4.2 A2 Business key terms Flashcards
economies of scale
the cost advantages that a business can exploit by increasing the scale of production, which leads to a lower cost per unit of output
increasing size or speed - lowers the costs - increases efficiency
labour productivity
the amount of output (volume of goods and services) produced by each employee, in a given time
push factors
adverse (prevent success or development) factors in the existing market that encourage an organisation to seek international opportunities
pull factors
factors that entice firms into new markets, they are the opportunities that businesses can take advantage of when selling into overseas markets
offshoring
the relocation of business activities from the home country to a different international location
outsourcing
the delegation (transference) of one or more business processes to an external provider, who then owns, manages and administers the selected processes to an agreed standard
saturation
he point when most of the consumers who would buy a product already have it, or there is limited remaining opportunity for growth in sales
product life cycle
the stages that many products go through;
1) development 2) introduction 3) growth 4) maturity 5) decline
risk
the probability of a negative event occurring that has a negative impact as a result - different from the event that was hoped for
disposable income
personal income that remains after an individual has paid their taxes and other governmental charges (national insurance and deductions)
exchange rate
the price of one currency in terms of another
infrastructure
the basic systems, facilities, services and capital equipment required for a country’s economy to function
this would include:
- roads
- communication systems
- power services - electricity
- transport and telecommunication networks
reshoring
it involves a business returning production or operations to the host country that had previously been moved to a different international location
franchising
when a franchisor grants a licence (franchise) to another business (franchisee) to allow it trade using the brand/business format
intellectual property
a product that is a creation of the mind, such as an invention, literary work or artwork - that the law protects from unauthorised use by others
types include:
patent, trademarks and copyrights
licensing
a contract a firm has with another firm which allows it to use its intellectual property
barriers to entry
factors that make it difficult for a company to enter an industry or type of business and compete effectively - these can include:
brand recognition, restrictive government policies, lack of capital investment and so on
cost competitiveness
where an international firm is able to acquire ever-increasing economies of scale, which can then allow it to operate under very low costs
it can then be able to create the cheapest products and services in the market
cost leadership
pursuing a strategy to become the lowest cost producer in the industry, which acts as a competitive advantage
developed by Michael Porter
differentiation
when a firm selects certain attributes of its products or services and tries to match them with specific customers, and instead of aiming for lower costs, they command said customers a higher price for creating a catering and differentiated product
economic risk
risk that future cash flows will change due to unexpected exchange rate changes
global competitiveness
the extent to which a business is able to succeed against both domestic rivals and foreign competitors in international markets
skills shortages
when potential employees do not have the skills demanded by employers
