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MS ELHABASSI BUSINESS > 4.2 Global Markets And Business Expansion > Flashcards

4.2 Global Markets And Business Expansion Flashcards

1
Q

Why do businesses increasingly want to target international markets?

A
  • reduced independence
  • access faster growing markets and demand
  • achieve economies of scale
  • better serve customers located overseas
  • build brand value
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2
Q

What’s a domestic market?

A

Home market, if a business is based in the uk then the domestic market is the uk all other markets are international

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3
Q

Push factors?

A
  • saturated domestic market
  • low growth opportunities
  • end of plc in domestic market
  • need to diversify and reduce risk
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4
Q

Pull factors?

A
  • attraction to new overseas markets in emerging economies
  • opportunity to exploit EOS by expanding
  • exploit comp adv in new markets
  • ways to extend plc
  • risk spreading
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5
Q

what is outsourcing?

A

a business function is contracted out to a third party business

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6
Q

benefits of outsourcing?

A
  • improved focus on core business activities
  • increased efficiency
  • controlled costs
  • increased reach
  • greater comp advantage
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7
Q

drawbacks of outsourcing?

A
  • possible slower service/delivery
  • lack of flexibility
  • management difficulties
  • instability (over reliance)
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8
Q

what is offshoring?

A

moving operations overseas

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9
Q

benefits of offshoring?

A
  • take advantage of lower min wage
  • advantage of trade blocs
  • tax benefits
  • access to larger pool of labour
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10
Q

drawbacks of offshoring?

A
  • communication issues
  • cultural and social barriers
  • time zone differences
  • security
  • loss of intellectual property
  • external factors
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11
Q

what are the PILEE factors?

A
  • political stability
  • infrastructure
  • levels and growth of disposable income
  • ease of doing business
  • exchange rates
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12
Q

what is political stability?

A

how secure a government is and how strong the political and regulatory framework supports the country economy

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13
Q

benefits of political stability?

A
  • allows them to see how well protected their business would be
  • identify areas which are high risk
  • crime rates/ safety identified
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14
Q

drawbacks of political stability?

A
  • only accounts for the governmental side of things
  • political factors are variable and often change
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15
Q

what is infrastructure?

A

the physical systems that a country require to operate efficiently

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16
Q

benefits of using infrastructure as a way of assessing a country as a market?

A
  • allows them to plan for any additional costs (transport)
  • dependent on the product you sell
  • transport will be fast
17
Q

drawbacks of using infrastructure as a way of assessing a country as a market?

A
  • may improve through time
  • might be a developing country and is therefore unstable
18
Q

benefits of using level of income as a way of assessing a country as a market?

A
  • raise price if higher income
  • skilled workers due to high employment
  • high demand
19
Q

drawbacks of using level of income as a way of assessing a country as a market?

A
  • high competition
  • inferior goods wont be demanded in high income countries
  • high labour cost if wages are high
20
Q

benefits of using exchange rates as a way of assessing a country as a market?

A
  • Businesses moving to countries with stronger currencies can import raw materials and components for production at a lower price
21
Q

drawbacks of using exchange rates as a way of assessing a country as a market?

A
  • Exports from this country will be more expensive to customers abroad
  • profit may be less than expected if currency is stronger than the pound
22
Q

benefits of using ease of doing business as a way of assessing a country as a market?

A
  • if legislation is lenient they are able to set up more easily
23
Q

drawbacks of using ease of doing business as a way of assessing a country as a market?

A
  • may have to change production process
  • loss of intellectual property
  • wasted time through set up process and communication challenges
24
Q

What are the 9 ways of assessing a country as a production location?

A
  • cost of production
  • labor force
  • skills and education of workforce
  • infrastructure
  • location in a trade bloc
  • govt incentives
  • ease of doing business
  • raw materials
  • likely return on investment
25
Q

what is a merger?

A

where 2 businesses join to become one on a permanent basis

26
Q

what is a joint venture?

A

2 businesses collaborate on a project it is a temporary merger and they remain separate legal entities

27
Q

what are the reasons for mergers and joint ventures?

A
  • spread risk over different countries
  • enter new markets and trade blocs
  • acquire new international brand names and patents
  • securing resources and suppliers
  • maintain global competitiveness
28
Q

how can you improve global competitiveness - comp adv?

A
  • cost leadership
  • differentiation
29
Q

what is the impact of SPICED?

A
  • inflation domestically is likely to fall
  • econ cycle may fall to a short run recession
  • if exports are elastic demand will fall drastically
  • production costs decease if imported
  • increased international comp
30
Q

what is the impact of WPIDEC?

A
  • inflation may rise
  • econ cycle will have a short term boom
  • depends on elasticity of imports
  • production costs increase if imported
  • decreased international competition
31
Q

what are the drawbacks of skilled workers?

A
  • high labor costs
  • increased training requirements
  • harder to recruit
31
Q

what are the benefits of skilled workers?

A
  • improved productivity
  • improved quality
32
Q

ways to overcome skill shortages offered by the govt?

A
  • encourage migration
  • invest in vocational education
  • tax incentives
  • apprentices
32
Q

ways to overcome skill shortages?

A
  • raise wages in remuneration
  • offer better training and other non financial incentives
  • collaborate with other firms
  • offshore activities with skill shortages
  • outsource to specialist providers

MS ELHABASSI BUSINESS (7 decks)

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