Assessing a country as a market (4.2.2)

Question 1

What factors do businesses need to consider before entering new countries?

Answer 1

-Ease of doing business
-Levels and growth of disposable income
-Exchange rates
-Political stability
-Infrastructure

Question 2

What does ease of doing business mean for a business when businesses enter new markets?

Answer 2

Rules and regulations involved in establishing a business can be hard or easy. If business faces significant challenges while setting up may lead to delay in operation and business generating sales

Question 3

What does Levels and growth of disposable income mean for a business when businesses enter new markets?

Answer 3

Selling in a country with higher disposable income is likely to lead to more sales. Businesses should look at trends in income levels

Question 4

What does Exchange rates mean for a business when businesses enter new markets?

Answer 4

ER’s can be subject to extreme fluctuations so business should look at historical trends of the currency of the country. Businesses move to countries with stronger currencies can import raw materials for a lower price

Question 5

What does Political stability mean for a business when businesses enter new markets?

Answer 5

Businesses can be at risk of not gaining a return on their investment in a country with political instability. Subject to corruption, lack of law enforcement and higher levels of crime which can have disruption to trading. Country with stable economy and government is less risky investment for business

Question 6

What does Infrastructure mean for a business when businesses enter new markets?

Answer 6

Roads, transportation and communication (internet) need to considered to improve production and reduce costs