4.2 Flashcards Preview

business a level > 4.2 > Flashcards

Flashcards in 4.2 Deck (17)
Loading flashcards...
1

conditions that promt trade, push factors:

- market saturation, growth slows
- competition
- shareholder pressure

2

conditions that promt trade, pull factors:

- economies of scale
- cost saving

3

whats offshoring?

- moving manufacturing or service industries to a part of the world with lower cost production

4

benefits of offshoring?

- lower wage costs
- access to raw materials
- access to skilled workforce

5

drawbacks of offshoring?

- damage to business reputation in home country
- as economies develop production costs also rise
- cultural and language barriers

6

what is outsourcing?

- moving a business function to a specialist external provider in another country

7

benefits of outsourcing?

- allows the business to upgrade
- takes advantage of a comparative advantage
- access to specialist facilities/knowledge

8

drawbacks of outsourcing?

- reliance on 3rd parties
- cultural and language barriers
- businesses are less flexible if tied into a contract with a specialist

9

production location checklist?

- cost of production
- skills and availability of workforce
- natural resources
- developed infrastructure

10

merger-

- where two companies join together to create one organisation

11

join venture-

- involves two separate businesses to collaborating to achieve a shared goal

12

what are barriers to entry?

- low brand awareness
- cultural/language differences
- knowledge of market
- additional costs incurred through exporting

13

reasons for global mergers and joint ventures:

- spread risk
- global competitiveness
- acquire national/international brands
- resources and suppliers

14

why do exchange rates fluctuate?

- elasticity of demand
- relative economic growth in international markets
- the use of fixed contracts

15

what is cost competitiveness?

- Also cost leadership
- MNCs find it easier to gain economies of scope and scale as they have multiple operations around the world

16

how can global firms use differentiation?

- use a polycentric approach to marketing and adopt their products to meet the needs of local markets

17

what can a skill shortage lead to?

- reduced effectiveness and productivity of its workforce
- operating internationally gives access to unique labour