economic factors in business expansion Flashcards
Describe the difference between push and pull factors.
Push factors deter firms from entering new markets, whereas pull factors are those that attract a firm to enter a market.
Would a saturated market be a push or pull factor?
A push factor.
Would an emerging economy be a push or pull factor, and why?
A pull factor, as emerging economies have a lot of potential for business growth.
Define offshoring.
This is the process of having part/all of a firm’s services shifted abroad.
How could a firm benefit from offshoring?
They could take advantage of the low labour costs in other countries.
What is outsourcing?
When companies use external providers to carry out business processes that would otherwise be handled internally.
This occurs when firms get their goods from a supplier abroad.
How does political stability affect the potential for a business to grow?
If a country faces a lot of corruption it will be harder for a firm to set up a long-term plan in that country and be able to make a profit.
Would red tape be a push or pull factor?
A push factor.
How would government subsidies benefit a firm?
It would lower their average costs of production, thus improving their profit margin per unit of output sold.
