4.2.4

Conditions that Prompt Trade

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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 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.
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.
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1

Exploring Business

1.1

Features of Business Organisations

1.1.1Sole Traders & Partnerships1.1.2Private & Public Limited Companies1.1.3Types of Liability & Not-For-Profits1.1.4Purposes of Businesses1.1.5Purposes of Businesses 21.1.6The Different Economic Sectors1.1.7Multinational Companies1.1.8Stakeholders1.1.9Influence of Stakeholders
1.2

Organisation of Businesses

1.2.1Organisational Structure1.2.2Types of Organisational Structures1.2.3Business Aims & Objectives1.2.4Business Aims1.2.5Business Objectives
1.3

Business Environment

1.3.1External Influences1.3.2Political & Legal Change1.3.3Economic Environment1.3.4Social & Technological Environment1.3.5Lifestyle & Technological Environment1.3.6Corporate Social Responsibility1.3.7The Competitive Environment1.3.8Innovation1.3.9Risk & Uncertainty1.3.10Porter's Five Forces1.3.11SWOT Analysis
2

Marketing Campaigns

2.1

Marketing

2.1.1Setting Marketing Objectives2.1.2Customer Needs2.1.3The Market2.1.4Competition & The Market2.1.5Consumer Behaviour2.1.6Market Research2.1.7Forms of Market Research2.1.8Market Segmentation2.1.9Cultural & Social Factors in Marketing2.1.10Promotional Decisions 32.1.11Pricing Strategies
2.2

Marketing Mix

2.2.1Marketing Mix2.2.2Product Life Cycle2.2.3Pricing Decisions & Price Skimming2.2.4Pricing Decisions & Price Penetration2.2.5Promotional Decisions2.2.6Promotional Decisions 22.2.7Promotional Decisions 32.2.8Market Mapping
3

Business Finance

3.1

Sources of Finance

3.1.1Internal Finance3.1.2External Finance3.1.3External Finance 23.1.4Sources of Business Finance
3.2

Financial Planning

3.2.1Revenue3.2.2Costs3.2.3Cash & Cash Flow3.2.4Cash & Cash Flow 23.2.5Break-Even Analysis3.2.6Profits
3.3

Financial Statements

3.3.1Balance Sheets3.3.2Income Statements3.3.3Liquidity
4

International Business

4.1

Globalisation

4.1.1Growing Economies4.1.2Specialisation & Trade
4.2

International Business

4.2.1Internationalisation4.2.2International Trade4.2.3MNCS4.2.4Conditions that Prompt Trade4.2.5Assessment of a Country
4.3

International Economic Environment

4.3.1Globalisation4.3.2Factors Contributing to Globalisation4.3.3Protectionism4.3.4The EU & the WTO4.3.5Trading Blocs
4.4

Factors Affecting International Business

4.4.1Global Competitiveness4.4.2Ethics of Global Business4.4.3Controlling MNCs4.4.4Cultural & Social Factors in Marketing
5

Principles of Management

5.1

Management & Leadership

5.1.1Managers5.1.2Management Theories5.1.3Managing Organisational Culture5.1.4Management Style
5.2

Theories of Motivation

5.2.1Motivating & Engaging Employees5.2.2Taylor's Theory5.2.3Mayo's Theory5.2.4Maslow's Theory5.2.5Herzberg's Theory
5.3

Managing Change

5.3.1Change5.3.2Key Factors in Change5.3.3Scenario Planning5.3.4Managing Change5.3.5Managing Strategic Implementation
6

Business Decision Making

6.1

Business Principles & Practices

6.1.1Influences in External Environments6.1.2Product Decisions6.1.3Competitive Environment6.1.4Corporate Strategy6.1.5Quantitative Sales Forecasting6.1.6Legislation
6.2

Quality Management

6.2.1Importance of Quality6.2.2Measuring Quality6.2.3Total Quality Management6.2.4Evaluating TQM
6.3

Human Resources

6.3.1Contracts6.3.2Recruitment6.3.3Training a Workforce
6.4

Documents & Business Decisions

6.4.1Sales Forecasts6.4.2Managing Strategic Implementation6.4.3Problems with Strategy

Practice questions on Conditions that Prompt Trade

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  1. 1
    Over 90% of Americans have a Facebook or Instagram account. Would this factor be a push or pull reason to expand overseas?Multiple choice
  2. 2
    What is outsourcing?Flashcard
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MNCS

Assessment of a Country