4.2 - Global markets and business expansion

Question 1

Give 2 push and 2 pull factors prompting trade (expand outside of domestic country)

Answer 1

Push factors:
* saturated markets
* competition

High interest rates, high inflation,
Depreciation - decrease cost of exporting to foriegn countries

Pull factors:
* economies of scale
* risk spreading

Rising incomes?

Question 2

PEELI

Give 5 factors to consider in the assessment of a country as a market

Answer 2

Acyronym - PEELI
* political stability
* exchange rate (& other economic variables)
* ease of doing business (Rules and regulations involved in establishing a business in a particular market,accessing credit, registering properties and enforcing contracts)
* levels and growth of disposable income
* infrastructure

Question 3

Give 9 factors to consider in the assessment of a country as a production location

Answer 3

Factors to consider:
* costs of production
* skills and availability of labour force
* infrastructure
* location in trade bloc
* government incentives
* ease of doing business
* political stability
* natural resources
* likely return on investment

Question 4

Give reasons for global mergers or joint ventures

Answer 4

a) Spreading risk over different countries/regions
b) Entering new markets/trade blocs
c) Acquiring national/international brand names/patents
d) Securing resources/supplies
e) Maintaining/increasing global competitiveness

Gain economies of scale, gain new technology, expertise

New markets, products (Ansoff)