4.2.2 assesment of a country as a market

Question 1

assessment of a country as a market factors

Answer 1

cost of production 
ease of doing business
infrastructure
political stability
exchange rate 
likely investment of return 
natural resources 
government incentives

Question 2

describe the ease of doing business

Answer 2

The ease of doing business is how accessible markets are for a business. For example is their excessive bureaucracy, where rules and regulations increase the time taken to do business e.g. paperwork when exporting products.

• barriers to trade eg import export tariffs
• culture and language barrier
• employment restrictions

Question 3

describe infrastructure

Answer 3

Infrastructure is the physical systems that a country (or business) require to operate effectively.
This will include transport e.g. roads, railways and airports, communication e.g. phone and internet facilities and ease of use, utilities such as electricity, gas and water.

Question 4

describe politically stable

Answer 4

Political stability has increased in some areas of the world whilst declining in others.

Poor governance, particular in some less developed countries, has made it difficult to trade successfully. In some countries corruption is rife and is a major element in being able to do business.

Civil wars continue to impact in areas throughout the
world. When there is a greater likelihood of civil unrest it means that a business is less confident in investing time and effort in doing trade with that country.

Question 5

describe skills available

Answer 5

• ability to access tasks
• training required
• labour intensive vs skills intensive

Question 6

describe natural resources

Answer 6

• linked to cost of production
• availability of raw materials
• bulk reduced ,product easier to transport after production
• bilk increase, easier to transport before production

Question 7

describe government incentives

Answer 7

• free trade zones
• less taxation
• subsidies
• grants, help set up costs either construction or cost of training

Question 8

describe cost of production

Answer 8

• equipment and building and land, cost of availability
• wage levels
• raw materials
• including transport costs

Question 9

describe exchange rates

Answer 9

Exchange rates have a significant impact on the profits of a business operating in foreign markets.
If the exchange rate of the £ appreciates then it is more expensive to export to foreign countries.
Any profit made in the foreign country from providing goods and services will be more expensive to repatriate (send back) to the UK as the business will have to turn the foreign currency into £s.
This will impact negatively on profits of the business.