4.2

• Pull factors – factors that entice firms into new markets and are the opportunities that businesses can take advantages of when selling to overseas markets
• Push factors - Factors in the existing market that encourage an organisation to seek international opportunities
• Push factors in saturated markets (steady amounts of high competition)

  • A feature of markets where sale growth has stalled pr is falling
  • Difficult to grow revenues other than by taking market share from competitors
  • Market often characterised by lack of product innovation
  • Strategic response is to look for growth opportunities for the same product in overseas markets
• Push factors with increased competition (new entrants)

  • Domestic firms may be faced with new market entrants who take market share
  • Result in lower revenues in the domestic market – creating the incentive to pursue revenues elsewhere
• Pull factors in economies of scale

  • Extending a business' operations overseas provides an opportunity to increase output and access economies of scale, thereby reducing unit costs
  • This might involve offshoring production to lower cost economies
• Pull factors – risk spreading

  • Ansoff's matrix suggests that moving into new markets (overseas) involves greater risks
  • However, trading internationally can spread the activities and revenues of a business over a wider range of markets, making the business less dependent on domestic demand
• Offshoring – shifting jobs to another country e.g. manufacturing and customer service
• Factors of a country as a market

  • levels of growth and disposable income
  • ease of doing business
  • infrastructure
  • political stability
  • exchange rate
  • natural resources
• Factors of a country as a production location

  • locating production
  • cost of production
  • skills and availability of labour
  • infrastructure
  • location in trading bloc
  • government incentives
  • ease of doing business
  • political stability
• A joint venture is when a separate business entity is created by two or more parties, involving shared ownership, returns and risk. Partners benefit from each other's expertise
• A global merger is a combination of two previously separate firms which is achieved by forming a completely new firm into which the two original firms are integrated.
• A depreciation in exchange rates will make exports cheaper.
• If a business is unable to find the labour with the required skills it will effect their ability to gain a competitive advantage.
• Competitive advantage is a distinctive strength that competitors do not have