International Business 0.0 / 5 ? Business StudiesWhy firms seek international businessA2/A-levelEdexcel Created by: Ryan SnapeCreated on: 24-10-13 13:08 Why firms seek International Markets Limited growth in domestic market Innovation in multple markets Foreign competition in home market Extension of product life cycle Improvements in communications and transportation Global Sourcing Plus - benefit of emerging markets 1 of 6 L3 of Trading Abroad Cheaper Mass Produced - Because of skilled workforce First Mover advantage More customers = more sales = more profit Lower Costs 2 of 6 L4 of Trading Abroad May lead to bad image Locals can be exploited Costly - Setup / Market / Failure Poor Standards of living for local people Language Barriers Rules / Regulations Trading Rules / Tarriffs 3 of 6 L4+ of Trading Abroad Depends on the exchange rate Culture - Any clashes? Rules and Regulations Spending Power Trading Blocks 4 of 6 L1 Trade Liberalisation Means reducing the barriers to free trade and remove protectionism. Achieved through - Trading Blocs / WTO Free trade means no barriers to trade, protectism exists where they are barriers to trade. 5 of 6 L3 Barriers to Trade Tarrifs - (Tax on Imports) Quotas Subsides Laws Foreign goods are less competitive because of higher price - Subsidy is help from governement to import / support a dcomestic indistry e.g farmering Reduces costs / price in home market, it may prevent a country competing in that market. 6 of 6
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