4.2 Global Markets and Business Expansion

Push Factor

A factor that pushes a business out of its market into a new one

Pull market

a factor that pulls a business out of its market into a new one

saturated market

markets that are populated by many competitors, gaining a share in these are difficult

Off-shoring

When a business moves part of its operations overseas

pros - can reduce costs, increases competitiveness or profitability

cons - can lead to quality problems if strict standards aren’t enforced

Outsourcing

Pros - quality if 3rd party has more expertise

cons - quality is 3rd party has less

Life Cycle

Selling in a different market could extend a products life cycle as it may be declining in one market but growing in another

Attractiveness of Internalisation

• Size of local market: must be large/growing

• Political stability and culture: can affect complexity of market

• Local competition: affects success

• Exchange rates: can influence relative costs of imports/export

Assessment of a country as a product location

• Costs of production and labour

• Existing infrastructure and incentives

• Stability and resources

Global Mergers or joint ventures

• Spreading Risk: Businesses may merge with another to spread risk over different countries

• Enter new markets: e.g uber acquiring a middle eastern taxi service

• Utilise existing brand loyalty: E.g tiktok merging with music.ly

• Supplies: secure resources jointly

• Global competitiveness: to maintain or increase competitiveness (e.g british airlines merging with spanish airlines)

Global Competitiveness

• Exchange rates: affects imports and exports

• Competing on cost: when a business has an advantage of lower costs than its rivals

• Differentiation: offering products/services which consumers find superior to that of their competitors

• Skill shortages: shortage of skills can effect efficiency