4.2.4
Conditions that Prompt Trade
Conditions that Prompt Trade
Conditions that Prompt Trade
A push factor is a factor which pushes a business out of its own market into a new market, and a pull factor is a factor which pulls a business into a new market.


Push factors
Push factors
- Saturated markets are markets which are populated by many competitors and gaining new market share in these markets is difficult.
- Saturated markets can force a business to grow outside of its current market.
- When Facebook signed up almost everyone in the USA, it moved its focus towards developing nations like India.


Pull factors
Pull factors
- Economies of scale refer to the reduction in the unit cost of production.
- If a business enters a new market, its output increases, and it may benefit from economies of scale.
- The benefit of economies of scale can pull a business towards a new market.
- Risk spreading can pull a business towards a new market if it wishes to spread risk by operating in two or more different markets.
Off-Shoring, Outsourcing and a Product's Life Cycle
Off-Shoring, Outsourcing and a Product's Life Cycle
Off-shoring and outsourcing could be used to help a business expand.


Offshoring
Offshoring
- Off-shoring refers to a business moving part of its operations overseas.
- Off-shoring has advantages and disadvantages:
- Off-shoring can reduce a business’ costs. This increases competitiveness or profitability.
- Off-shoring can lead to quality problems if strict standards are not enforced.
- For example, Ford used off-shoring to move its customer services division to India to reduce cost.


Outsourcing
Outsourcing
- Outsourcing refers to a business using the services of a third-party external supplier.
- Outsourcing has advantages and disadvantages:
- Outsourcing can lead to increased quality if a third party has greater expertise than the business in a specific element of its operations.
- Outsourcing can lead to quality problems if strict standards are not enforced.
- For example, many schools and hospitals outsource their IT network management as they lack the expertise to run these services securely and cost efficiently.
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Life cycle
Life cycle
- Selling in different markets can extend a product’s life cycle as a product may be declining in one market but be growing in another market.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
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