How does a company decide which countries to target?

What does a business need to consider when trading internationally?
Legal framework, Natural resources, Labour market, Demographics, Geographic location, Political stability,Ease of setting up,Exchange rates, Language+culture, Consumer profiles, Corporate policy, Government policy, Infrastructure, Economic develoment
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Why is measuring development on GDP per capital alone not always helpful?
On face value countries can appear wealthy but if income comes from natural resources it may not be evenly distributed evenly.
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What can be a better way to measure development
Human Development Index (HDI)
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How is HDI measured?
Health-Life expectancy, Education- years of schooling, Living standards-GDP per capita
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What is HDI?
A measure of development based on access to health care, education and national income. It provides qualitative and quantitative data about development.
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What information can HDI provide businesses seeking to new markets?
Access to education indicates the level of skilled labour available, levels of development indicate the existance for potential markets, can indiicate if products need to be adapted to suit level of development.
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What are the legal issues when entering new markets?
Law enforcement agencies may be corrupt and may fail to protect foreign investors which may make them reluctant to invest.
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Which government policies can effect which new market to enter?
Tax rates and laws, the level of protectionism.
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What effects the Ease of Doing Business index?
Time, cost and minimum start-up capital. Dealing with permits and regulation. Ease with which employees may be hired and fired. Tax payable as a share of gross profit. Cost and time to export and import.
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What are commodities?
Are raw materials or semi-manufactured products that are traded in bulk. They are not recognisably originating from any particular business.
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Which socioeconomic factors would a business need to research when entereing a new market?
Age, income, sex, occupation, education, family size,
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How would segmenting a merket help assess a potential market?
Helps assess the size of a potential market and whether its products are likely to succeed.
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How will labour costs and available skills impact which market to target?
Low labour costs will be attractive but there may be a trade off with the righ technical skills. Also the work force may need training which increases costs. Ease of hiring and firing employees, availability of workers, level of regulation.
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How does a consumers profile impact the desicion to enter new markets?
Consumers in emerging markets may see a rise in disposable income. There is also the creation of a middle class. Consumers may develop an appitite for Western goods and brands like fashion, fast food, household appliances, cars.
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What is infrastructure?
Includes all transport and communication facilities as well as the basic provision on energy and water supplies like ports, telecommunication systems, dams.
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How does weak infrastructure inhibit business growth?
Slows down transport and increases cost. Communication more uncertian and difficult, Harder to maintain a supply chain, Harder to use production techniques such as JIT, Prevents efficient distribution of goods.
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What corporate policies could be used when entering new markets?
Diversifying risk, expanding the business, cutting costs like labour, inorganic growth.
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How will exchange rates effect a decsion to do international business?
A low exchange rate may cut costs but undervalued exchange rates can cuase domestic markets to become a problem.
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Which areas may countries have an advantage in?
Natural resources, abundant land, cheap labour, plentiful skills, technical know-how, favourable climate, beautiful scenery, deep water port, university active in scientific research, accessable source of finance
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How does specialsing affect output?
It can increase output but only works if the surplus output can be traded.
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What is specialisation?
People make the most of their skills by focusing on what they do best.
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What is absolute advantage?
It exists if the real resource cost of a product is lower in one country than another.
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What is comparitive advantage?
States that if two countries each speacialise in the product with the lowest oppertunity cost, then trade and real incomes will rise for both countries.
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What are the advantages of specialisation?
Increased output and efficiency, economies of scale gained, goods and services produced cheaper, competitive advantage enhanced, exports increase, competition lowers prices drives innovation which benfits foreign and domestic consumers.
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What are the disadvantages of specialisation?
Possible over reliance in one area, comparative advantage can move elsewhere, emerging economies often rely on commodities, fluctuating commodity prices, reliance on imports for other goods, over specialism can cause severe structural unemployment.
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Other cards in this set

Card 2


Why is measuring development on GDP per capital alone not always helpful?


On face value countries can appear wealthy but if income comes from natural resources it may not be evenly distributed evenly.

Card 3


What can be a better way to measure development


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Card 4


How is HDI measured?


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Card 5


What is HDI?


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