4.2.1 Conditions that prompt trade Flashcards

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1
Q

What are push factors?

A

Where businesses feel they have to expand because of domestic market issues

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2
Q

What is a pull factor?

A

Where businesses are attracted by compelling opportunities to grow by expanding internationally

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3
Q

Give three examples of push factors for UK business considering international trade.

A

1) Bexit-Acces to EU single market
2) Small population- 67.5million
3)Corporation tax increase-19%»25%

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4
Q

What are the two main push factors for businesses in general?

A

1) Saturated markets
2)Increased competition

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5
Q

What is a saturated market?

A

•A feature of markets where sales growth has stalled or is falling.
•Difficult for firms to grow revenue other than by taking market share from competitors.

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6
Q

What is increased competition?

A

•Domestic firms may be faced with new market entrants who take market share
•Results in lower streams of revenue

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7
Q

What are the two main Pull factors?

A

1)Economies of scale
2)Risk spreading

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8
Q

What is economies of scale?

A

•getting the lowest cost per unit possible by mass producing

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9
Q

What is risk spreading?

A

•Trading internationally can spread the activities and revenues of a business over a wider range of markets, making the business less dependent on domestic demand

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10
Q

What is Off-shoring?

A

•Occurs when a business relocates production and o another country

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11
Q

What is the main reason for off-shoring?

A

•Cost minimisation

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12
Q

What is Outsourcing?

A

•Occurs when a business contracts out production to another business.

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13
Q

Why do businesses outsource?

A

•Business may be specialist

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14
Q

What is Re-shoring?

A

•The reverse of off-shoring
•Bringing back respiration of business activities to the home country

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15
Q

Why would a business re-shore?

A

•Minimise risk to supply chain
•Less complex
•Easy to collaborate
•Certainty on warranty

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