4.2.1- conditions that prompt trade

Question 1

What are the pull and push factors that prompt international trade?

Answer 1

Push- competition, saturated markets at home

Pull- EOS, possibilities for offshoring and outsourcing, new and bigger markets, lower labour costs

Question 2

What is a saturated market?

Answer 2

One where most consumers who would buy a particular product already own it, so their is limited growth for the business

Question 3

Why may EOS be a pull factor?

Answer 3

Achieving EOS will allow the business to be more cost-competitive because cost per unit decreases as scale of production increases

Question 4

What does off shoring mean?

Answer 4

Moving jobs to other countries

Question 5

What are the pros and cons of offshoring?

Answer 5

Pros-
-reduces cost due to cheaper labour
-access to workers with particular skills

Cons-
-loss of jobs in home nation
-damage firms reputation
-complications causes by language barriers
-cultural clashes

Question 6

What is outsourcing?

Answer 6

Moving jobs to other organisations

Question 7

What are the pros and cons of outsourcing?

Answer 7

Pros-
-reduces costs
-allows business to focus on core activities
-improves speed and quality

Cons-
-poor communication may be disruptive