conditions which prompt trade

Push factors

Negative reasons that drive a business out of its existing market and into a new international one

Reasons

• market saturation- leaving little potential for business growth

• Intense rivalry - lower precise or string differentiation

Pull factor

Attractive reasons that draw a company into an international market

Reasons

• offer more growth enabling econmies of scale

• Improve profit margins

• Can spread risk across different markets and countries reducing dependency on a single market - different income streams

Off-shoring

When a business relocates operations such as production or logistics to another business

Still under business control

Why?

• reduced labour costs

• Provides access to specialised workforce or materials

BUT

• unethical due to job losses in home coutnry potential labour exploitation and cultural barriers- language barriers

Out-sourcing

When a business uses an external company to perform specific operations or tasks instead of managing internally

Why?

• improve quality by using specialists

• Reduce cost in short term

• Allows forms top focus on core operations

BUT

• lose control-need to have strong communication

• Long term could face high costs

Extending product life cycle

Entering new markets can extend the product life cycle and act as an extension strategy - customers haven’t seen product before