Entering International Markets Flashcards
why do international markets offer business growth opportunities
they can move from saturated markets e.g TESCO has saturated the UK market can extend the product life cycle reduce costs of raw materials low wage rates can reduce costs reduce risk of economic recession
how does the size of the international market affect its attractiveness
countries with large populations and developing markets can be attractive (HOWEVER assess population demographics)
the wealth of the population will affect the size of businesses potential market
the availability of technology e.g NETFLIX won’t enter countries without readily available wifi
how do political and economic factors affect market attractiveness
businesses need to take into account laws
account for political controls on trade
depends on a stable political environment
exchange rate fluctuations
how do cultural, ethical and environmental factors
similar cultures and languages make markets more attractive
cheap labour can be seen as exploiting workers
what the impact would be on the environment
Businesses can exploit the lack of environmental restrictions
countries restrictions on buying and selling products
how can producing abroad cut costs or increase revenue
locating abroad can reduce costs
locating abroad is a way of targeting new international markets
locating abroad helps companies avoid trade barriers
locating abroad has been made easier by improved transport and communication links
what is offshoring
the process of moving production to cheaper countries
what is reshoring
when business move departments back to its country of origin. This may be due to the fact that people have become increasingly aware of business activities.
what are the non-financial benefits of locating abroad
it may create new jobs in the country, which can increase people’s income and standard of living. Companies also invest in the host country by paying for factories, roads, etc to be built by paying taxes.
what are the non-financial costs of locating abroad
loos of jobs and investment in the original country. Overseas workers can be exploited if they aren’t protected by employment laws as well as rising pollution
what is a multinational business
a business that has branches or departments in more than one country
what is harmonisation
the standardisation of employment laws such as equal opportunities and health and safety standards to ensure that multinational corporations have to meet minimum standards wherever they locate
what is transfer pricing
when a multinational business buys and sells products between parts of the company based in different countries
who proposed 4 international business strategies
Bartlett and Ghoshal
what are the four strategies in Bartlett and Ghoshal’s business strategies
Global strategy, transnational strategy, international strategy, multidomestic strategy
what is the global strategy
high pressure to reduce costs low pressure for local responsiveness.
what will global strategy businesses look like
centralised and coordinated in order to take full advantage of economies of scale
what are the axes of Bartlett and Ghoshal
pressure to reduce costs and pressure for local responsiveness
what is the transnational strategy
high pressure to reduce costs and high pressure for local responsiveness.
what is the focus of a transnational business
when a business focuses on developing knowledge and ideas locally and sharing them globally to benefit the whole business.
what will a transnational business look like
a mixture of centralisation and decentralisation
what is the international strategy
low pressure to reduce costs and low pressure for local responsiveness.
what does an international business look like
very centralised with most of the research, big decisions and development being carried out at the head office
what is the multi-domestic strategy
high-pressure local responsiveness, low pressure to reduce costs
when would a business introduce a multi-domestic strategy
when the demands of the different markets are very different and there is little pressure to reduce costs through global coordination
what does a multi-domestic business look like
the business will be decentralised and the business operates as if it were lots of independent companies each running itself
how does internationalisation affect finance
having to adapt to work with different currencies
finance have to comply with the trade laws of different countries
due to the complexity of multinationals, financial functions might be spread across different locations
how does internationalisation affect marketing
marketing will need to have different campaigns and strategies
marketing message may need to be adapted to appeal to different markets
how does internationalisation affect operations
different manufacturing facilities will need to be coordinated if the product is standardised
how internationalisation affect IT
IT functions will often be carried out at each branch of the business in order to manage the day-to-day IT problems
what may multinationals face
culture clashes
