Theme 4 pt.2

Question 1

Benefits of an ethnocentric approach

Answer 1

Develop a brand image
Gain economies of scale
Product orientated approach

Question 2

Drawback of an ethnocentric approach

Answer 2

Miss out on some markets
-> made less significant due to the homogenisation of tastes and fashions
Risk isn’t spread
-> bad considering contagion

Question 3

Advantages of being in a niche market

Answer 3

Reduced competition in the market
Charge a premium price, from an inelastic PED
Efficient marketing -> know who your targeting
Strong relationship with customers, less research needed
Reduced chance of takeover

Question 4

Disadvantages of being in a niche market

Answer 4

Reduced economies of scale , relative
Increase cost of training -> knowledge of product is high
Workers demand high wage -> high trained/ skilled
Lack of brand recognition
Less sales -> smaller market
Not spreading risk

Question 5

Whats the advantage of becoming a global niche business

Answer 5

Will increase your ability to gain economies of scale

Question 6

Advantages of an MNC on the local economy

Answer 6

Creates jobs
Skills and technology transfer
Build up infrastructure
Creates ancillary services
Money to invest

Question 7

Disadvantages to the local economy of an MNC

Answer 7

Local firms can’t compete, on wages/ goods produced
Resource crowding out
Only brings in high skill jobs
Creates low skill in the host
Jobs uncertain -> hotfooted
Race to the bottom -> get away with lower regs etc