Unit 9

Question 1

Internationalisation

Answer 1

Increasing interdependance of businesses within international markets

Question 2

Factors influencing which international market to enter

Answer 2

• Potential for economic growth
• Size of market
• Competition
• Infrastructure
• Exchange rates

Question 3

Multinational company (MNC)

Answer 3

Has operations in more than one country

Question 4

Methods of entering an international market

Answer 4

Exporting
Alliances
Licensing
Direct investment

Question 5

Exporting

Answer 5

Selling directly to countries overseas

Question 6

Alliances

Answer 6

Cooperative agreement or joint venture with an overseas business

Question 7

Licensing

Answer 7

Overeseas business using your patent to produce and sell products abroad

Question 8

Benefits of exporting

Answer 8

Low investment
Direct contact with customers
Entire profit margins

Question 9

Negatives of exporting

Answer 9

Cost of transportation is high
Exposure to exchange rate fluctuation
Trade barriers e.g. quotas and tariffs

Question 10

Direct investment

Answer 10

Setting up production and/or retail facilities overseas

Question 11

Benefits of licensing

Answer 11

Source of income e.g. initial fee and royalties
Avoids trade barriers
Outsourcing business might produce a better product increasing sales

Question 12

Negatives of licensing

Answer 12

Limited income
Loss of patent
Loss of how product is produced and perceived