3.1: Factors Driving Global Business Development

Question 1

Outline the 4 factors driving global business development

Answer 1

• financial growth opportunities and/or loss minimisation
• consumer purchasing and spending patterns
• World Trade Organisation (WTO) regulations and sanctions
• deregulation of the financial market

Question 2

Explain financial growth opportunities and/or loss minimisation as a factor driving global business development

Answer 2

( how ) - As businesses are able to trade internationally they gain access to an increased customer base through capturing a wider target market and cheaper production costs through countries with lower minimum wage. Companies may look for ways to reduce operational costs, e.g. streamlining production processes, improving supply chain management, or adopting new technologies.
( why ) - This is a factor driving global business development as it allows businesses to boost their revenue whilst simultaneously minimising their losses; leading to an overall increase in profit.

Question 3

Explain consumer purchasing and spending patterns as factors driving global business development

Answer 3

( how ) - Consumer purchasing and spending patterns are both measures of how people make decisions in acquiring products and services. The more understanding businesses have of their customers’ purchasing and spending patterns, the better they are able to meet these demands and hence improve their global sales.
( why ) - If higher spending patterns occur in developing countries and/or there is increased consumer purchasing due to increased discretionary income, businesses could expand to these regions to take advantage of the trends and therefore maximise their profits.

Question 4

Explain WTO regulations and sanctions as a factor driving global business development

Answer 4

( how ) - The WTO is the international Organisation that sets standards for international trade and rules of free trade agreements. It sets standards of transparent and fairer trade, lower barriers to allow for increased access to global markets and assists countries to facilitate free trade agreements.
( why ) - By allowing freer trade between countries, businesses are therefore easily able to expand their operations internationally by sending their products and/or creating new physical stores overseas without any substantial barriers or tariffs.

Question 5

Explain the deregulation of the financial market as a factor driving global business development

Answer 5

( how ) - The deregulation of the financial market refers to the revision, reduction or elimination of laws that restrict global movement of finance, allowing for greater competition and a less restricted operating environment.
( why ) - These lower barriers of entry allow Australian businesses to have easy access to foreign markets, expanding their business globally and ultimately granting them freedom to innovate and create change within the business.