4.2 - Global Markets And Business Expansion Flashcards
(51 cards)
What are pull factors?
Better conditions in other places that might attract a business to move there to take advantage of them.
E.g. economies of scales, risk spreading
What are push factors?
The conditions that make a business’ current location less desirable and may cause it to leave and move elsewhere.
E.g. saturated markets, competition
What is a saturated market?
A market where most potential customers already own or use a product, limiting opportunities for growth.
Why does market saturation push businesses to internationalise?
It reduces the chance of increasing sales domestically, so businesses look to foreign markets for growth opportunities.
How does competition act as a push factor?
High domestic competition may lead businesses to seek less competitive or emerging markets abroad.
How do economies of scale encourage internationalisation?
Entering new markets allows businesses to increase output and reduce average costs, boosting competitiveness and profitability.
What is risk spreading in business?
Reducing reliance on a single market by operating in multiple countries to spread economic and market risks.
How does internationalisation help with risk spreading?
Poor performance in one market may be offset by success in another, making the business more stable overall.
What is relocating?
When a business moves to a new location, improving the use of premises and can lead to lower costs to e.g. lower rent
What is off-shoring?
Moving a part of a business’ operations to another country, usually to reduce costs
Give one benefit and one drawback of offshoring?
- Benefit: lower labour or production costs
- Drawbacks: potential loss of control and quality issues
What is outsourcing?
Hiring an external business (often overseas) to perform tasks or services previously done in-house, like IT or logistics
Why might a business outsource?
To cut costs, focus on core activities or gain access to specialist skills
How can selling in multiple markets extent the product life cycle?
Products in decline in one market may still be new or growing in another, generating extra sales and delaying decline
Why is the level of economic growth important?
High growth suggests rising demand and businesses opportunities, while low growth may signal a stagnant or declining marketing
How does disposable income influence market potential?
Higher disposable income means consumers have more money to spend on goods and services, increasing demand for non-essential products.
What is meant by the ‘ease of doing business’?
How simple it is to start and operate a business in a country, including regulations, taxes and bureaucracy.
How does the ease of doing business affect market decisions?
A country with fewer barriers and clearer regulations is more attractive for expansion.
How does political stability affect business?
Unstable governments can lead to sudden law changes, corruption or conflict, increasing risk for businesses
Why is infrastructure important when assessing a market decision?
Reliable transport, communication and utilities support smooth operations, distribution and customer service.
Why is the exchange rate a key consideration?
A weak local currency can make profits less valuable when converted, while fluctuations can impact costs and pricing.
Why are production costs important when choosing a location?
Lower costs for labour, land and utilities can improve profit margins and competitiveness
How does the skill and availability of the labour force affect production?
A skilled ad reliable workforce increases efficiency and quality, while shortages can limit output.
Why is infrastructure important for production?
Good transport, energy and communication systems ensure smooth production and delivery of goods
