Assessing a country as a market

Factors to consider

• Levels and growth of disposable income: how much people have to spend after taxes, and how fast it is rising. Fast growth matters for income-elastic products such as cars, travel and branded goods.
• Ease of doing business: how simple it is to start and run a business: registering, permits, tax, contracts, getting finance, bureaucracy and corruption. The World Bank's former Doing Business rankings have been replaced by its Business Ready (B-READY) report; the first, in 2024, covered 50 economies and the 2025 report 101, using three pillars: regulatory framework, public services and operational efficiency.
• Infrastructure: transport, ports, power, internet and retail networks to reach customers.
• Political stability: risk of conflict, sudden policy change, expropriation or unrest.
• Exchange rates: the level and volatility of the currency affect prices, revenue and profit when converted home.

Porter's five forces applied to a foreign market

Porter's five forces judge how attractive (profitable) a market is:

1. Rivalry among existing competitors: many strong local and global rivals mean price wars and low margins.

2. Threat of new entrants: low barriers to entry mean profits are competed away.

3. Threat of substitutes: alternative ways to meet the need (local street food instead of fast-food chains).

4. Bargaining power of buyers: powerful retailers or price-sensitive consumers push prices down.

5. Bargaining power of suppliers: few suppliers of key inputs can raise costs.

A market is most attractive when all five forces are weak. Do not confuse the five forces (market attractiveness) with Porter's generic strategies (how to compete), which the October 2023 series examiner report said many candidates mixed up.

Making a judgement

No single factor decides. A large, fast-growing market may be worth high political risk; a stable rich market may be unattractive if rivalry is intense. The best answers weigh the factors for the specific product and business (a luxury brand cares about the number of high-income consumers; a mass-market brand about average income growth) and suggest how risks could be reduced (joint venture with a local partner, market research, starting small).

Worked example

Average disposable income in Country X rises from $6,000 to $6,540 in a year. Calculate the growth rate and explain why it matters to a seller of motorbikes.

1. (6,540 - 6,000) / 6,000 x 100 = 9%
2. Motorbikes are income elastic in a developing economy, so demand could grow faster than 9%.

Answer: 9% growth, a strong sign of rising demand for income-elastic goods.

Check yourself

1. Disposable income per head rises from $14,200 to $15,123. Calculate the percentage increase.
   Show answer

   6.5 %. 923 / 14,200 x 100 = 6.5%.

2. Income elasticity of demand for a firm's product is 1.8. If incomes rise by 5%, by what percentage would demand rise?
   Show answer

   9.0 %. 1.8 x 5 = 9%.

3. Which is one of Porter's five forces?
   • Cost leadership
   • Market development
   • Political stability
   • Bargaining power of suppliers
   Show answer

   Bargaining power of suppliers. The five forces are rivalry, new entrants, substitutes, buyer power and supplier power.

4. A potential market would be most attractive to enter when
   • rivalry is low and buyers have little bargaining power
   • there are many close substitutes
   • barriers to entry are very low
   • a few suppliers control key inputs
   Show answer

   rivalry is low and buyers have little bargaining power. Weak forces leave room for high margins.

5. The World Bank's Business Ready (B-READY) report, which replaced Doing Business, assesses economies against which three pillars?
   • GDP, inflation and unemployment
   • Product, price and place
   • Regulatory framework, public services and operational efficiency
   • Health, education and income
   Show answer

   Regulatory framework, public services and operational efficiency. B-READY's three pillars are regulatory framework, public services and operational efficiency.

6. Explain why political instability makes a country less attractive as a market.
   Show answer

   Sudden changes in government or policy, unrest or conflict can disrupt sales, damage assets or lead to new taxes or nationalisation, so revenue and profits are uncertain and riskier.. Instability raises the risk of losses and makes planning difficult.

7. Explain why poor infrastructure can make a market less profitable.
   Show answer

   Poor roads, ports, power or internet make it harder and more expensive to distribute products to customers, raising costs and limiting the number of customers that can be reached.. Infrastructure affects both costs and access to customers.

Practise with instant feedback Print this lesson

Sources

• Pearson Edexcel International Advanced Level in Business specification (first teaching 2018)
• World Bank: B-READY reports
• World Bank Data Blog: B-READY 2025 data (101 economies)
• Pearson Edexcel IAL Business WBS14/01 examiner report, October 2023 series (published January 2024)

Last updated 8 November 2026. Spotted a mistake? Tell us.