International Business: Push/Pull Factors, Offshoring and Outsourcing

Flashcards covering push and pull factors, offshoring, and outsourcing as discussed in the lecture notes.

PUSH factor

Something that forces a business to consider trading in another country, pushing them into international trade.

Saturated markets

Markets with limited growth opportunities, encouraging businesses to seek new markets abroad.

High levels of domestic competition

A situation where a business looks abroad due to intense competition in its home country, seeking more favorable market opportunities.

PULL factor

Something that attracts a business to trade in another country, creating opportunities for international expansion.

Export opportunity

Increased sales and profits through exporting, driven by heightened demand for a product in other countries.

Economies of scale

Advantage gained from increased production levels through exporting, especially when products or services are standardized across markets.

Marketing economies of scale

Spreading advertising costs across multiple countries or products.

Bulk buying

Reducing raw material costs by purchasing large quantities from suppliers.

Technical economies of scale

Spreading the high fixed costs of large equipment over a larger production volume.

Financial economies of scale

Negotiating better lending rates with banks as a business grows, which reduces fixed costs.

Risk bearing

Increased likelihood of surviving economic downturns as a company grows larger.

Ability to spread risk

The ability to mitigate vulnerability to domestic economic changes by selling in multiple countries with varying growth rates.

Offshoring

Relocating a business process to another country, often manufacturing or supporting functions like accounting.

Outsourcing

Contracting out a business function to a third-party, which may or may not be in another country.

Outsourcing - production

Sending some or all of the production process to other companies to complete.

Outsourcing - payroll

The most common task outsourced by companies, involving weekly/monthly/quarterly payroll and completion of HMRC paperwork.

Outsourcing - purchasing

Contracting out the task of purchasing and maintaining information systems to other businesses.

Outsourcing - delivery

Contracting a delivery firm to handle logistics instead of maintaining an in-house fleet.