4.1.5 trading blocs - pros & cons

Question 1

advantages of business joining/operating in trading blocs - 2

Answer 1

• can gain entry into larger markets more freely. increase in sales volume therefore increase in revenue. Can also lower costs as you can gain EOS from larger volumes e.g purchasing 
• Removal of trade barriers can mean its easier for businesses within the bloc to obtain Raw materials + labour e.g May have access to more skilled workers, which can improve efficiency & quality of production

Question 2

Disadvantages of trade blocs - 2

Answer 2

• When businesses has just joined/joining a trading bloc it may find it difficult to compete due to existing competition from larger firms
• countries/business outside the trading bloc may have a better competitive/comparative advantage in which members are unable to access. e.g Eu members may not be able to access cheaper Indonesian agriculture due to tariffs