Page 146 - Cambridge IGCSE Business Studies
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Cambridge IGCSE Business Studies Section 3 Marketing
Government intervention in markets
In many countries the government is an important influence on business activity.
Governments can affect competition in markets through:
■ Legal controls that prevent individual firms from dominating the market; for
example many countries such as India have laws against anti-competitive
behaviour.
■ Selling off public sector organisations to the private sector. This is known as
privatisation, for example the privatisation in 2012 of Glen Valley and Dikabeya
farms, Tanzania.
■ Deregulation – the removal of government controls from an industry, for example
the deregulation of postal services in New Zealand.
■ Providing financial and other assistance to new and small to medium-sized
businesses; for example the Small Enterprise Development Agency (SEDA) in
South Africa helped the owner of Inembe Food prove that their baby food
porridge was full of multivitamins and minerals and safe for babies to eat. This
helped the owner of Inembe Food to secure the financial support needed to set up
production facilities. The product is now widely available in supermarkets across
KEY TERM
South Africa.
Free trade: no barriers exist that
might prevent trade between Growth of free trade between countries
diff erent countries. Regional free trade agreements remove or reduce barriers to trade between
countries.
144 Development of e-commerce and social networks
Many businesses have developed their own websites and use these to sell their
goods to customers in other regions of their own country and to customers in
Free trade: see Chapter 26,
page 327. other parts of the world. The development of e-commerce has increased the size
of a business’s market but it has also greatly increased the level of competition in
this market.
Social network sites such as Facebook are also being used by businesses to
promote their products. Consumers have much more information about the
E-commerce and social suppliers of products and, while this has increased consumer choice, it has also
networks: see Chapter 13,
increased competition within the marketplace.
page 186.
How businesses respond to changing spending patterns
and increased competition
If businesses do not respond to changing consumer spending patterns and more
EXPLORE!
competitive markets, they are unlikely to survive.
Use the internet, library There are a number of actions a business can take to respond to changes in
and other printed material
consumer spending patterns and increased levels of competition. Th ese include:
to research the diff erent
countries your country has
■ Product development – market research will identify how the needs and wants of
trade agreements with. You
consumers are changing. This information can be used to develop new products to
may find the following website
satisfy the changing needs and wants of consumers. Developing new products will
a useful source of information:
www.wto.org. help a business to remain competitive.
■ Improve eff iciency – the efficient use of resources will help a business to reduce
average costs. If average costs are reduced then a business will be able to reduce
the prices of its products. You have already learned that a decrease in price will
