4.2 Flashcards
Push factors for trade
Saturated markets- when a product has become so common in a market that there’s no potential customers left to sell to has to enter new market (market development)
Competition- arrival of big multinational , may have to flee to international markets to extend product life cycle .
Pull factors for trade
Eos-
Spread the risk- may fail in one country but have demand in another
Offshoring and outsourcing
Factors to consider to make a market attractive
-disposable income ,US
-ease of doing business ,UK take 4 days to set up a company , China 23
-infrastructure , goods can be transported better and communicated.
-political stability,sierra leone not stable pillage trading.
-exchange rate
Factors assessing of country as a production location
- cost of production, )labour lextricty,gas)
-skills and availability of labour force
-infrastructure (if cheap labour poor structure)
-location in trade bloc(so can access free trade)
-government incentives(grants machinery)
-ease of doing business
-political stability
—natural resources (coal)
-likely return on investment (lower costs will boost return on investment)
Joint venture vs global merger
JV short term only for a project
Reasons for merger or venture
-spread risk over diff countries,
-entering new markets and trade blocs
-national and internal brand names and patents, (protect ownership of invention)
-mainting and increasing global competitiveness
Impact of a high exchange rate
Have large exports
Appreciation of the £ = products more expensive in other countries who u export to = lower demand
Impacts of low exchange rate
Uk
Depreciation of pins means cost more for supplies that are imported.
Competitive advantage through cost competitiveness
Predatory pricing
Cost saving
Outsourcing - finding another company to do the work hotels with cleaning company for cheaper
Offshoring - factories or offices moved to new location overseas can help avoid environmental regulations
