Assessment of a Country
Business: BTEC Level 3 National Extended Diploma, topic 4.2.5
Attractiveness of Internationalisation
Various factors affect a business choosing an international market to enter.
Size of the local market
- The market’s growth rate and size must be considered as a large or growing market will be more attractive.
Political stability and culture
- The political stability and culture of the country in which the international market is located must be considered as this can affect the complexity of entering the market.
Local competition
- Local competition must be considered as this can affect the likelihood of a foreign business being able to access the market with success.
Exchange rates
- Exchange rates can affect the attractiveness of a foreign market by influencing the relative cost of imports and exports.
Assessment of a Country as a Product Location
When considering producing in a foreign market, a business must consider different factors:
Cost of production and labour
- Costs of production will affect a business’ decision whether to produce in a new location.
- Skills and availability of labour force will affect a business’ decision whether to produce in a new location.
- The USA has higher wages and labour costs than India.
Existing infrastructure and incentives
- Infrastructure will affect a business’ decision whether to produce in a new location.
- Government incentives will affect a business’ decision whether to produce in a new location.
- Likely return on investment will affect a business’ decision whether to produce in a new location.
- Nations like Japan and Sweden have very good transport infrastructure relative to most nations.
Stability and resources
- Trade blocs will affect a business’ decision whether to produce in a new location.
- Political stability will affect a business’ decision whether to produce in a new location.
- Natural resources will affect a business’ decision whether to produce in a new location.
- Political coops are a major risk for businesses.
Test yourself on Assessment of a Country
Which of the following is least likely to be an attractive market to join?
Which situation is most attractive for a business choosing a country as a product location?
Which of the following situations are attractive for businesses when choosing a new location?