4.2 Global Markets & Business Expansion Glossary

Question 1

Off-shoring

Answer 1

Shifting jobs to other countries

Question 2

Outsourcing s

Answer 2

Shifting jobs to other organisation

Question 3

Pull Factors

Answer 3

Factors that entice firms into new markets and the opportunities that businesses can take advantage of when selling into overseas markets

Question 4

Push Factors

Answer 4

Factors in the existing market that encourage an organisation to seek international opportunities

Question 5

Disposable Income

Answer 5

The amount of money that a person has left over after they have paid their taxes, national insurance and other deductions

Question 6

Exchange Rate

Answer 6

The price of one currency against another

Question 7

Infrastructure

Answer 7

The basic systems, facilities, services and capital equipment required for a country’s economy to function, which might include its roads, communication systems and power services.

Question 8

Re-shoring

Answer 8

Bringing production back home after using foreign production facilities for a period of time

Question 9

Trade bloc

Answer 9

A group of countries situated in the same region that join together and enjoy trade free of tariffs, quotas and other forms of trade barrier

Question 10

Intellectual property

Answer 10

A product that is the creation of the mind, such as the invention, literary work or artwork that the law protects from unauthorised use by others. Types include patents, copyrights and trademarks

Question 11

Licensing

Answer 11

A contract with another firm to use its intellectual property or to produce its product or service in return for a fee

Question 12

Franchising

Answer 12

Establishing a long-term co-operative relationship whereby one party, the franchisor, contracts with another, the franchisee, to run its business.

Question 13

Barriers to entry

Answer 13

Factors making it difficult for a firm to enter a market or an industry and compete effectively. These can include high start-up costs or high capital investment, strong economies of scale for existing firms in the market, restrictive government policies and labour unions

Question 14

Competitive advantage

Answer 14

The advantage one company has over another, or several others, on the provision of a particular product or service. Examples could be USP, quality or price.

Question 15

Cost competitiveness

Answer 15

Through acquiring ever-increasing economies of scale, a company creates the cheapest product on the market

Question 16

Cost leadership

Answer 16

A concept developed by Porter and used in business strategy. It describes the way the establish competitive advantage and essentially means the lowest cost (and lowest potential prices) in the industry

Question 17

Differentiation

Answer 17

A firm selects certain attributes of its products or services and matches them with specific customers, commanding a higher price.

Question 18

Economic risk

Answer 18

Risk that future cash flows (money in and out in a time period) will change due to unexpected exchange rate changes

Question 19

Global competitiveness

Answer 19

The extent to which a business or a geographical area such as a country, can compete successfully against rivals

Question 20

Skills shortage

Answer 20

Where potential employees do not have the skills demanded by employers

Question 21

Joint venture

Answer 21

Is a separate business entity created by two or more parties, involving shared ownership, returns and risks