Assessment of a country as a market Flashcards
List the different facts that make some countries more attractive than others to sell in.
levels and growth of disposable income
ease of doing business
infrastructure
political stability
exchange rate
Explain disposable income as a factor impacting how attractive a company is to sell in.
Disposable income is the amount that a customer has to spend after all their bills have been paid
If a business wants to move into another country it may assess the level of disposable income in that country
This helps a business to see if the citizens of the country will be able to afford the products that they want to sell there
Explain disposable income per household as a factor impacting how attractive a company is to sell in.
Household disposable income is the amount of money that a household earns, or gains, each year after taxes.
It represents the money available to a household for spending on goods or services.
A minimum wage is the least amount that a business is allowed to pay a worker in that country
Explain growth of disposable income.
The growth rate of disposable income can signal potential opportunities in that country to sell to
Explain ease of doing business as a factor impacting how attractive a company is to sell in.
The ease of doing business index is an index created by the World Bank Group.
Higher rankings (a low number) indicate better, usually simpler, regulations for businesses and stronger protections of property rights e.g. patents
Explain infrastructure as a factor impacting how attractive a company is to sell in.
Infrastructure is the basic physical and organisational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or business
Many developing nations have been slow to get their infrastructure in place, and through failure to maintain it have let it decline
Explain global competitiveness index.
The World Economic Forum’s Global Competitiveness Survey looks at the financial health and risks of countries around the world.
One of the sub-indexes ranks countries’ infrastructure after scoring them from 1-7. A score of 7 is the best you can get.
Why is infrastructure important to sales?
Infrastructure can mean road, rail and transport. Without this a business cannot deliver to its customers on time
Infrastructure can also mean telecommunications, without this a business cannot communicate with its suppliers and its customers
Explain political stability as a factor impacting how attractive a company is to sell in.
The world bank has a series of worldwide governance indicators, one of which is the political stability and absence of violence and terrorism
Political instability in a country could be a major risk factor so should be taken into consideration when assessing a potential country as a market for your products
Each new government may seek to impose a series of laws which will need to be adhered to e.g. environment laws, employment laws which could have an impact on the business
Why is political stability important?
An aggressive takeover of a government, a coup could lead to riots, protests and looting
It can also lead to civil war, notable recent examples are Egypt, Syria and Sri Lanka
Even more recently the government in Venezuela has faced challenges which have led to a great deal of political unrest
Explain exchange rates as a factor impacting how attractive a company is to sell in.
When assessing a country as a potential market a business will look at the exchange rates: Strong Pound Imports Cheaper Exports Dearer
