Economics

Why trade internationally 

Opportunities  

Threats 

• Strong economic growth for the home nation 

• Rising consumer incomes and growing ‘middle class’  

• Opportunities for joint ventures with local businesses 

• Culture/varying customer needs 

• Difficult to protect ideas from competition due to inadequate laws 

• Infrastructure could be poor, making distribution and marketing difficult. 

Potential Locations 

OFFSHORING - 

Potential problems of International Location 

Language and Cultural Differences 

Language barrier can cause diseconomies. of scale (communication errors). Cultural differences can impact on work practices between countries. 

Impact on public image 

When countries relocate abroad, they can attract media attention over allegations of worker exploitation in low cost economies; a question of labour laws 

Economic and Political Stability 

Chances of rapid and unforeseen changes in many countries due to economic and political upheaval = firms choose countries with a history of economic and political stability. 

Reasons why firms locate abroad 

To exploit new markets…