Week 3- 4: What’s Driving Global Expansion?

Which of the following is a market driver of globalisation?

• Economies of scale

• Rising disposable incomes in emerging markets

• Technological breakthroughs

• Tariff reductions

Answer explanation

Correct answer: B) Rising disposable incomes in emerging markets

Explanation:
Rising disposable incomes in emerging markets increase the purchasing power of consumers, creating new demand for goods and services. This motivates companies from developed countries like the UK to expand globally to tap into these growing markets.

Technological advancements reduce communication barriers in international trade.

• True

• False

Answer explanation

Correct answer: True

Explanation:
Technology, especially the internet and digital communication tools, has made it easier and cheaper for businesses to communicate and coordinate across borders. This reduces the barriers of distance and time, enabling faster decision-making and expanding global trade opportunities.

A saturated UK market is most likely to drive expansion due to:

• Lower demand

• Competitive pressure

• Cultural pressure

• None of the above

Answer explanation

Correct answer: B) Competitive pressure

Explanation:
When domestic markets become saturated with competitors and growth slows, companies look abroad to find new customers and opportunities. Competitive pressure pushes firms to seek international markets to maintain or increase sales and profitability.

Governments can encourage global expansion by:

• Increasing export subsidies

• Raising tariffs

• Imposing strict data laws

• Mandating local production

Answer explanation

Correct answer: A) Increasing export subsidies

Explanation:
Export subsidies are financial incentives given by governments to domestic firms to encourage exporting their products. These subsidies help lower the cost of entering foreign markets and make exports more competitive internationally, stimulating global business expansion.

Which of the following best describes a cost driver for going global?

• Diverse consumer preferences

• Shared R&D across markets

• High tariffs

• Cultural adaptation

Answer explanation

Correct answer: B) Shared R&D across markets

Explanation:
Cost drivers reduce expenses through global operations. Sharing research and development across different countries helps spread costs and create efficiencies, lowering the total cost per unit and enabling firms to compete better internationally.

Choose a UK product that you might use in your assignment. Which global driver might support its expansion abroad-and why?

Example:
If you choose a UK skincare brand, a market driver might be the rising demand for premium skincare products in emerging markets with growing middle classes. This driver suggests a strong opportunity for expansion because more consumers have disposable income to spend on such products.

Answer explanation

Example:
If you choose a UK skincare brand, a market driver might be the rising demand for premium skincare products in emerging markets with growing middle classes. This driver suggests a strong opportunity for expansion because more consumers have disposable income to spend on such products.