Assessment of a country as a market — Edexcel A-Level Business
Test yourself on Assessment of a country as a market with PEARSON EDEXCEL A-Level practice questions.
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Assessment of a country as a market explained
This is a demand question, and every one of these factors feeds a single judgement: will enough customers be able and willing to buy at a price that covers the cost of serving them?
Read the full explanation
Income after tax and benefits is the spending power available, and its rate of growth often matters more than its level, because income elasticity of demand, the percentage change in quantity demanded divided by the percentage change in income, is high and positive for luxuries. Ports, roads, broadband, payment systems, registration and contract enforcement together set the cost of actually reaching those customers. Stability prices the risk of losing the investment altogether. The currency decides both the shelf price of an imported good and the value of any profit brought home.
Your focus
- a) Factors to consider: levels and growth of disposable income; ease of doing business; infrastructure; political stability; exchange rate
Assessment of a country as a market exam tips
Marking Points
- Rank the factors rather than listing them, and justify the ranking from the product: a premium brand needs high income levels, a staple needs population and income growth.
- Use income elasticity of demand numerically, where a value above one means demand rises faster than income, so a fast growing economy can be worth more than a rich but static one.
- Say what a weak local currency does in both directions: an imported good priced in a strong currency becomes dearer for local buyers, while profits converted home shrink.
- Treat instability as a measurable risk to the payback period and to the return on the investment, not as a vague worry.
Examiner Tips
- 💡This is a standard twenty mark question asking which country to enter, so set a criterion, apply it to each option, then judge with a stated condition.
- 💡The data response usually supplies a table of income, ranking and currency figures, and every point you make should cite one of them.
- 💡Say what further information you would want, such as income distribution or the size of the target segment, because that earns evaluative credit.
Common Mistakes
- Quoting gross domestic product or population as though either were demand, with no adjustment for income per head or for how that income is distributed.
- Blurring the level of income with its rate of growth, when the two point towards completely different entry decisions.
- Assuming today's exchange rate will hold, when an entry that is profitable at one rate can be loss making at another.