3.9.3 - internationalisation Flashcards
why do businesses operate abroad?
- cheaper labour
- access to different materials
- access to more customers
- lower tax rules
what is exporting?
selling goods abroad going from you to them
what are the pros of exporting?
- more control over the quality and marketing of the product compared to licensing
- less dependant on any single market
what is a con of exporting?
- does not avoid tariffs
what is licensing?
selling the right to make and sell goods abroad
what is a pro of licensing?
relatively cheap way of increasing global presence compared to direct investments
what is a con of licensing?
does not have control over quality
what are alliances?
2 or more businesses coming together to manufacture or sell something
what are the pros of alliances?
- shared risk
- innovation + flexibility
what are the cons of alliances?
- loss of control
- reputation risk as dependent on partner not failing
what is direct investment?
when a business puts money into a foreign business or sets one up itself
what is a pro of direct investment?
direct entry into a market
what is a con of direct investment?
more expensive
what makes international markets attractive to sell to?
- good laws/favourable
- cheaper capital
- growing market
- competitive environment
what is offshoring?
moving production from one country to another
what is reshoring?
moving production back to the original country it was produced and sourced before it was offshored
what are the benefits of offshoring?
- cheaper labour
- expert labour
- way of increasing efficiency by utilising capacity more efficiently
what are the benefits of reshoring?
- creates local jobs
- reduces unemployment
- shortens delivery times and transportation
what are some pros of of tariffs?
- good for domestic trade
- increases government revenue
what are some cons of tariffs?
- increase cost of living
- retaliation risks
- political tension
why buy something that was produced abroad?
- cheaper
- better quality
- only available abroad
why sell abroad?
- market expansion
- easy to achieve
- high disposable income nations
why produce abroad?
- cheaper labour
- access to materials only they have
- greater efficiency elsewhere
