4.2 - Global Markets and Business Expansion Flashcards
(47 cards)
Outsourcing
Moving a business function or department to a specialist external provider which may or may not be overseas
Pull factors
The conditions that exist elsewhere that appear to be more advantageous and may cause a business to move to those areas
Push factors
The conditions that make a current b location less desirable and may cause it to leave and move elsewhere
Relocating
When a b moves to a new location. Improve the use of the premises and can lead to lower costs, rent
Risk spreading
Limit the various risk that a b faces eg avoiding over dependence on one market
Saturated market
Where most of the customers who would buy a product already have it, limited opp for growth
Disposable income
Amount of money households have available for spending and saving after taxes
Ease of doing business
Number and severity of barriers a b faces when entering a new market/country. High rank means face fewer barriers
Infrastructure
Systems and services that an economy needs to function effectively, inc transport links and communication
Subsidy
Payment to producer to offset/lower costs of production
Joint venture
When companies from different countries combine assets and operations
Patent
Legal rights to a monopoly on a new product or process. B cannot legally copy without permission
Skills shortages
When employees can’t find enough workers with a particular skill
Economies of scale
Increasing sale of production leads to a lower costs per unit output
Labour productivity
Amount of goods and services produced by one hour of labour
Risk
Probability of an event happening multiplied by its (negative) impact
Push factor examples
- Saturated markets, e.g. phones in the UK —> differentiate home market or look elsewhere
- Comp (may need to be adapted abroad to meet n/w)
Pull factor examples
- New or bigger markets
- Lower costs or secure resources
- Lower cost of transportation
- Tech expertise, inc research facilities
- Managerial or financial expertise
- Organisational skills
- Assets, intellectual property
Off-shoring risks
- Danger to reputation if cutting lots of jobs in dom nation
- Lang and cultural diff
- PESTLE
- Fail
- Increase management costs
- Reduce efficiency
- Expose firms to corruption
- Quality damage
Outsourcing risks
- Loss of expertise/experience
- Poor communication
- Differing interests (indirectly ££)
- Often less controversial to offshoring
Labour productivity
Workers cost less per unit of output they produce. Many factors impact productivity. Not accepted from moral pov
Extend a products life cycle by selling in multiple markets
Choose to sell prod in new market, where in maturity stage in Europe but in introduction stage in Asia
Exchange rate
Price of one currency against another
Factors to consider when assessing countries as a market
- Levels and growth of disposable income (growing/stable in past few years(
- Ease of doing business
- Infrastruct (reliable or add significantly to costs)
- Political stability
- Exchange rates
