3.9.3 - internationalisation

Question 1

why do businesses operate abroad?

Answer 1

• cheaper labour
• access to different materials
• access to more customers
• lower tax rules

Question 2

what is exporting?

Answer 2

selling goods abroad going from you to them

Question 3

what are the pros of exporting?

Answer 3

• more control over the quality and marketing of the product compared to licensing
• less dependant on any single market

Question 4

what is a con of exporting?

Answer 4

• does not avoid tariffs

Question 5

what is licensing?

Answer 5

selling the right to make and sell goods abroad

Question 6

what is a pro of licensing?

Answer 6

relatively cheap way of increasing global presence compared to direct investments

Question 7

what is a con of licensing?

Answer 7

does not have control over quality

Question 8

what are alliances?

Answer 8

2 or more businesses coming together to manufacture or sell something

Question 9

what are the pros of alliances?

Answer 9

• shared risk
• innovation + flexibility

Question 10

what are the cons of alliances?

Answer 10

• loss of control
• reputation risk as dependent on partner not failing

Question 11

what is direct investment?

Answer 11

when a business puts money into a foreign business or sets one up itself

Question 12

what is a pro of direct investment?

Answer 12

direct entry into a market

Question 13

what is a con of direct investment?

Answer 13

more expensive

Question 14

what makes international markets attractive to sell to?

Answer 14

• good laws/favourable
• cheaper capital
• growing market
• competitive environment

Question 15

what is offshoring?

Answer 15

moving production from one country to another

Question 16

what is reshoring?

Answer 16

moving production back to the original country it was produced and sourced before it was offshored

Question 17

what are the benefits of offshoring?

Answer 17

• cheaper labour
• expert labour
• way of increasing efficiency by utilising capacity more efficiently

Question 18

what are the benefits of reshoring?

Answer 18

• creates local jobs
• reduces unemployment
• shortens delivery times and transportation

Question 19

what are some pros of of tariffs?

Answer 19

• good for domestic trade
• increases government revenue

Question 20

what are some cons of tariffs?

Answer 20

• increase cost of living
• retaliation risks
• political tension

Question 21

why buy something that was produced abroad?

Answer 21

• cheaper
• better quality
• only available abroad

Question 22

why sell abroad?

Answer 22

• market expansion
• easy to achieve
• high disposable income nations

Question 23

why produce abroad?

Answer 23

• cheaper labour
• access to materials only they have
• greater efficiency elsewhere