4.2.2 Assessment of a country as a market Flashcards
What is disposable income?
• Disposable income is the amount that a customer has to spend after all their bills have been paid
• If a business wants to move into another country it may assess the level of disposable income in that country
• This helps a business to see if the citizens of the country will be able to afford the products that they want to sell there
Disposable income per household?
• Household disposable income is the amount of money that a household earns, or gains, each year after taxes.
• It represents the money available to a household for spending on goods or services.
• A minimum wage is the least amount that a business is allowed to pay a worker in that country
Growth of disposable income?
• The growth rate of disposable income can signal potential opportunities in that country to sell to
Ease of doing business?
• The ease of doing business index is an index created by the World Bank Group.
• Higher rankings (a low number) indicate better, usually simpler, regulations for businesses and stronger protections of property rights e.g. patents
Infrastructure?
• Infrastructure is the basic physical and organisational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or business
• Many developing nations have been slow to get their infrastructure in place, and through failure to maintain it have let it decline
Why infrastructure is important to sales?
• Infrastructure can mean road, rail and transport. Without this a business cannot deliver to its customers on time
• Infrastructure can also mean telecommunications, without this a business cannot communicate with its suppliers and its customers
Political stability – risk factor?
• Political instability in a country could be a major risk factor so should be taken into consideration when assessing a potential country as a market for your products
• Each new government may seek to impose a series of laws which will need to be adhered to e.g. environment laws, employment laws which could have an impact on the business
Why is political stability important?
• An aggressive takeover of a government, a coup could lead to riots, protests and looting
• It can also lead to civil war, notable recent examples are Egypt, Syria and Sri Lanka
• Even more recently the government in Venezuela has faced challenges which have led to a great deal of political unrest
Exchange rate?
The price of one currency against another
What are factors to consider when assessing a country as a market?
- level and growth of disposable income
- ease of doing business
-infrastructure - political stability
- exchange rate
Why is level of growth and disposable income a factor when assessing a country as. A market?
Level and growth of disposable income: The disposable income of consumers in a country indicates their purchasing power and ability to spend on goods and services. A high level of disposable income, coupled with steady growth, indicates a strong potential market for businesses.
Why is ease of doing business a factor when assessing a country as. A market?
Ease of doing business: The ease of doing business in a country, including factors such as the regulatory environment, tax laws, and access to financing, can impact a company’s ability to enter and operate in that market. A favorable business environment can attract foreign investment and promote economic growth.
Why is infrastructure a factor when assessing a country as. A market?
Infrastructure: A country’s infrastructure, including transportation networks, communication systems, and energy supply, can affect the cost and efficiency of doing business. Adequate infrastructure can facilitate the movement of goods and services, reduce costs, and improve productivity.
Why is political stability a factor when assessing a country as. A market?
Political stability: Political stability is a critical factor in attracting foreign investment and promoting economic growth. A stable government and favorable political climate can provide a secure environment for businesses to operate in and enable long-term planning and investment.
Why is exchange rate a factor when assessing a country as. A market?
Exchange rate: The exchange rate is an important factor for businesses that trade internationally. A favorable exchange rate can increase a company’s competitiveness in the global market and impact the profitability of exports and imports. A stable exchange rate can also provide certainty for businesses engaging in cross-border transactions.
