4.2.1 - CONDITIONS THAT PROMPT TRADE Flashcards
What is a PUSH FACTOR?
2 examples
THREATS in a DOMESTIC MARKET that FORCE a BUSINESS to SELL ABROAD
e.g. - HIGH LEVELS of DOMESTIC COMPETITION
- SATURATED MARKETS with ONLY LOW GROWTH OPPORTUNITIES
Explain the PUSH Factor - SATURATED MARKET
business HAS SOLD product to EVERYONE who WILL BUY one.
While R&D takes place -> BUSINESS NEEDS to CONTINUE TRADE + GROW -> LOOK for NEW MARKETS for the products abroad
Explain the PUSH Factor - HIGH COMPETITION IN HOME MARKET
Look Abroad -> LESS COMPETITION + LUCRATIVE Market OPPORTUNITES
What are PULL FACTORS?
3 examples
OPPORTUNITIES that ENCOURAGE a BUSINESS to SELL ABROAD
1) Opportunities to sell in OVERSEAS MARKETS
2) ABILITY to SPREAD RISK
3) ABILITY to gain EOS
Explain the PULL FACTOR - OPPORTUNITIES IN OVERSEAS MARKETS
EXPORTING means HIGHER SALES and PROFITS. SELLING OVERSEAS will be able to GROW FASTER Than those LIMITED to DOMESTIC
Explain the PULL FACTOR - ABILITY TO SPREAD RISK
by SELLING in OTHER COUNTRIES –> the BUSINESS is LESS VULNERABLE to CHANGES in the DOMESTIC ECONOMY
Explain the PULL FACTOR - ABILITY to GAIN EOS
EXPORTING is EXCELLENT WAY to DRIVE PRODUCTION to an EOS LEVEL GREATER EOS = MORE COST COMPEITIVE
What is OFFSHORING?
BUSINESS RELOCATES SOME of its PRODUCTION process to ANOTHER COUNTRY
may be to CUT COSTS in terms of LABOUR routes pay , may be to TAKE ADVANTAGE of TRADE BLOCS or TRADE DEALS
What is OUTSOURCING?
where a BUSINESS FUNCTION e.g. payroll is CONTRACTED OUT to a THIRD PARTY BUSINESS o, may or may not be located abroad
What are 4 EXAMPLES of OUTSOURCING?
(1) PRODUCTION - sending some , e.g. parts
(2) PAYROLL - most common , paperwork : weekly monthly
(3) PURCHASING and MAINITNG INFO SYSTEMS - saving cost of IT staff and best technology
(4) DELIVERY - may prefer LARGER DELIVERY FIRM rather than their own - Deeps Delivery problems + decisions away
What are ADVANTAGES of MOVING CALL CENTRE to INDIA
+ HUB of TALENT - SKILLED WORKERS for LOW COST
+ Vast MAJORITY SPEAK ENGLSIH
+ TIME ZONE DIFFERENCE -> POSSIBLE to OFFER 24/7 service
What are DISADVANTAGES of MOVING CALL CENTRE to INDIA
- LOSING SENSITIVE DATA and LOSS of CONFIDENTIALITY
- LOSING MANAGEMENT CONTROL of BUSINESS FUNCTIONS -> may be NO LONGER ABLE to CONTROL OPERATIONS WELL compared to if they were domestic
- PROBLEMS with QUALITY - if outsourcing PROVIDER DOESN’T have PROPER PROCESSES / is INEXPERIENCED in WORKING in an OUTSOURCING RELATIONSHIP
What are DISADVANTAGES of MOVING CALL CENTRE to INDIA
- LOSING SENSITIVE DATA and LOSS of CONFIDENTIALITY
- LOSING MANAGEMENT CONTROL of BUSINESS FUNCTIONS -> may be NO LONGER ABLE to CONTROL OPERATIONS WELL compared to if they were domestic
- PROBLEMS with QUALITY - if outsourcing PROVIDER DOESN’T have PROPER PROCESSES / is INEXPERIENCED in WORKING in an OUTSOURCING RELATIONSHIP
How is SELLING in MULTIPLE MARKET a PRODUCT LIFECYCLE EXTENSION STRATERGY?
DEVELOPING NATIONS may often SEE MATURE or DECLINING PRODUCTS AS NEW or EXCITING, e.g. SPAM
