push/pull factors

Question 1

what are push factors?

Answer 1

adverse (negative) factors that can encourage an organisation to seek international opportunities. for example, if a company is no longer happy in a market or if there is an increase in corporation tax

Question 2

some examples of push factors:

Answer 2

• saturated markets
• low growth opportunities
• end of the product life cycle at home
• need to diversify
• need to reduce risk

Question 3

what are saturated markets?

Answer 3

an over populated market where there is low opportunity for growth. for example, the phone market

Question 4

low growth opportunities:

Answer 4

where a product is already popular in a country, making growth/expansion harder within that country. for example, everyone in Netherlands already have bikes

Question 5

end of the product life cycle at home

Answer 5

when the product has declined in the domestic country, but in other countries it does well. for example, lemon coke in the UK declined but in Brasil, China and Italy it is still popular

Question 6

the need to diversify:

Answer 6

to extend the product portfolio and diversify product ranges into an international market. for example, Nestle use long lasting (powdered) milk in eastern countries

Question 7

need to reduce the risk

Answer 7

when laws change, and the business is put at a disadvantage, they have to change markets/ country to reduce risks. for example, Brexit lead to the UK no longer being a part of the EU trade bloc

Question 8

what are pull factors?

Answer 8

desirable factors that attract firms into new markets, like the opportunities / advantages when selling into overseas markets

Question 9

examples of pull factors:

Answer 9

• attraction to overseas markets in emerging economies
• opportunity to gain EOS by expanding overseas
• opportunity to exploit competitive advantages in new markets
• ways to extend the product lifecycle

Question 10

attraction to new overseas markets in merging economies

Answer 10

there could be infant companies operating in MINT/BRIC countries, which is good because consumer confidence increases as there would be more job opportunities

Question 11

opportunity to gain EOS by expansing overseas

Answer 11

larger brands would benefit from expanding overseas as you have a large popularity