assessment of a country as a market Flashcards
what are the factors a business must consider when assessing a country as a market?
- disposable income
- infrastructure
- political stability
- exchange rate
- developmentalism
what is disposable income?
the money a person has left over after taxes, national insurance and other deductions
why is the average level of household disposable income of a country an important factor?
if it is low, it would mean that people would have less money to spend on luxuries and wants, meaning it would lower a business’ profit and inflows. however, if a countries d.i is good, the business would thrive as consumers would have more money to spend on luxuries
what would a business look for when assessing a countries disposable income?
growth rate of the disposable income (steady and rising), a steady and rising income would mean that consumers are able to afford goods now and in the future
what is ease of doing business?
if a business faces problems with its goods entering a country, setting up or dealing with everyday trading activities, it is likely to look for another location/market
give an example of a country with the highest ease of doing business rate
New Zealand have an ease of doing business rate of 86.8%
what is infrastructure?
the basic systems, facilities, services and capital equipment required for a country’s economy to function, which might include its roads, communication systems and power services.
why is infrastructure an important factor?
Without amenities like roads, communication systems and power services, it would be hard for a business to operate in terms of importing goods, providing goods/services and even communicating with key stakeholders. The logistics and communication of the business would be greatly impacted if strong infrastructure was not available within a country
what is political stability, and what factors does it affect for a business?
political stability is important as it affects many factors, which can affect the cost of many things, for example:
- employment/operational rates
- tax regulation
- trade restrictions
- corruption levels
- a country’s relationship with international institutions like the WTO or the United Nations
what is exchange rate?
the price of one currency against another, a currency can rise in value or appreciate against another currency
how you calculate exchange rate (worked example)
British/foreign currency x exchange rate
e.g: £1 x 1.2 = €1.2
