Edexcel Business A Level Revision

Cultural/social factors - are the lifestyle, customs and values of a group of people. It is important for a business to recognise these factors when targeting markets. Without an insight and understanding it is likely that a business will fail to establish a significant presence in the market. It is essential that a business understand the requirements of the target market, whilst at the same time ensuring that it does not use inappropriate marketing, very likely innocently, to upset them. Cultural and social factors include the following; Cultural differences Different tastes Language Unintended meanings Inappropriate/inaccurate translations Innappropriate branding and promotion. Cultural differences occur because different types of people have different lifestyles, customs and values. For example, in India a handshake for a business meeting is considered critical, though Indian women are not supposed to shake hands with men. Any drink such as tea must be accepted as a ...

Niche market - A smaller segment of a larger market where customers have specific needs and wants. Marketing mix - The set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps - price, product, place and, promotion - make up a typical marketing mix. The marketing mix needs to be applied effectively to global niche markets in order to be of use to the business. A business will have to invest in each element of the marketing mix numerous times in order to meet the requirements of the variety of consumers that they are targeting. This will require expertise and insight into these specific markets. PRODUCT Product will be the most important factor. The quality must be extremely high in order to target wealthier individuals on a global basis. This means that businesses must undertake significant market research and R&D in order to meet customer requirements. PRICE Businesses will be able to charge high prices as they are tar...

Niche market - A smaller segment of a larger market where customers have specific needs and wants. Global market niches are subcultures in world society. These share common interests and can be identified as market segments on a global scale. Although a niche tagets a smaller market, on a global scale, this can be sizeable. This is particularly profitable when we recognise that these are likely to highly differentiated products rather than low costs. This means that the world's wealthiest consumers can be targeted, with the quality of the product being the most important factor. Other common features of a global niche market include; Requires high levels of customer service as demanding customers pay for quality not quantity Highly skilled employees with the expertise and, at times, the reputation required to create and sell the desired products Product innovation is essential in order to product the highly differentiated products that customers require A high level...

Niche market - A smaller segment of a larger market where customers have specific needs and wants. Cultural diversity - is the range of different people and their values within a society, which may be based on ethnicity, beliefs or other similar factors. Society attempts to take into account all people's values in order to create a just and fair world.  Global niche markers are similar to domestic niche markets in that they target a very specific range of people, though the key is to position a product so that it appeals to a wide range of customers across the global market. CULTURAL DIVERSITY Cultural diversity recognises that the ideas, customs and social behaviour of a particular people or society vary in different global markets. Those businesses that cater for this will thrive but will struggle to identify exactly what niches in the marker that they have to fill. Those who don't are likely to lose market share. Cultural diversity needs to take into account d...

Ansoff Matrix - The Ansoff matrix is a famous strategic marketing planning tool that helps a business determine its product and market growth strategy. It suggests that a business's attempts to grow depends on whether it markets new or existing products in new or existing markets. MARKET PENETRATION A business might wish to pursue a strategy of market penetration targeting the same customer base in its current global markets.  To do this it will look at its EPG (Ethnocentric, Polycentric and Geocentric) marketing approach and decide where and how to invest. This will be dependent on the forecast return on investment from each market that it already operates in. It will look to see if it should continue its current approach e.g. ethnocentric or adapt it to meet the changing requirements of the marker e.g. to one of geocentricity.  MARKET DEVELOPMENT Global businesses will always be looking to pursue a strategy of new market development. As markets grow and disposable...

Global marketing strategy - A product strategy to increase sales through promotion and advertisements to the international market. It focuses on the 4Ps - Price, Place, Promotion and Product - on a range of foreign markets. Marketing strategy - A process to allow a bsuiness to focus limited resources on the best opportunities to increase sales and thereby achieve a sustainable competitive advantage. Glocalisation - is the adaptation of a global marketing strategy in order to meet the requirements of local geographic markets. The term is a mix of globalisation and localisation. MNCs such as Coca-cola and McDonald's use the same global marketing strategies in each market in which they operate, which has the advantage of economies of scale across global markets, called global brands. This would be a transnational corporation approach which is also used by Rolls-Royce cars, Chanel handbags and Tiffany jewellery, all luxury products. However, businesses increasingly have found t...

Global merger - is an agreement between two companies from different countries to join forces permenantly. They will become a MNC and these types of merger are likely to increase the power of the new business. Joint Venture - a separate business entity created by two or more parties acting as a collective tp set up a new business venture, involving shared ownerships, returns and risks. Patents -  a government authority or licence conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention. Reasons for a global merger or joint venture; Spreading risk Entering new market/trade bloc Acquiring national/international brand name/patents Securing resources/supplies Maintaining/increasing global competitiveness. SPREADING RISK OVER DIFFERENT COUNTRIES/REGIONS By operating in a number of countries, a business reduces the risk associated with one individual country. This is because all countries will ...

Market attractiveness - A measure of the potential value of a particular market in a country. It can include short-term or long-term profit and growth rate of the market. A range of tools can be used to assess market attractiveness for a country, such as the Boston Matrix, PESTLE and Porter's Five Forces. Disposable income - the total income of an individual has available to spend after paying income taxes and the addition of benefits. Ease of doing business - how accessible markets are for a business Infrastructure - the physical systems that a country (or business) require to operate efficiently Political Stability - an absence of excessive fluctuations in the economy. There are several key issues to consider when assessing the market attractiveness, for example; Levels and growth of disposable income Ease of doing business Infrastructure Political stability Exchange rate LEVELS AND GROWTH OF DISPOSABLE INCOME Changes in disposable income are believed to have...

Product lifecycle - An important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall. One of the main reasons for operating in a global market is to extend the lifecycle of a product. According to the product lifecycle, a product will peak in its maturity stage and then start to decline, resulting in less profit. An extension strategy used by businesses is to introduce the product to a more international market/less mature or saturated market, effectively extending the life of the product. This might require adapting the product to suit local tastes or a large promotional budget to raise awareness. However, if successful, this might extend the life of the product for a number of years. Advantages of selling products in multiple markers include; Continued profitable returns Potential economies of ...

A key difference between offshoring and outsourcing is that the offshored element of the business is still part of the same global business but outsourcing means a completely separate business takes over the work. Offshoring - When a company moves various operations to another country for reasons such as lower labour costs or more favourable economic conditions in that other country. The key reasons for this is cost minimisation as the production process can be undertaken at a reduced costs in comparison to the domestic economy. Closeness to market will reduce transport costs for businesses and might allow for easier access to consumers, particularly if operating in the country being targeted e.g. Jaguar Land Rover have set up production in China. As well as this they will take advanatge of economies of scale from operating in larger international markets and having access to more specialised suppliers and services.  However, offshoring includes the fact that public and emp...

Pull factors - are those that attract a business to a global market. These may include lower levels of competition or an untapped market or customers. Pull factors are the opportunities a business may see for expansion into a foreign market. The factors are linked to the foreign market in which the businesses wishes to operate. Economies of scale are present when unit costs fall as output rises. Globalisation has meant a rise in opportunities for international businesses to reduce unit costs by increasing sales volumes to new and emerging markets, thus being able to buy the raw materials to make the products in bulk. Businesses have also moved production to new markets where costs such as wages are significantly cheaper than in their domestic market. Risk spreading is a benefit from moving into markers in order to reduce dependence on the home market. A wet summer in Britian does not worry Wall's ice cream as it sells ice cream in lots of overseas markets. Therefore they nega...

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, Thaila...

The changing competitive advantage  means that most markets are continually evolving, with businesses entering and leaving the market. In every market businesses are trying to keep at the cutting edge of product development and changes in customer tastes and fashions. The competitive environment or market structure involves all the external factors that either compete with  or have an impact on a business.  It is constantly changing, it is dynamic and a business that fails to monitor these changes and take action  runs the risk of losing market share or even failure. Direct competitors – Businesses are likely to have direct rivals who produce very similar products and  services, Domino competes directly with Papa John’s, Nationwide with Halifax, Asda with Tesco and so on.  They are competing for the same consumer and will try to find more effective ways of competing. Indirect competitors – are not direct rivals but they are competing for the sam...

Competitive advantage -  A sustainable advantage over the competitors in the long term, gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. Specialisation - When a business concentrates on a product or task and in many cases means producing only a small number of products. Specialisation is particularly important when competing in international markets as it can create a competitive advantage for the business and act as a barrier to stop others from entering the market. Specialisation increases output as economic units become more effective and efficient in what they produce due to: Greater understanding of the requirements of production Each economic unit can specialise in what they are best at Efficient use of time as there is no switching between tasks Technical economies of scale such as capital equipment is used to produce goods and services The increased output can...

Competition - is where rival businesses in the same market try to win customers from each other. Price - The value at which a product or service is offered to customers Businesses can gain customers through using the price of their product or service, for example by offering a lower price for a product or service that is similar to that of a competing business.

Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. Another aim is to achieve increased market share and brand recognition, which overlap gently with increased market power. Increased market share gives greater control today and higher brand recognition gives greater influence over what will happen to the business in the future

Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. A business will aim to achieve greater market power, which gives it more control over its future, including a greater ability to increase prices. Greater dominance over customers means pricing control ; greater dominance over suppliers gives increasing power to keep purchasing costs down. This allows the business to gain a competitive advantage.

Organic growth - Where a business expands through increased output, sales and market share via strategies developed within the business causing revenues and profits to grow. Inorganic growth - Growth that comes from outside the business e.g. through a takeover or joint venture. Organic growth Inorganic growth May mean increasing existing production capacity through investment in machinery and technology May mean increasing production capacity through the merger with or takeover of another business May mean developing and launching new products The product range will be expanded through the takeover/merger so new product development is less necessary May mean finding new markets Growth can be achieved relatively quickly as employees, capacity and distribution are already in place Is likely to take longer to achieve, as capacity will need further employees, machinery and distribution resources,...