4.2.1 Conditions that prompt trade Flashcards
What the types of factors that prompt trade?
Push and pull
What are the factors that prompt trade?
- Economies of scale (internal & external)
- Saturated domestic markets
- Intense competition
- Offshoring
- Risk spreading/diversification
- Outsourcing
- The need to extend the product life cycle
What are push factors?
where businesses have to expand because of domestic market issues
What are pull factors?
Where businesses are attracted by compelling opportunities to grow by expanding internationally.
What are the push factors?
Intense competition
Saturated domestic market
What are the pull factors?
Economies of scale
offshoring
risk spreading
outsourcing
What is the difference between offshoring and outsourcing?
Offshoring means getting work done in a different country. Outsourcing refers to contracting work out to an external organization.
What are methods of extension strategy?
- new use
- change packaging
- modifying formulation
- change advertising
- new market
- discounts
- change design mix
- add features
- increase usuage
What are the stages of a product life cycle?
R+D Introduction Growth Maturity Decline
What is determinism?
A theoretical concept where following events are based of previous events/success.
Why is determinism bad?
Because managers can expect that a product will work forever.
At what stage does a business begin to make a profit during the product life cycle?
Halfway during growth
When does a business make a loss during the product life cycle?
During r+d and growth
Why do businesses have negative cash flow during the product life cycle?
- advertising
- R+D costs
- low sales
- low economies of scale
Why is good for businesses to sell in multiple markets?
Because it helps spread risks and because of varying cultures the success of the same product varies. Therefore, businesses can use this as an extension strategy elongating the life of a product.
