4.2 - Global Markets & Business Expansion

Vocabulary practice flashcards covering business expansion, international trade, foreign market assessment, global mergers, joint ventures, and global competitiveness.

Push factors

Factors that push a business to expand outside of its own country due to saturated markets, intense competition, or adverse domestic market conditions.

Saturated markets

Occur when the demand for goods and services has reached a peak, making it challenging for businesses to grow within the local market.

Intense competition

A market condition in which businesses must find ways to differentiate themselves and expand their customer base to reduce reliance on a single market.

Pull factors

Factors that encourage businesses to operate within markets abroad that present significant growth opportunities, such as economies of scale and risk spreading.

Offshoring

When a company moves part or all of its production process to another country while remaining under the same business.

Outsourcing

Occurs when a business hires an external organisation to complete certain tasks or business functions.

Product life cycle

Represents the value of sales from the time a product is introduced into the market until it is no longer sold.

Extension strategy

A method used by a business to lengthen the life cycle of a product or service, such as introducing the product into new international markets.

Infrastructure

Factors such as roads, transportation, and communication (mobile coverage and internet) that impact the production process and delivery of goods and services.

Ease of doing business

Refers to the simplicity or complexity of rules and regulations involved in establishing and conducting business activities in a foreign market.

Disposable income

The income individuals have left after paying direct taxes (e.g. income tax) and other deductions (e.g. pension contributions).

Exchange rate

The price or value of one currency expressed in terms of another currency.

Global merger

A permanent agreement between two businesses from two different countries to join together.

Joint venture

When two businesses join together to share their knowledge, resources, and skills to form a separate business entity for a limited period of time.

Patent

The legal right given by the government to an individual or business to make, use, or sell an invention and exclude others from doing so.

Global competitiveness

The ability of a business to perform better than its rivals across markets in different countries.

Currency appreciation

An increase in the value of an exchange rate where a currency increases in value against another currency.

Currency depreciation

A decrease in the value of an exchange rate where a currency falls in value against another currency.

Cost competitiveness

A strategy achieved when a business becomes one of the lowest-cost producers in its industry.

Differentiation

Occurs when a business makes the characteristics of its products or services different from those of its competitors.

S.P.I.C.E.D

An acronym for 'Strong Pound Imports Cheaper Exports Dearer' used to explain the impact of currency appreciation.

W.P.I.D.E.C

An acronym for 'Weak Pound Imports Dearer Exports Cheaper' used to explain the impact of currency depreciation.

World Economic Forum (WEF)

An organization that has established a global ranking of countries based on their ease of doing business.

Boston Matrix

A strategic model used by businesses during market research to assess the attractiveness of entering potential markets.

PESTLE

A strategic framework used during international market research to evaluate external factor influences before entering a foreign country.

Government incentives

Financial or regulatory benefits (e.g. grants, business loans, and tax breaks) offered by a host government to attract businesses to locate there.

Location in a trading bloc

Establishing operations within a group of trading countries to access benefits such as reduced protectionist measures.

Investment appraisal techniques

Quantitative methods, including the payback method, average rate of return, and discounted cash flow, used to estimate potential return on investment.

Spreading risk

Accessing multiple international markets to diversify a customer base and reduce exposure to economic or political disruptions in a single market.

Diseconomies of scale

Unit cost increases that can occur as a business expands due to communication issues and a lack of managerial control.

Culture clash

A misalignment of organizational values between two joining businesses that can negatively impact quality, staff motivation, and sales.

Skills shortage

A lack of qualified labour in a market, which can increase unit costs through waste and hinder cost leadership or product differentiation.

Cost leadership

A competitive position of maintaining low production costs, which can be undermined if workers lack necessary skills and productivity.

Organic growth

Internal business expansion, which is typically a slower method of entering new markets than global mergers or joint ventures.

Maturity stage

The phase in the product life cycle where sales peak before potential decline, prompting businesses to expand into foreign markets as an extension strategy.