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Business > Topic 4.2 Global Markets and Business expansion > Flashcards

Topic 4.2 Global Markets and Business expansion Flashcards

Mrs Carr

1
Q

What is a Merger?

A

When two businesses join together to form a completely new business entity

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2
Q

What is a joint venture?

A

A separate business entity created by two or more business who have pooled their resources together for a certain project

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3
Q

Reasons for Mergers and joint ventures

A
  • Spreading risk over different countries/regions
  • Entering new markets /trade blocs
  • Acquiring national/ international brand names/patents
  • Securing resources/Supplies
  • Maintaining/increasing global competitiveness
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4
Q

What are the problems with mergers and joint ventures? Unrealistic Objectives

A
  • Firms don’t have enough information about the partner business and overestimate the benefits of the venture in terms of increased sales and reduced costs
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5
Q

What are the problems with mergers and joint ventures? Communication and culture

A
  • Every business has a unique company culture and organisational structure
  • They may have different ways of working which can cause conflict
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6
Q

What are the problems with mergers and joint ventures? Management issues

A
  • Mergers often result in layoffs and other cost cutting measures
  • This can result in the loss of key employees with skills and knowledge
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7
Q

What are the problems with mergers and joint ventures? Finances

A
  • The process of merging two companies can be costly
  • It may result in expensive legal fees and additional investments
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8
Q

Factors that effect global competitiveness

A
  • Brand name
  • Quality and design
  • Lower prices / economies of scale
  • Customer service
  • Research and development
  • Product reliability
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9
Q

What is cost leadership?

A
  • Businesses seek to produce the same quality products as their competitors but at a lower price
  • Good resource management
  • Waste minimisation
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10
Q

What is Differentiation?

A
  • A business will produce a unique product or give a unique service
  • Can charge a premium price
  • Performance
  • Style
  • Design
  • Consistency
  • Durability
  • Reliability
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11
Q

What are some economic factors that influence global competitiveness?

A
  • Movements in the exchange rate
  • Labour skills shortage
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12
Q

What are some of the effects of the Devaluation of the currency ?

A
  • Cheaper exports
  • Imports more expensive
  • Inflation is likely to occur
  • Lower wages
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13
Q

What are push factors?

A
  • Factors that push a business into foreign markets
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14
Q

Examples of Push factors

A
  • Saturated domestic markets
  • low growth opportunities
  • need to diversify
  • end of the product life cycle
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15
Q

What are pull factors?

A

Factors that encourage businesses to operate abroad

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16
Q

Examples of Pull factors

A
  • Attraction to new overseas markets
  • Opportunties to gain economies of scale
  • Ways to extend the product life cycle
17
Q

What is offshoring?

A
  • When a business decides to move part of the production process or all of it to another country
18
Q

What are the advantages of Offshoring?

A
  • Lower labour costs
  • Access to specialised suppliers
  • Access to resources
19
Q

What are the disadvantages of Offshoring?

A
  • Increased short term costs
  • Cultural / language barriers can cause bad customer service
  • Public relations and staff relations may suffer
20
Q

What is outsourcing?

A
  • When a business hires an external organisation to complete certain tasks or business functions
21
Q

What are the advantages of Outsourcing?

A
  • Higher productivity
  • Economies of scale
  • Help the business meet demand
22
Q

What are the disadvantages of Outsourcing?

A
  • Possible poor working conditions
  • Poor communication - can lead to mistakes and higher costs
23
Q

How can a business extend the product life cycle ?

A
  • Rebranding
  • Price discounting
  • Seeking new markets
  • Adding value
  • New packaging
24
Q

How does a business asses a country as a market?

A
  • Levels and growth of disposable income
  • Exchange rate
  • Ease of doing business
  • Infrastructure
  • Political stability
25
Q

How does a business asses a country as a production location?

A
  • Cost of production
  • Availability and skills of labour
  • Government incentives
  • Natural resources
  • Likely return on investment
  • Ease of doing business
  • Infrastructure
  • Political stability
  • Location in the trade bloc
26
Q

Ease of doing business

A
  • Regulations, taxes, policies and trading
  • How easy it is for a business to start up in that country
27
Q

Government incentives

A
  • Governments give out grants or tax breaks
  • Initial investment is less
28
Q

Natural resources

A
  • No transportation costs
  • Increased efficiency as resources are closely located
29
Q

Likely return on investment

A
  • if their are reduced labour costs but not in a good location in the trade block
  • Do the pros weight out the cons
30
Q

Location In the trade bloc

A
  • Access to larger markets
  • Reduction in trade barriers
31
Q

Advantages of Cost leadership

A
  • Reduced costs lead to reduced prices so they are more competitive
  • Waste minimisation - Getting more form their resources
32
Q

Disadvantages of Cost leadership

A
  • Requires constant innovation to lower costs
  • Quality may suffer
33
Q

Advantages of Differentiation

A
  • Can charge a higher price
  • Build brand loyalty
34
Q

Disadvantages of Differentiation

A
  • May limit growth as it is a niche market
  • expensive to do market research

Business (11 decks)

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