last set 1 Flashcards
why dio some business locate abroad? 3 reasons
what is offshoring?
what is reshoring?
- reduce costs = pay foreign workers low wages however this unethical
- cost of land and office space is cheaper abroad - easier transport and communication links
- technological developments businesses can communicate online by video conferencing and email so do not to leave uk - targeting new international markets
= easier to spot local market trends and gain more local knowledge which leads them to operate in niche markets.
offshoring = moving parts of the business to cheaper countries
- it helps reduce costs as often cheaper labour however negative brand image as they often criticised by trade unions and media for uk job losses.
reshoring = is when a business moves back to its country of origin because customer attitudes and also easier to manage and control the business when its the same country however they might miss out on reduce cost due cheap labour overseas
how does
india
china and brazil
china
Philippine’s
offer benefits to businesses
what are the problems
what are non financial benefits + costs of locating abroad
India = specialisation in communication and IT service and have trained workers
china and brazil = cheap and skilled labour in manufacture department
however low quality as they care more about volume that quality
china = good at research and development and have cheap labour
Philippines = young university graduates with strong work ethics
problems
- workers may lost motivation and diseconomies of scale
non financial benefits = creates new jobs in new countries and increase people income and standard of living
non financial costs = it will lead to loss of jobs in original country and oversee workers can be exploited.
how does
india
china and brazil
china
Philippine’s
offer benefits to businesses
what are the problems
India = specialisation in communication and IT service and have trained workers
china and brazil = cheap and skilled labour in manufacture department
however low quality as they care more about volume that quality
china = good at research and development and have cheap labour
Philippines = young university graduates with strong work ethics
problems
- workers may lost motivation and diseconomies of scale
what is multinational business
how can multinational business helping developing countries? ( 4)
how does it not help developing countries?
located in more than one country
- create jobs and offer higher standards of living through increase wages
- economic growth as result of additional spending
- pay taxes to the local government which increase gov income
4) ethical multinationals = pay fair wages than exploiting them
not help
1. exploit the workers - lower wages to reduce cost set up sweatshops
- locate themselves in countries with less strict employment laws. for e.g child labour
- sell products which don’t meet safety standards.
why do multinational also locate themselves in DEVELOPED countries not developing broke ones (2)
what are political , economic and legal restraints on multinational? ( 3)
- stable and growing economies = more customers to buy their products
- set up factories = keep distribution cost low
- European union try to standardise employment laws and they have to meet these standards this is known as harmonisation
- protection policies like tariff and quotas
- pressure groups influence government as they may argue for tighter controls.
why are multinational difficult to manage?
who came up with model to manage multinational businesses
- complex as different parts of the business have different laws, values, culture and economy
- so may either take centralised approach or decentralised approach
Bartlett and Ghoshal identified 4 strategies
- international strategy = this happens when demands of market in different countries are similar and pressure for reduce cost is low this lead to centralised approach as decision will made in head office
- multidomestic = demands of market are different and little pressure to reduce costs
- take decentralised approach as make own decisions based on their own markets - global = demands of market are not similar but can reduce cost significantly
- take centralised approach as benefit of economies of scale. - transnational = pressure to reduce cost and meet meet local needs are high
- developing knowledge and ideas locally and sharing them globally to benefit the whole business.
how does being a multinational business affect :
finance
marketing
operations
IT
departments
finance =
-work with different currencies
- trade laws limit the amount of money they take from country economy,
- need to understand tax laws so they provide detail analysis of expansion opportunities
marketing =
- adapt to meet needs of local market and different campaigns and strategies to promote different products
operations
= different manufacturing facilities will need to be coordinated so use same materials and machinery
IT = create and manage several websites which may result in dep expanding
how business use digital technology lead innovative products
what are disadvantages?
how can it make a business efficient? ( 2 ways)
- up to date tech can help business be innovative to stay ahead of competition
- offer small upgrades allow to retain its market share
- monitor updates on global scale
disadvantage of using tech for innovative
1. expensive
2. not fully tested so it might have bugs and not working properly
3. difficult to diagnose customers can get frustrated.
efficient
better quality products and increased capacity.
what is data mining?
what is enterprise resource planning? ( erp)
when big data can be analysed using computers and specially designed software to spot correlations and trends
ERP =business software management allows business to monitor activities in every department through collection and interpretation of data
allows hr : track work rates to see who needs training
finance = might use previous data to budget
marketing = keep track of how well they are doing with promotional methods
