4.2.1 Conditions that prompt trade

Question 1

what is there that force and entice businesses to seek trading opportunities abroad

Answer 1

There are a range of factors that force and entice businesses to seek trading opportunities abroad

Question 2

What are these factors called

Answer 2

Push & Pull factors

Question 3

Push factors

Answer 3

Adverse (negative) factors in existing markets that force businesses to look for opportunities in international markets

Question 4

2 Push factors

Answer 4

1) Saturated market

2) Rise in Competition

Question 5

Saturated market

Answer 5

Where most customers already have or there is limited remaining oppurunites for growth in sales

E.g cycling manufacture may have limited oppurunties to sell in countries where cycling is very popular
But
may find a market abroad where cycling is relatively new/small

Question 6

Competition

Answer 6

Rise in competition in domestic market may force a business to sell abroad

Question 7

What can competitors do

What can it result in?

Answer 7

Can sell products at a lower price/better quality

as a result making your original product unprofitable and difficult to sell

Question 8

Pull factors

Answer 8

Positive factors that entice a UK business to look outside the Uk market and into international markets

Question 9

2 pull factors

Answer 9

1) Economies of scale

2) Risk spreading

Question 10

Economies of scale

what can expanding into international markets do?

Answer 10

The reductions in average unit costs enjoyed by a business as output increases

• Expanding into international markets may lower unit costs as output is increasing

Question 11

Risk meaning

Answer 11

anything that can lower a businesses profits or lead it failure

Question 12

How does risk spreading and pull factor correlate

Answer 12

By expanding into other international markets a business can spread it’s risk

e.g may no longer be dependent on just one market -> if this market fails it can rely on it’s other market