Global markets and expansion 4.2 Flashcards
What is a pull factor?
Positive factors overseas that entice a business to look outside their domestic market.
What are two examples of pull factors?
-Economies of scale
-Risk spreading
What is a push factor?
Negative factors in the business domestic market that push the business to look overseas
What are two examples of a push factor?
-Saturated markets
-Competition
What is outsourcing?
Contracting another business to perform a business function on your behalf overseas.
What are some factors in assessing a country as a market?
-levels of disposable income
-Ease of doing business
-Quality of infrastructure
-Political stability
What is disposable income?
The amount a household has left after income taxes have been deducted
Why does high growth rates of disposable income make a country attractive?
-Consumers are more likely to spend more
-Consumers more likely to spend money on luxury products
What does ease of business refer to?
A measure of how easy or difficult it is to set up a business in a certain country
Why is the quality of infrastructure important to business expanding overseas?
If there is a high quality infrastructure, then transport takes less time and money plus communication.
What type of business would be particularly interested in the infrastructure of a country?
A business that sells perishable goods such as food and drink. A good quality infrastructure means that goods can be transported quickly without the goods going bad.
What might political instability mean for a business?
-high growth rates could mean high inflation rates
-fluctuating exchange rates
What are some factors that make a country a good production location?
-High skills and availability of workers
-Low costs of production
-Is in a trading bloc
-Natural resources
Why would a business merge or have a joint venture with another business overseas?
-Increases global competitiveness
-Secures resources and supplies
-Acquires international brand names
What is a joint venture?
An mutually beneficial agreement between two businesses from different countries to work together on a specific project.
