Conditions the prompt trade

Question 1

Define a GLOBAL MARKET

Answer 1

A global market is a market that targets all of the world’s economies, rather than the ones of individual countries. This has been aided by the process of globalisation.

Question 2

Define PUSH FACTORS

Answer 2

Push factors are factors that force a business to leave a market it is currently operating in, often forcing them to expand internationally. (e.g. market saturation, more competitors, the need to extend a product’s life cycle).

Question 3

Define PULL FACTORS

Answer 3

Pull factors are factors that attract a business to enter a global market (e.g. economies of scale, outsourcing, spreading of risk).

Question 4

What are the advantages of offshoring?

Answer 4

• Allows for cost minimisation
• The closeness to markets will reduce transport costs
• Easier access to consumers
• Global delivery may be quicker

Question 5

What are the disadvantages of offshoring?

Answer 5

• Business must consider the ethics of offshoring
• Redundancies in domestic markets may result in negative PR
• The initial cost savings may be eroded over time
• Issues with quality may prompt re-shoring

Question 6

What are the advantages of outsourcing?

Answer 6

• Allows for the business to expand capacity to meet demand

- The outsource business is likely to be a specialist, allowing the business to focus on its core activities

Question 7

What are the disadvantages of outsourcing?

Answer 7

• Businesses must consider the ethics of outsourcing
• May lead to a loss of quality control
• The relationship between the two businesses may be new or weak.

Question 8

Define OUTSOURCING

Answer 8

Outsourcing is the practice of using the services of another organisation to work on behalf of the firm.

Question 9

Define OFFSHORING

Answer 9

Offshoring is the relocation of a business process to another country.