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Assessing a country as a market to expand into - Coggle Diagram
Assessing a country as a market to expand into
Disposable income:
the money individuals have left after paying taxes and other contributions (like a pension)
The wealth of a country will affect the size of a potential market. Businesses will likely look at a market with high levels of disposable income so they have more potential customers.
For example: A luxury designer clothing brand would want to expand into Switzerland, with a high disposable income, compared to Bangladesh where it is low.
Emerging economies pose opportunities for expansion:
Incomes are rising in emerging economies and there's a growing middle class.
This gives a business a growing market to sell in.
A business will likely want to assess income trends to see if they will grow in the future.
Ease of doing business
The level of cultural and language similarities:
A business will find it easier to trade/expand into countries they share a language/cultural similarities with.
For example the UK to Australia, which avoids many language and cultural barriers.
Laws and political regulations
Businesses will likely want to consider laws or political barriers to trade such as tarrifs and quotas when assessing an international market.
Large amounts of control may make the process more time consuming and expensive.
Countries that have fewer restrictions on the buying and selling of certain products can be appelaing to businesses, like the USA and its firearm market.
Infrastructure
Infrastructure: the physical systems and services a country has that allow society and businesses to work effectively, such as good roads, electricity, communications and law enforcement.
A country with poor infrastructure may be unattractive to expand into. For example, an expensive jewellry company would avoid expanding into a country with weak law enforcement.
The availability of technology also affects the size of the market. For example, businesses will not sell electric cars in a country where there is no charging points.
A business may need to pay to improve local infrastructure, such as roads. This could be expensive so this must be considered.
It also improves the delivery process.
Political stability
Instability can effect disposable income...
as it would lead to higher unemployment which will affect how much disposable income people have.
Political instability means that the business in that country is at risk from unpredictable changes in policy.
Political changes can also affect businesses directly, such as through changes in business regulations such as tariffs.
Political instability, such as corruption, lack of law enforcement and higher levels of crime will likely disrupt trading.
Exchange rates
Stronger currency: Imports cheaper, exports more expensive
A business expanding into a country with stronger currencies could import raw materials and other goods for cheaper.
For a business in the UK that might be considering where to export, a country with a weak currency compared to the pound may be unattractive.