4.2 Flashcards
1
Q
conditions that promt trade, push factors:
A
- market saturation, growth slows
- competition
- shareholder pressure
2
Q
conditions that promt trade, pull factors:
A
- economies of scale
- cost saving
3
Q
whats offshoring?
A
- moving manufacturing or service industries to a part of the world with lower cost production
4
Q
benefits of offshoring?
A
- lower wage costs
- access to raw materials
- access to skilled workforce
5
Q
drawbacks of offshoring?
A
- damage to business reputation in home country
- as economies develop production costs also rise
- cultural and language barriers
6
Q
what is outsourcing?
A
- moving a business function to a specialist external provider in another country
7
Q
benefits of outsourcing?
A
- allows the business to upgrade
- takes advantage of a comparative advantage
- access to specialist facilities/knowledge
8
Q
drawbacks of outsourcing?
A
- reliance on 3rd parties
- cultural and language barriers
- businesses are less flexible if tied into a contract with a specialist
9
Q
production location checklist?
A
- cost of production
- skills and availability of workforce
- natural resources
- developed infrastructure
10
Q
merger-
A
- where two companies join together to create one organisation
11
Q
join venture-
A
- involves two separate businesses to collaborating to achieve a shared goal
12
Q
what are barriers to entry?
A
- low brand awareness
- cultural/language differences
- knowledge of market
- additional costs incurred through exporting
13
Q
reasons for global mergers and joint ventures:
A
- spread risk
- global competitiveness
- acquire national/international brands
- resources and suppliers
14
Q
why do exchange rates fluctuate?
A
- elasticity of demand
- relative economic growth in international markets
- the use of fixed contracts
15
Q
what is cost competitiveness?
A
- Also cost leadership
- MNCs find it easier to gain economies of scope and scale as they have multiple operations around the world
