Entering International Markets

Question 1

why do international markets offer business growth opportunities

Answer 1

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

Question 2

how does the size of the international market affect its attractiveness

Answer 2

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

Question 3

how do political and economic factors affect market attractiveness

Answer 3

businesses need to take into account laws
account for political controls on trade
depends on a stable political environment
exchange rate fluctuations

Question 4

how do cultural, ethical and environmental factors

Answer 4

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

Question 5

how can producing abroad cut costs or increase revenue

Answer 5

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

Question 6

what is offshoring

Answer 6

the process of moving production to cheaper countries

Question 7

what is reshoring

Answer 7

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.

Question 8

what are the non-financial benefits of locating abroad

Answer 8

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.

Question 9

what are the non-financial costs of locating abroad

Answer 9

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

Question 10

what is a multinational business

Answer 10

a business that has branches or departments in more than one country

Question 11

what is harmonisation

Answer 11

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

Question 12

what is transfer pricing

Answer 12

when a multinational business buys and sells products between parts of the company based in different countries

Question 13

who proposed 4 international business strategies

Answer 13

Bartlett and Ghoshal

Question 14

what are the four strategies in Bartlett and Ghoshal’s business strategies

Answer 14

Global strategy, transnational strategy, international strategy, multidomestic strategy

Question 15

what is the global strategy

Answer 15

high pressure to reduce costs low pressure for local responsiveness.

Question 16

what will global strategy businesses look like

Answer 16

centralised and coordinated in order to take full advantage of economies of scale

Question 17

what are the axes of Bartlett and Ghoshal

Answer 17

pressure to reduce costs and pressure for local responsiveness

Question 18

what is the transnational strategy

Answer 18

high pressure to reduce costs and high pressure for local responsiveness.

Question 19

what is the focus of a transnational business

Answer 19

when a business focuses on developing knowledge and ideas locally and sharing them globally to benefit the whole business.

Question 20

what will a transnational business look like

Answer 20

a mixture of centralisation and decentralisation

Question 21

what is the international strategy

Answer 21

low pressure to reduce costs and low pressure for local responsiveness.

Question 22

what does an international business look like

Answer 22

very centralised with most of the research, big decisions and development being carried out at the head office

Question 23

what is the multi-domestic strategy

Answer 23

high-pressure local responsiveness, low pressure to reduce costs

Question 24

when would a business introduce a multi-domestic strategy

Answer 24

when the demands of the different markets are very different and there is little pressure to reduce costs through global coordination

Question 25

what does a multi-domestic business look like

Answer 25

the business will be decentralised and the business operates as if it were lots of independent companies each running itself

Question 26

how does internationalisation affect finance

Answer 26

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

Question 27

how does internationalisation affect marketing

Answer 27

marketing will need to have different campaigns and strategies
marketing message may need to be adapted to appeal to different markets

Question 28

how does internationalisation affect operations

Answer 28

different manufacturing facilities will need to be coordinated if the product is standardised

Question 29

how internationalisation affect IT

Answer 29

IT functions will often be carried out at each branch of the business in order to manage the day-to-day IT problems

Question 30

what may multinationals face

Answer 30

culture clashes