In relation to international trade, what are push factors?
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In relation to international trade, what are push factors?
Push factors are factors that drive a business to expand outside of its domestic country.
What is a saturated market?
A saturated market is where demand for goods and services has reached a peak. It becomes challenging for businesses to grow and expand within the local market.
True or False?
Intense competition can prompt businesses to explore new markets.
True.
Intense competition can prompt businesses to explore new markets to increase sales.
In relation to international trade, what are pull factors?
Pull factors are factors that encourage businesses to operate within markets that present significant growth opportunities abroad.
What does the term economies of scale mean?
Economies of scale are the cost reductions achieved as a result of expanding production. They can arise when a business expands its production in new markets abroad.
Define the term risk spreading.
Risk spreading is when a business accesses multiple markets to diversify their customer base. This reduces their exposure to risks associated with operating in a single market.
What is meant by the term offshoring?
Offshoring is when a company moves part of the production process, or all of it, to another country.
True or False?
Outsourcing occurs when a business hires an external organisation to complete certain tasks or business functions.
True.
Outsourcing occurs when a business hires an external organisation to complete certain tasks or business functions.
What is an extension strategy?
An extension strategy is a method used by a business to extend the life cycle of a product or service.
What is the main difference between offshoring and outsourcing?
Offshoring is carried out within the same business, albeit in a different location.
Outsourcing refers to tasks undertaken by a completely different business.
What is meant by the term infrastructure?
Infrastructure refers to the basic physical and organisational systems and facilities needed for the operation of a society, such as roads, transportation networks, power and communication (mobile coverage/internet).
What is meant by ease of doing business?
Ease of doing business refers to the presence or absence of rules and regulations involved in establishing a business in a particular market.
What is disposable income?
Disposable income is the income individuals have left after paying direct taxes and other deductions, such as pension contributions.
State the meaning of the term exchange rate.
An exchange rate is the price of one currency in terms of another.
True or False?
Stable political environments are less risky for businesses to invest in.
True.
A country or region that offers a stable political environment is less risky for businesses to invest in. They are less likely to be subject to corruption, crime and a lack of law enforcement.
What does the acronym PESTLE stand for?
PESTLE is a model used by businesses to assess the external factors at play in a market. These factors are categorised as political, economic, social, technological, legal and environmental.
True or False?
Ease of doing business includes factors such as accessing credit, registering properties and enforcing contracts.
True.
Ease of doing business can include factors such as accessing credit, registering properties, and enforcing contracts.
True or False?
Businesses should only consider financial factors when assessing a country as a market.
False.
Businesses should consider both financial and non-financial factors when assessing a country as a market.
What are the factors to consider when assessing a country as a production location?
Factors to consider for a production location include:
Costs of production
Skills and availability of the labour force
Infrastructure
Location in a trade bloc
Available government incentives
Ease of doing business
Political stability
Availability of natural resources
What is a trade bloc?
A trade bloc is a group of countries that have agreed to remove barriers to trade, such as tariffs and quotas, among themselves.
Define the term government grant.
A government grant is a sum of money given to a business to encourage them to invest, create jobs or operate in a particular location. A grant does not need to be repaid.
What is the importance of political stability when assessing a production location?
Political stability is important to avoid disruptions in production. Unstable political environments can have high levels of corruption, crime and a lack of effective law enforcement.
True or False?
Businesses often choose to locate production in a region where labour costs are lower.
True.
Businesses often choose to locate production in a region where labour costs are lower as this reduces production costs.
What is meant by the term bureaucracy?
Bureaucracy is a system where many rules and processes exist that slow down decision-making, making it less easy to conduct business affairs.
What is a tax break?
A tax break is a financial benefit offered by the government that reduces the tax liability of a business. Tax breaks are sometimes available to businesses that agree to locate to a particular region.
What is a global merger?
A global merger is a permanent agreement between two or more businesses from different countries to join together.
Define the term joint venture.
A joint venture is when two businesses join together to share their knowledge, resources, and skills to form a separate business entity for a limited period of time.
What is a patent?
A patent is the legal right for an individual or business to make, use or sell an invention and exclude others from doing so.
True or False?
Mergers and joint ventures can be used to acquire national or international brand names or patents.
True.
Mergers and acquisitions can be used to acquire national or international brand names or patents.
True or False?
Many governments insist that foreign businesses can only operate as joint ventures.
True.
In many emerging economies, governments insist that foreign businesses can only operate as joint ventures, as this can benefit domestic businesses.
State the meaning of the term global competitiveness.
Global competitiveness refers to a business's ability to perform better than its rivals across markets in different countries.
What is meant by the term diversification?
Diversification is when a business varies its range of products or services, alongside its core business, to provide additional income
True or False?
When two businesses join together, redundancies can occur.
True.
When two businesses join together, redundancies can occur as job roles are duplicated.
What is a culture clash?
A culture clash is a conflict that arises between workers from combined businesses as a result of different working norms or organisational processes.
True or False?
Economies of scale can occur due to communication issues and a lack of control as a business expands through global mergers.
False.
Diseconomies of scale can occur due to communication issues and a lack of control as the business expands through global mergers.
What is meant by the term exchange rate fluctuations?
Exchange rate fluctuations refer to the changes in the value of one currency in relation to another currency over time.
True or False?
Exchange rate fluctuations impact global competitiveness.
True.
Exchange rate fluctuations can influence the competitiveness of businesses operating in different countries.
What is meant by the term currency appreciation?
Currency appreciation is when the value of one currency increases in relation to another currency over time.
True or False?
If there is a currency appreciation, businesses that import raw materials and components from abroad will pay less for them.
True.
If there is a currency appreciation, businesses that import raw materials and components from abroad will pay less for them.
What is currency depreciation?
Currency depreciation is when the value of one currency decreases in relation to another currency over time.
True or False?
Cost Leadership is achieved when a business becomes the highest cost producer in their industry.
False.
Cost leadership is achieved when a business becomes the lowest cost producer in their industry.
Define the term competitive advantage.
Competitive advantage refers to the ability of a firm to outperform its competitors in a particular industry by offering superior products or services.
True or False?
If there is a currency appreciation, businesses that export products will become more competitive.
False.
If there is a currency depreciation, businesses that export products will become more competitive because their products will be cheaper for overseas buyers to purchase.