4.2 Flashcards
Offshoring/outsourcing
+ Cheaper production/wages to pay
+ Improved focus on main business activities
+ Increased efficiency (lower costs)
- Lack of flexibility (reliant on others)
- Difficult to manage/oversea tasks
- Could be unstable
Off sharing: Shifting jobs to other countries
outsourcing: Shifting jobs to other businesses
Factors to consider when assessing a country as a market
- Levels and growth of disposable income
- Ease of doing business
- Infrastructure
- Political stability
- Exchangerate
Pull factors
Pull factors - are those that attract a business to a global market. These may include lower levels of competition or economies of scale
Push factors
Phenomena in a company’s domestic market that motivate it to enter into new markets. For example a saturated market
Factors to consider when assessing a country as a place of production
- Costs of production
- Skills and availability of labour force
- Infrastructure
- Location in trade bloc
- Government incentives
- Ease of doing business
- Political stability
- Natural resources
- Likely return on investment
Ways to extend the product lifecycle
- Change price– Price can be lowered to allow new customers to buy it
- Change place– Products can be sold in different countries or territories to gain more sales
- Change promotion– Different advertising or sales promotion techniques can prolong the life of the product, giving it a new image
Joint venture
20 or more parties share ownership returns/risk
+ Use each others expertise/resources
+ Use of recognisable licence for IP (franchising)
+ Reduces risk of growth strategy
Global merger
Occurs when two businesses agree to join together under one management beyond the boundaries of one specific country
Reasons for joint ventures of global mergers
- Spreading risk over different countries/regions
- Entering new markets/trade blocs
- Acquiring national/international brand names/patents
- Securing resources/supplies
- Maintaining/increasing global competitiveness
Cost competitiveness
Differences in unit costs between competitors
Differentiation
Setting your company apart from the competition through a specific element, such as your distribution network or price-point
Skill shortages
Lack of qualified people available in relation to a vacant job role
Impact of skill shortages
- Difficulties in meeting customer service objectives
- Delays in developing new products or services
- Increased operating costs
- Difficulties meeting required quality standards
Impact of exchange rate
Changes in interest rates, inflation, national politics, and the economy of each country
Saturation
The point when most of the customers who want to buy a product already have it, or there is limited remaining opportunity for growth in sales
