why do businesses want to target international markets
-reduce dependence on domestic markets
-access faster growing markets + demand
-economies of scale
-better server customers overseas
-build brand value, esp global brands
what is a push factor
something happening within an existing market that forces a business to look elsewhere for survival/ success
what is a pull factors
something that happens in another market that attracts a business towards it
what are the push factors
-saturated market
-increased competition
-higher minimum wage levels
-extending the product lifecycle
why is a saturated market a push factor
-sale growth is still/ falling
-hard to grow business other than stealing market share
what are the pull factors
-economies of scale
-risk spreading; less dependent on domestic
-access to resources
what is offshoring
relocation of business activities from the home country to a different international location
pros of offshoring
-lower manufacturing costs (lower labour costs)
-better skilled workers/ high quality supply
-make use of existing capacity overseas
-take advantage of free trade areas + avoid protectionism
-easier to supply target international market
cons of offshoring
-longer lead times for supply/ risk of poorer quality
-additional management costs (time, travel)
-communication; time zones, language
-implications for CSR; harder to control aspects of operating long distances away
-impact of exchange rates
what is outsourcing
delegation of one or more business processes to an external providers; who owns, manages and administers the selected processes to an agreed standard
pros of outsourcing
-specialists may increase quality
-cheaper; supplier can achieve econ of scale
-speed of response can be set as a requirement in contract
-supplier may have greater capacity/ flexibility
reasons not to outsource
-easier to ensure quality within business
-within business dont need to make a profit like suppliers, so may be cheaper
-easier to schedule to fit with business needs
-closest to needs of business
what factors should be considered when assessing a country as a market
-level/ growth of disposable income
-ease of doing business
-infrastructure
-political stability
-exchange rate
what should be considered when assessing a country as a production location
-cost of production
-skills of labour
-infrastructure
-location/ trade blocs
-ease of doing business
-political stability
-natural resources
-likely return on investment
-government incentive
what is disposable income
income that consumers have left to spend after tax
why should disposable income be considered when assessing a market
-often associated with rising middle class
-more money to spend on goods/ services
cons of considering disposable income when assessing a market
-GDP not always helpful alone
-some countries appear wealthy but income may not be evenly distributed
what is HDI
-human development index
-measure of development based on access to healthcare, education and income
what is disposable income measured in
GDP; gross domestic income per capita
what may HDI indicate
-income + living standard
-life expectancy; health
-education
-skill of workforce
what factors does ease of doing business consder
-starting a business
-dealing w construction permits
-getting electricity
-registering property
-getting credit
-protecting minority investors
-paying taxes
-trading across border
-enforcing contracts
-resolving insolvency
why should political stability be considered when assessing a country as a market
-instability or corruption may fail to protect foreign investors, so businesses may be reluctant to invest
-can intellectual property be protected
what is infrastructure
communication, energy, transportation, water, energy etc
why should exchange rates be considered when assessing a country as a market
-SPICED (selling exports to a market with a weak exchange rate may be difficult as domestic competition may have lower costs)
-WIPIDEC (locating where exchange rates are low may cut costs of exporting)
