Conditions that prompt trade (Push factors) - 4.2.1
Push factors - are those that force a business to leave the market in which they currently operate to look for new income streams in the future e.g. operating in a different market. Often businesses look to another country when operations in their current market become difficult. This can include a saturated market or products coming to the end of their product lifecycle.
These are mainly reasons a business has to want to grow outside of the domestic country in which it currently operates.
Saturated markets are the point at which a market is no longer generating new demand and decline in sales revenue for a firm's products, due to competition, decreased need, obsolescence or alternatives. Businesses will look for growth in overseas markets where there are similar characteristics, for example demographic trends and GDP per capita and where sales revenue will rise again. An example of a UK saturated market is the grocery market, where Tesco attempted to expand into China, Thailand and the US.
High levels of domestic competition mean a business will try to move into markers that are undeveloped and/or have less powerful competitors in order to be more likely to survive. This can happen particularly to small to medium-sized businesses when MNC's enter a domestic market and hold a competitive advantage or where the return on capital employed in the market is not worth the risk to remain.
Therefore, the business will look to undertake new market development as a strategy for the future. This suggests that a business beleives that it will struggle to break-even in its current market and must take steps to ensure its survival.
To maximise sales revenue this type of business might look to move into global markets.
These are mainly reasons a business has to want to grow outside of the domestic country in which it currently operates.
Saturated markets are the point at which a market is no longer generating new demand and decline in sales revenue for a firm's products, due to competition, decreased need, obsolescence or alternatives. Businesses will look for growth in overseas markets where there are similar characteristics, for example demographic trends and GDP per capita and where sales revenue will rise again. An example of a UK saturated market is the grocery market, where Tesco attempted to expand into China, Thailand and the US.
High levels of domestic competition mean a business will try to move into markers that are undeveloped and/or have less powerful competitors in order to be more likely to survive. This can happen particularly to small to medium-sized businesses when MNC's enter a domestic market and hold a competitive advantage or where the return on capital employed in the market is not worth the risk to remain.
Therefore, the business will look to undertake new market development as a strategy for the future. This suggests that a business beleives that it will struggle to break-even in its current market and must take steps to ensure its survival.
To maximise sales revenue this type of business might look to move into global markets.
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