A1 Choice of Markets in Which to Operate
Markets can be generally classified as developed economies, emerging markets and less developed economies.
https://blogs.worldbank.org/opendata/new-world-bank-country-classifications-income-level-2022-2023
Developed economies are those with a high level of economic activity which will be reflected in a high GDP. People in these economies may enjoy a better standard of living than other economies.
Examples of developed economies include the USA, UK, Germany, Japan, South Korea and Hong Kong.
Emerging markets refer to economies that are experiencing rapid economic growth but may lack some of the features of developed economies such as stable currencies and infrastructure.
Examples of emerging markets include Brazil, Russia, India, China, Mexico, Indonesia, Nigeria and Turkey.
Less developed economies are low-income countries that face a lot of barriers to developing through trade and are very vulnerable to unexpected events such as recession and extreme weather.
Examples of less developed economies include Afghanistan, Bukina Faso, Cambodia, Dijibouti, Gambia and Haiti.
Factors Influencing the Choice of Market
The type of product a business sells will be more appropriate in some markets than others. Firms may seek markets where the product will meet customer needs and where there is little competition.
The costs of operation in different markets will have an impact. Firms may decide to relocate to countries where they can get cheaper labour. In countries where costs are high, firms may need to calculate whether this will be offset by higher revenue from sales.
If size of market is large in terms of population and potential customers, this could translate into higher revenue. Firms will also make predictions on whether the market is growing.