivity and reap profits. Manufacturing sector continues to be the key driver of the economic growth of the country and can be considered as the key manufacturing location for the company such as Speedboard Assembly Services (Businessmag.co.uk 2022). In order to create job opportunities for the locals, the country is growing the capabilities and size of the local enterprise and attracting the foreign companies by ramping up its efforts. The global innovation alliance facilitates the collaboration of the foreign manufacturing companies with the local companies. In addition to this, manufacturing industry of Singapore has enjoyed stable growth because of the political stability and pro-business environment. Manufacturing sector of the country accounts for 21% of the total gross domestic product of the country (Oecd.org 2022). It is required by the Singapore to reposition its manufacturing sector because of the accelerate of some disruptive trends faced due to the pandemic. The qualitative transformation in the manufacturing sector of Singapore would provide the opportunity to the manufacturing SME such as Speedboard Assembly Services to take the advantage of the fast-growing pace supported by innovation and new product and services prototype. Apart from these, the country meets the business requirements by its full suite of the activities ranging from research and development, logistics, supply chain management to the regional and global logistics functions (Mohan 2018).
Discussing the SME rationale to internationally expand their business
Electronic cluster of Singapore specializes in field such as consumer electronics, semiconductor and information technology that has been expanding despite the crisis of Covid-19. It is the only sector that witnessed an increase in employment which was driven by the growth in demand across the value chain and towards digitization. SME’s when expanding into Singapore would be able to offer more job opportunities by looking into their building capabilities. Also, firms should work by increasing their capacity to meet the increasing electronic components demand by using the technology such as robotics, artificial intelligence and automation (Trade.gov 2022). Hence, the productivity performance of SME would be strengthened by digital transformation and fostering innovation. In addition to this, healthy business dynamics is ensured by the policy makers of the country. This is facilitated by ensuring that the framework of policies ensures dynamism of business implying that experimentation with the new business models, ideas and technologies are not explicitly or implicitly hindered by the framework. Furthermore, collaboration of SME with the local business in Singapore would strengthen their business services with the help of programmes that create opportunities for the linkages (Chung and Au 2021). Often, SME’s often lack skills to deal with the customers in both the export and domestic market and have limited information on the market opportunities. However, SME might be faced with some challenges when carrying out their operations in Singapore is the critical issue in terms of diffusion of new and already developed technologies, business practices and ideas. Challenges would be faced concerning interconnected production in future and upgrading the system of entire production and difficulties in retrofitting the outdated technologies. Furthermore, production by SME can be incentivise closer to the destination market because of reduction in the cost of customized production. Another key challenge for SME to expand its operation in Singapore is the access to finance for making investment in new capabilities such as digital technologies, equipment and machinery, innovation and skills (Chang and Rimaud 2019).
A high priority is placed by Singapore on the multilateral system of trading embodied by the World health organization. It is believed by the country that such organization can provide a stable framework for the development of sound multilateral rules ensuring the free flow of goods and services with minimal impediment. The country has various free trade and bilateral trade agreement with several countries and is a partner of the “regional comprehensive economic partnership trade negotiations”. Under this framework, Singapore would be able to achieve the reduction of tariffs gradually. Economic growth of the country is influenced by such trade agreements and it has enabled the Singapore to position itself as a centre of coordination of global and regional activities by the country (McKenzie and Meissner 2022). In addition to this, the trading bloc also have benefit in terms of reduction in the rate of unemployment and it facilitates broader system of free trade. For instance, ASEAN free trade area benefits Singapore by the removal of tariff that results in trade creation and provides greater opportunity for the exporters and lower price for consumers. Increase flow of goods and services enable the country to specialize and thereby provide benefits of the economies of scale. In addition to this, the increased trade opportunities and inward investment benefits enable the country to make significant progress in catching up with the average level of income. Furthermore, customers are provided with greater choice and the firms operating in the region faces increased competitiveness and incentive to cut down their cost (Gulanowski et al. 2018). Therefore, it is understood that Singapore benefits from its trade agreement and wide range of trading blocs and thereby drives the economy performance.
Critical analysis of the challenges and opportunities for global growth
It becomes important to acknowledge the fact that trading blocs and trading agreement provide the countries with the real benefits both to the consumers as well as producers. Globalization process has been aided by trading blocs and this implies that the countries around the world are witnessing their growing interdependence. Access to each other market under free trade trading bloc reduces the competition and facilitates specialization in the products known for exporting. Increase in production and specialization has resulted in the creation of more jobs and have allowed the companies to benefit from the increased resource access and reduction in the production cost. Firms forming a part of the trading bloc are protected from the outside cheaper imports and the cooperation incentives reduces the possibility of violent conflict. Economic activities would shift locations because of the trade bloc formation and create divergence and convergence between the bloc members (Ctrc.sice.oas.org 2022). Agglomeration within each industry would be increased because of the trading bloc and furthermore, they can be a liable contention source because the blocs is considered to be economically advantageous for all its member countries. A powerful weapon to promote the development, growth and reduce poverty is the global economy integration and such integration can be done using trade agreements and trade blocs, which provides the opportunities to improve the overall economic well being of nations.
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How to Start an Exporting Business |
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Advantages and disadvantages of different exporting processes The term exporting can be defined as the method of carrying any goods to abroad particularly for the purpose trading and sales, this is perhaps the simplest ways of inflowing in any foreign markets. There are two ways of exporting goods and services from country to country. It can be either direct exporting method or indirect exporting, where in indirect method, the goods are transferred in its original form from any foreign country to any other any domestic country. Whereas in the direct way of export, transferring or selling of the goods occurs directly through the distribution arrangements via any foreign country’s organization (Wto.org 2022). Associated with both the way of export are a number of advantages and disadvantages. Below are mentioned some of the key advantages of exporting: 1) It results in increased profitability by earning more and more and revenue by sell of different kinds of goods and services to any host market in order to increase the sale and eventually revenue of the country. 2)It also assists in the companies to become more competitive in nature by helping them form different kinds of strategies useful for any international arena. 3) Additionally, through foreign access or capture the companies earn huge share from the international marketplace. 4) It causes expansion through the venture of any organization’s business in any foreign country. 5) It also helps in diversification of the business opportunities by selling to several markets as any participating company is not liable to consider the business cycles of the domestic market of any particular country. Disadvantages: 1)Products packaging modification comes along with the exporting of the goods as the companies might be required to have some modifications in the products so as to meet the security and safety standards of any foreign countries. The organization also needs to consider the restrictions of imports of certain goods (Thoumrungroje and Racela 2021). 2)Apart from the issue of the financial risks which are associated with the export of goods and services, international trading involves complexities in the payment methods like open-account method or through the prepayment, or consignment and also through the documentary collection, these ways are however time taking and involves more effort (Rodrik 2018). •For the foreign market development, mostly the payback periods are much longer, the upfront costs involved in the promotional materials, personnel allocation involves cost. It takes more time to develop extra markets, and the pay back periods are longer, the up-front costs for developing new promotional materials, allocating personnel to travel and other administrative costs can cause tension in financial resources of small size companies (Keskin et al. 2021). |
Required documentation The export customed process requires some of the most important legal documents, these are mentioned here as under: 1)Letter of credit: It is a contractual commitment by the bank of foreign buyer to pay the price after the goods and services has been exported and the documents is presented to the bank of exporter as a proof. 2)Bill of entry: Another important document for import/export custom permission and this report is submitted to the Customs House Agent for further proceedings for the import approvals. Additionally, there are few other documents that are also needed to be submitted like import license, insurance certificate any technical write if needed for certain specified goods (Wu et al. 2019). 3)Registration cum membership certificate in order to get help from import exemption from government office in case in case of certain explicit merchandising. The RCMC with custom specialists is one of the pre mandatory requirement for the purpose of clearing import. 4) Commercial invoice is an international shipment carrying commercial value so that the regulation can be fulfilled under the custom of import and export country. It represents a legal document used for processing the international trade agreement. |
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Evaluation of different methods of tapping into new international markets. There are different ways through which any organization can enter into any international market, these are stated here as under: 1)Exports: Any goods and services can be directly or indirectly transferred through trading from one country to any international market. Merits: a) It is comparatively cost friendly b) Lower risk rate in association with trading through export c) In case the export is done indirectly, the exporter also has access to choose the market. d) It also assists in surplus distribution. Demerits: a) One of main disadvantage which comes in association with direct export is the high start-up cost. b) The exporter has almost no control or access to the product distribution c) Increased cost due to involvement of the export intermediaries. 2) Joint Venture: The process through which any organization joins hand with any partner company in any other country by sharing the ownership and management of the same. It also helps in expansion of the company’s objectives (Harrison et al. 2019). It also has advantages and disadvantages associated with itself stated as under: Merits: a) Joint product management b) Sharing of the risks c) Sharing of the uncertainties d) Sharing of technology or transfer of any technology in between the two parties Demerits: a) Conflict in managerial decisions. b) Difficulties in asymmetrical investments 3) Outsourcing: It is the way of business expansion which is cost effectiveness in nature through the partial work transfer to the other party and thereby reducing the dependence on their own company and seeking support and assistance from the foreign party and completing it internally (Tien et al. 2019). Merits: a) Operational swiftness b) Reduced cost requirement c) Sharing the risks. Demerits: a) Intermediate cost involvement b) Risk of the company’s confidential data exposure. c) Reduced consumer focus. Franchising: It is a method where the franchisees pay a certain fees and loyalty to the franchiser in return for the trademark rights require for the brand recognition. Merits: a) Lower rate of risk involvement. b) Expertise franchiser benefit. c) Higher rate of employee motivation. Demerits: a) There is risk of trade secretes exposure b) In the long run the partner might become the competitors. |
Justified recommendations on appropriate methods The appropriate method for the business such as Speed board Assembly Services would be by way of collaboration with the local business of Singapore. Such collaboration can be done either by entering into partnership or joint venture. It will help the firm to gain access to the resources and business environment of Singapore. |
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