3.2.1 Conditions that prompt trade Flashcards
What are push factors?
Factors which influence a business to leave the market they are operating in.
The two push factors are saturated markets and competition.
If the market is saturated then it means consumers already have suppliers who are supplying their need and so the firm will just see replacement sales causing for sales revenue to fall.
If the market is too competitive and the firm believes that they wont be able to survive in the markets or that their return on capital investment wont be susutaianble they will decide to leave the market.
What are pull factors?
These are factors which attract businesses to enter a global market. These include economies of scale and risk spreading.
What is offshoring?
When a business looks to reloacate and set up in another country due to cost minimisation.
What is outsourcing?
When a country oursources their production to anothe rbusiness. Can cause for the loss of quality control howeve rif the othe rbusiness is a specialist then it can cause for greater quality of goods whilst supply can meet demand
How can the lifecyle of a good be extended?
When a good starts to enter its decine stage, can still be made an effective market if distributed widely, the good can be distributed in new global markets which are less mature.
