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Assessing economic potential GapFill
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When a business has its home market it may look to international markets to achieve economies of scale. There are a variety of factors which help businesses to distinguish which are the most attractive markets for their particular products or services.
Firstly a business may look at the levels of income of the population of the country. The country with the highest household disposable income level is the USA, closely followed by Switzerland and Germany. This would make them attractive markets as a higher proportion of the population would be able to afford the products or services. Countries with low levels of disposable income include India, Mexico and Brazil. These countries, in particular South American nations, might make attractive locations but would not be suitable markets.
Next a business looks at the of Doing Business Index, which ranks countries on how simple it is to trade with them. The easiest is usually New Zealand and the hardest is Somalia. The categories in the index include how quickly a business can start up in that country, how easy it is to obtain finance and how reliable the electricity supply is.
Then a business will look at existing and see if it is suitable to sustain a distribution network in that country. If the business cannot get the goods to the customers then other countries may be considered instead. Infrastructure includes roads, rail, power and other utilities, even Wi-Fi.
Now the business can consider any problems in the area. Countries that are currently at war (and have been for some years) include Afghanistan, Iraq, Syria and Somalia. War and civil unrest make getting goods to customers problematic and also reduce the potential disposable income of the customers.
Finally the business may look at countries with stable and favourable rates. We use the SPICED mnemonic to remind us of the relationship between exchange rates and imports and .