Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business Theme 3 and 4 > 4.2 > Flashcards

4.2 Flashcards

1
Q

Why target international markets?

A

-Reduce dependence on domestic markets
-Access faster growing markets & demand
-Achieve economies of scale
-Better serve customers located over seas

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are push factors?

A

Where businesses feel they have to expand internationally because of domestic market issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define pull factors

A

Where businesses are attracted by opportunities to grow by expanding internationally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Define Offshoring?

A

Relocation of business activities (Work done overseas)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Define Outsourcing

A

When a business hires an external organisation to compete tasks for you.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are some considerations for entering markets in new countries?

A

-Growth opportunities and disposable income
-Infrastructure
-Political stability
-Exchange rate
-Ease of doing business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are some considerations for choosing production locations?

A

-Cost of production
-Skills & availability of labour force
-Infrastructure
-Location in trade bloc
-Return on investment
-Political stability
-Ease of doing business
-Natural resources
-Gove incentives.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Define joint venture

A

Two businesses come together to share their knowledge, resources and skills to form a separate entity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Benefits of a joint venture

A

-Gain eachothers expertise and resources
-Diversifies risk due to products being in multiple markets
-Economies of scale
-Opportunity to enter new markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Drawbacks of a joint venture

A

-High initial costs of merging
-Diseconomies of scale
-Culture clash
-Redundancies can occur which effects morale of workers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Define merger?

A

A combination of two previously separate firms forming one completely new firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Key reasons for mergers and joint ventures

A

-Spreading risk
-Entering new markets/trading blocs
-Securing resources/suppliers
-Maintaining/ increasing global competitiveness

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Factors affecting cost competitiveness?

A

-Exchange rates
-Productivity & labour skills
-Out sourcing
-Off shoring & reshoring

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Define exchange rate?

A

Price of one currency in expressed in terms of another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Define Reshoring

A

Involves the repatriation of business activities from overseas back to the home country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are some reasons for Reshoring?

A

-Greater certainty around delivery times
-Minimise risk of supply chain disruption
-Easier to collaborate with home suppliers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What can businesses do to overcome skill shortages?

A

-Raise wages & other remuneration
-Offer better training, non-financial rewards
-Offshore activities to obtain skills needed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What can the government do to overcome skill shortages?

A

-Investment in vocational education
-Offer better apprenticeships
-Encourage inwards migration of oversea citizens with appropriate skills
-Provide incentives to businesses to invest in training & education

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Key features of offshoring?

A

-Traditionally associated with the relocation of manufacturing activities from a domestic economy overseas
-Offshoring increasingly common with business services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Define differentiation

A

When a business aims to offer a product that is distinctively different from competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Ways of achieving differentiation?

A

-Superior product quality and design
-Strong brand recognition
-Sustained promotion
-High customer service

22
Q

What are some push factors

A

Market saturation and intense competition - businesses may therefore considering engaging in International trade.

23
Q

Define Market saturation

A

When demand for goods and services has reached its peak so it becomes challenging for a business to grow.

24
Q

Examples of pull factors

A
  1. Economies of scale: cheaper raw materials in different countries
  2. Spreading risk: accessing multiple markets business can diversify customer base reduces risk with operating in a single market.
25
Q

Advantages of offshoring

A

-Lower labour costs, increases profitability
-Access to specialised suppliers
-Economies of scale
-Access to skilled workers

26
Q

Disadvantages of offshoring

A

-Employee/employer relations may suffer eg due to relocation
-Increased short term costs eg relocation, training
-Poorer customer service due to cultural and language barriers.

27
Q

Advantages of outsourcing

A

-Take advantage of specialist skills
-Cost effective
-Higher labour productivity
-Easier to comply with rules & regulations

28
Q

Disadvantages of outsourcing

A

-Damage to brand image if outsourced firm isn’t ethical
-Poor communication can increase costs/cause disruption

29
Q

Define extension strategy

A

A method used by a business to extend the product life cycle of a product or service. Eg sell product in new International markets

30
Q

Factors to consider when entering new markets: Infrastructure

A

Good infrastructure improves production process reducing costs and increasing sales. (Roads, transportation, and communication.)

31
Q

Factors to consider when entering new markets: Ease of doing business

A

Rules & regulations may be relatively simple or very harsh, registering properties and enforcing contracts to be considered.

32
Q

Factors to consider when entering new markets: Levels of growth and disposable income

A

Selling in countries with high income = more sales
Selling in countries with low income = slower sales growth

33
Q

Factors to consider when entering new markets: Exchange rates

A

Can be subject to fluctuations, countries with stronger currencies can import raw materials at a lower price, exports more expensive to abroad customers.

34
Q

Factors to consider when entering new markets: Political stability

A

Businesses at risk of not gaining a return on investment in countries with political instability eg corruption, lack of law enforcement & high crime rates. Countries with stable economy and Gove seen as less risky investment

35
Q

Factors when assessing production location: Cost of production

A

Keeping costs low increases profit margins or allows firms to sell at a low price = competitive advantage

36
Q

Factors when assessing production location: Skills & availability of labor force

A

Quality of work force directly impacts the quality of goods, businesses need to consider literacy levels and skills needed for businesses. Firms may choose to locate in markets with low labor costs

37
Q

Factors when assessing production location: Location in trading bloc

A

Operating in a market within a bloc advantageous as it reduces protectionist measures

38
Q

Factors when assessing production location: Ease of doing business

A

Firms want to locate in areas with limited bureaucracy so process of establishing production facilities is not delayed or doesn’t incur high costs

39
Q

Factors when assessing production location: Natural resources

A

Important that businesses have access to raw materials as this will reduce transport costs and delays of production.

40
Q

Factors when assessing production location: Government incentives

A

Gov may offer grants, loans and tax breaks to firms that may be choosing to operate in their country.

41
Q

Define Currency appreciation

A

Value of a currency increases against another eg if £1=$1.60 and then increases to £1=$1.80 the value of the £ has appreciated against the $ (£ can buy more $)

42
Q

Advantages of currency appreciation

A

Imports cheaper from abroad = increases profit margins

43
Q

Disadvantages of currency appreciation

A

Exports more expensive for customers = fall in sales, shift of demand to domestic businesses.

44
Q

Define Currency depreciation

A

When the value of one currency decreases against another eg if £1=$1.60 and then falls to £1=$1.20 the value of the £ has depreciated abasing the $

45
Q

Advantages of currency depreciation

A

-Exports abroad are cheaper so business more competitive
-Imports more expensive = less competition fro foreign businesses.

46
Q

Disadvantages of currency depreciation

A

Imports from abroad are now more expensive = increase costs = high prices for consumers.

47
Q

SPICED

A

Strong pound imports cheaper exports dearer

48
Q

WPIDEC

A

Weak pound imports dearer exports cheaper

49
Q

What are the two ways of gaining a competitive advantage?

A

Cost leadership and Differentiation

50
Q

What is Cost leadership?

A

When a business becomes the lowest cost producer

51
Q

How is cost leadership achieved?

A

Using machinery and technology, outsourcing and offshoring

52
Q

How can businesses utilise cost leadership?

A

They can utilise their position to keep prices the same whilst having low costs which increases profits.

Business Theme 3 and 4 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions