Factors affecting the Attractiveness of International Markets

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  • Factors affecting the attractiveness of international markets
    • Size of the Market
      • Countries with large populations & developing markets (e.g. China & Brazil) attractive as markets bigger there
        • Need to consider population demographics when assessing size of market though
      • Wealth of population also affect potential market
      • Availability of technology also affect market size
        • Internet streaming services won't enter countries where internet not available or low connection speeds etc.
    • Political & Economical Factors
      • Businesses need to take account of laws in the country they are entering as they affect their profitability
        • Employment
        • Environmental laws
        • Tax laws
      • Need to consider political controls on trade
        • Tariffs
        • Quotas
      • Businesses prefer a country with a stable political environment
        • If there is political unrest, business might wait until problem resolved before entering country
      • Fluctuations in exchange rates
        • Make cost of international trade unpredictable
        • Difficult for businesses to accurately forecast revenue & profits
    • Cultural, Ethical & Economic Factors
      • Businesses find it easier to trade with similar languages & cultures
        • Harder to trade when there are language & cultural barriers
      • Cheap labour can be attractive
        • Businesses need to be careful of not exploiting workers
          • Very unethical
          • Can lead to consumers boycotting it if its unethical practises are brought to light
      • Might take into account damage their activities do to the environment
        • Often cheaper getting raw materials from abroad but transporting them between countries causes lots of polllution
        • Distributing finished products between countries also causes pollution
      • Businesses can exploit lack of environmental restrictions in other countries to gain cheap resources e.g. deforestation
        • Ethical companies will choose a more sustainable source though
      • Countries with fewer restrictions on buying & selling can be appealing to some businesses
        • E.g. weapons manufacturers make money by selling missiles and weapons abroad but selling to countries seen as security threat is unethical

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