4.2.2 Assessment of a country as a market

Question 1

What are the factors that impact whether a country can be a market?

Answer 1

1) Levels and growth of disposable real income
2) Ease of doing business
3) Infrastructure
4) Political stability
5) Exchange rates

Question 2

Why are the levels and growth of disposable real incomes important for assessing a country as a market?

Answer 2

• amount of demand for luxury goods that are price elastic (rising middle classes)
• The future and current demand
• disposable income is money available to spend after deducting income taxes, statutory payments

Question 3

Why is the ease of doing business important for assessing a country as a market?

Answer 3

• the barriers to entry due to government legislation (red tape and bureaucracy)
• accessibility of the market
• the existing business within the market (Porters 5 forces)

Question 4

Why is infrastructure important for assessing a country as a market?

Answer 4

• infrastructure provides business with existing supporting networks that aid supply chains and distribution channels
• infrastructure helps a business choose its marketing ploy and how they operate efficiently.

Question 5

Why is political stability important for assessing a country as a market?

Answer 5

• poor governance impacts trade and the potential trade barriers and additional tariffs and quotas.
• in developing nations, civil wars and unrest may reduce confidence and demand for luxury goods
• Corruption and aid plans may reduce the stability of the country over time which may impact investment.

Question 6

What is an example of when a business assessed a country as a market?

Answer 6

Netflix and Amazon in India both assessed the country differently ultimately resulting in differing marketing ploys and strategies which impacted success.

Question 7

What countries have the greatest and lowest ease of business?

Answer 7

Easiest = New Zealand (then Singapore)
Hardest = Somalia (then Eritrea)

Question 8

Why are exchange rates important for assessing a country as a market?

Answer 8

Because exchange rates affect:
- costs of inputs (CELL), price of exports, attract/detract a business from setting up, profitability, volatility can cause uncertainty, the value of repatriated profits made overseas.

Question 9

What are the acronyms for exchange rates?

Answer 9

SPICED
Stronger pound imports cheaper exports dearer
WPIDEC
Weaker pound imports dearer exports cheaper

Question 10

Why can the pound appreciate?

Answer 10

The pound appreciates during a boom because there is greater business and consumer confidence as well as demand for the currency (for bonds and investment)

Question 11

Why can an appreciating pound be good or bad?

Answer 11

The appreciating pound is good for the economy as the domestic goods are worth more meaning that the country gains more revenue. Also, the appreciated pound often leads to cheaper imports and then consequently, lower inflation.
However, the appreciation would detract international trade making exporting more expensive since it requires more finance to purchase goods. This leads to a loss in international trade X

Question 12

How does the UK rank as a business location compared with other countries (market-wise)?

Answer 12

• 10/144 overall competitiveness
• 12/144 institutions
• infrastructure 9/144
• macroeconomic 108/144
• labour market 5/144
• technological readiness 3/144

Question 13

What are the key issues about the UK as a market?

Answer 13

• access to finance for business

- skills gap in the workforce