conditions that prompt trade - push factors

Question 1

define push factors

Answer 1

market conditions are unfavourable in the UK and push businesses to look overseas

Question 2

what are the main reasons for businesses to go overseas?

Answer 2

1. saturated domestic market
2. high domestic competition
3. end of product life cycle at home

Question 3

explain the effects of saturated domestic markets

Answer 3

• lack of market growth
• overseas is easier if new market has similar characteristics e.g language = market development

Question 4

explain the effects of high domestic competition

Answer 4

• smaller uk businesses see mncs enter the UK market and see that they are unable to compete with them and go overseas

Question 5

explain the effects of the end of the product life cycle at home

Answer 5

• businesses sell abroad
• do this to counter maturity/decline in domestic market
• continues profitability of an existing product
• low risk strategy
• market development

Question 6

disadvantages of extending the product lifecycle abroad

Answer 6

• the cost of marketing to establish brand
• cost of exporting goods/material to the market
• language/cultural barriers = need for globalisation