4.2 Flashcards
Factors that affect business operations.
Home-
-History of business
-Maintain control over
quality
-Lower Lead Time
-Part of trade bloc
-Better customer service
Away-
-Lower production costs
-Falling Demand in home market
-Supply of workers
Factors that encourage a business to leave the UK (Push Factors)
-Saturated domestic markets
-Low growth opportunities
-End of the product lifecycle at
home
-Need to diversify
-Government Policies that
encourage trade
Factors that encourage a business to enter new markets (Pull Factors)
-Attention to new overseas markets in emerging economies
-Opportuny to gain EofS by expanding overseas
-Untapped markets
-Ways to extend the product lifecycle
What is offshoring?
A business relocating its business overseas.
Why do businesses use offshoring?
Take advantage of low labour costs, cost efficiencies and supply chains.
What is outsourcing?
When tasks that could be carried out by a business are contracted out to a third party business. E.g marketing research and call centres are often contracted out abroad.
What are ways to extend the life cycle?
-Rebranding
-Price discounting
-Seeking new markets
-Advertising
-Price reduction
-Explore new markets
What are disadvantges of international expansion?
-Distance
-Different language
-Risks in transit
-Import and export restrictions
-Problems in payments
-Frequent market change
-Intense competition
Advantages of International expansion
-Access to new customers
-Lowering costs through cheap labour and materials
-Spread business risk
-First mover advantage
What is ease of doing business?
Looks at regulations and policies such as taxes, trading contracts and labour regualtions
What should a business research when choosing a country to expand into?
-Political stability
-Infrastructure
-Disposable income
-Position in a trading bloc
-Financial considerations
-Skills and availability of workforce
What is a merger?
A deal to unite two existing companies into one new company.
What is a joint venture?
Is an arrangement in which two or more business agree to create a new business that they own in partnership.
What are reasons for mergers/joint ventures?
-Spread risk over different countries/regions
-Entering new markets/trading blocs
-Acquiring national/international brand names
-Acquring patents
-Mainting/increasing global competitiveness
What are the problems with mergers and joint ventures?
-Unrealistic objectives
-Communication and culture
-Managemnt issues
-Finances
