International markets

Question 1

Why might a business move to an international market?

Answer 1

A competitor has done so
Benefit from risk bearing eos

Question 2

How does an international market benefit eos?

Answer 2

Purchasing eos in a wider market
Experience curve quicker

Question 3

How does a new market increase market sharea?

Answer 3

Bigger population

Question 4

How does an international market boost profitability?

Answer 4

Cheaper costs - labour, energy, exchange rate

Question 5

Example of internationalisation

Answer 5

Dyson moving to Singapore

Question 6

What is exporting?

Answer 6

Selling the same products in another country
Can be through an agent

Question 7

Advantages of exports

Answer 7

Cheapest, lowest risk

Question 8

Disadvantages of exports

Answer 8

Risk of lost goods
Polluting
Strong pounds, exports dear

Question 9

What is licensing?

Answer 9

Giving another company permission to manufacture goods

Question 10

Advantages of licensing

Answer 10

Lower cost of transportation
Products can be adapted

Question 11

Disadvantages of licensing

Answer 11

IP can be copied
Low levels of marketing control

Question 12

What are alliances?

Answer 12

Arrangements between business in search of growth

Question 13

Advantages of alliances

Answer 13

Less permanent than a JV
Benefit from shared resources
Synergies

Question 14

Disadvantages of alliances

Answer 14

High chance of failure
breakdown of communication
can become future competitors

Question 15

What is direct investment?

Answer 15

Business owns manufacturing operations in foreign country through organic growth or taking over a foreign business

Question 16

Advantages of direct investment

Answer 16

Keep control over quality
Avoid tariffs and benefit from cheap labour

Question 17

Disadvantages of direct investment

Answer 17

risky and expensive
only suited to large businesses