theme 4 business Flashcards

1
Q

what is the definition of economies of scale ?

A

economies of scale - proportionate savings in cost when production is increased

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is a push factor ?

A

A push factor is something which forces a business to consider trading in another country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what are some examples of push factors which may force a business to persue trading options in other countries?

A
  • saturates markets/market saturation
  • high levels of competition in domestic (home) market/s
  • product life cycle extension strategies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what are some pull factors for expansion into foreign markets ?

A
  • economies of scale to gain
  • ability to spread risk
  • offshoring and outsourcing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what does it mean when a market becomes saturated and why is this a push factor for foreign expansion of a business?

A
  • when a market becomes saturated it means that a business has reached the greatest amount of people that they can sell their products and services to. Therefore their sales levels are likely to stay relatively the same.
  • This may encourage a business to expand into foreign markets as their product/service will be seen as new and exciting in these new markets.
  • R+D is still taking place and a business needs to continue to trade and expand into markets abroad at the same time.
    eg. Ansoff’s matrix market development
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

why may competition in the domestic market lead to a business expanding into foreign markets?

A
  • high levels of competition in a domestic market may mean that a business looks to expand abroad where there is a lower level of competition as they may be able to compete more successfully with domestic businesses in that market rather than their own home/ domestic market
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

why may product extension strategies be a reason for expansion into foreign markets?

A
  • a mature or declining product could be sold on an international scale as a new and exciting product - may generate more sales and more sales revenue in this way.
  • product design, packaging design + logistics
  • eg. SPAM
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

why may economies of scale be a pull factor for a business to expand into foreign markets?

A
  • can drive production to a level to gain economies of scale more easily in foreign countries, which may be due to the lower minimum wage levels which leads to a significant cut in costs
  • can paticularly benefit from economies of scale if a product is standard and can be sold in a range of countries with minimal adptations being made to it
  • purchasing,technical,marketing,financial and risk bearing economies can be gained in this way
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

why may the ability to spread risk be a pull factor for a business to expand into a foreign market?

A
  • by selling to other countries a business is less vunerable to changes in the domestic economy
  • balanced product portfolio
  • different growth rates experienced in countries at the same time - risk is spread as eggs aren’t all in one basket
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is offshoring ?

A

offshoring is when a business relocates dome of it’s business processes to another country eg. manufacgtiring or supporting processes such as accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

why might offshoring be a pull factor for expansion into foreign economies?

A
  • can benefit from lower minimum wage levels
  • trade blocs and trade deals which can be made that a business can benefit from
  • tax offered by host nations may be lower than in the domestic market
  • access to a much larger talent pool for recruitment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what are the BRICS countries ?

A

Brazil
Russia
India
China
South Africa

  • the BRICS are a group of emerging economies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are the MINT countries

A
  • the MINT countries are a group of emerging economies

Mexico
Indonesia
Nigeria
Turkey

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what does GDP mean?

A

GDP - the total value of all goods and services in a market/economy measured over a period of time which is usually 1 year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is an emerging economy ?

A

emerging economy - a country developing from an LIC to a HIC, due to the rapid growth of GDP in that country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what is the definition of an economy ?

A

economy - the state of a country in terms of the production and consumption of goods and services and the availible dupply of money in an economy

17
Q

what are the 4 indicators of economic growth?

A
  • GDP
  • GDP (gross domestic product) per capita
  • health
  • Human Development Index (HDI)
  • adult literacy rate (the amount of people in a country over the age of 15 who can read and write)
18
Q

what is a push factor?

A

A push factor is a factor in the domestic market which forces a business to expand into the international market. Push factors are often seen as Threats (SWOT)

19
Q

what is a pull factor?

A

a factor which forces a business to trade internationally/outside of their domestic market. Pull factors are often seen as Opportunities (SWOT)

20
Q

what are some examples of a push factor?

A
  • market saturation
  • changes to the tastes and preferances of consumers in the domestic market
  • changes to government legislation eg. increases in taxation which will lower a business’ profits
  • high levels of competition in the domestic market which the business can no longer compete with
21
Q

what are some examples of pull factors?

A
  • lower production costs - economies of scale
  • spreading of risk
  • more profitable markets
  • lower material costs
  • better availability of raw materials
  • residents may have better education levels and specialist training which would make them better suited to the job roles which that business could offer (potential employees) - lower training costs
  • ability to obtain overseas trading licences
  • spreads the risk across multiple markets
22
Q

why might businesses trade internationally?

A
  • may be forced to (push factors) (Threats) (SWOT)
  • may want to/ feel enticed to due to Opportunities (Pull factors) (SWOT)
  • before expanding internationally/into a specific market a business should asses whether they should trade abroad/ asses the market which they want to trade in before expansion of trading capabilities
23
Q

why might expansion/ trading abroad benefit a product’s life cycle?

A
  • expansion abroad may be beneficial for a product’s life cycle. For example a product may be at different stages of it’s life cycle in different countries. In a foreign country the product may be reaching it’s growth and maturity stage of the life cycle due to being a new product. - this will help a business to generate more sales. Whereas in the domestic market a product may be reaching/ at it’s decline stage of the life cycle which won’t generate as many sales for a business