Business Studies Unit 4 Topic 3

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Topic 3: Business Location 

We assess the market based on the market itself or production location; factors to consider when deciding:

  1. Levels and growth of disposable income - higher income means higher demand for goods hence higher possibility of more sales; high GNP/GDP per capita shows that people can afford produced goods 
  2. Ease of doing business - convenience that foreign businesses enjoy while setting up new businesses in new countries; some countries may take about 6 months to set a business up; still can be costly due to bureaucracy and time consuming
  3. Reliable infrastructure - roads, transportation, availability of electricity and water are essential when trying to cut down setting up costs
  4. Geographical proximity - the choice of a market may be affected by the goods that firm is producing; costs of transport will be increased if the goods are tangible and raw materials are heavy; also costs may be high if infrastructure is poor
  5. Exchange rate - the rate at which one currency is exchanges for another foreign currency; when choosing the market from should consider the impact on profits and costs by exchange rates; fluctuations have significant impact on business operations; currency can appreciate or depreciate: Appreciation of local currency makes exports of goods expensive and unattractive to foreign markets, and import of goods cheaper and attractive locally 
  6. Legal System - firms should make sure that legal rights are strong enough to protect firms brand and products 
  7. Government policies:
  • Taxation - firms will look for countries with low taxation
  • Tariffs and Quotas - tariffs and quotas may raise the

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