Page 195 - Cambridge IGCSE Business Studies

14: Marketing strategy

A large company that dominates a market may face legal controls, such as anti-
trust or competition laws, if it is considered to be exploiting consumers by charging
high prices or providing poor quality goods or services.
Advertisements may have to be withdrawn and redesigned if they are found to
contain misleading or inaccurate information. The business may have to advertise

its product again. It may also be required to issue statements of apology in the

newspapers and in the worst case might be fined for deliberately misleading
consumers. All of these actions increase a business’s costs.

ACTIVITY 14.4

Sugar ‘n’ Spice plc is a large manufacturer of confectionery products in Country Z.
The directors of Sugar ‘n’ Spice have decided to expand the business by entering new markets. Market research suggests
that there is a good market for its products in Country Y. However, it will have to make some changes to its products to
satisfy the legal controls in Country Y, which protect consumers from inappropriate business activity.
1 What is meant by ‘legal controls’?
2 Explain how legal controls in Country Y might affect Sugar ‘n’ Spice plc.

3 Identify and explain two ways legal controls might protect consumers in Country Y.

TEST YOURSELF
1 Why are legal controls on the activities of businesses important to consumers?
2 Identify and explain two legal controls placed on business activity in your country. 193

Opportunities and problems of entering

new markets abroad

E-commerce has enabled many businesses, of all sizes, to enter new markets
Distribution channels: abroad. However, this expansion does not have to be through e-commerce and
see Chapter 13, page 179. there are many examples of businesses which now export their goods and services
to other countries using traditional distribution channels.

Growth potential of new markets in other countries
One of the reasons for businesses expanding into new markets in other countries
Maturity and decline: is that the market in their own country has reached maturity, or might even be in
see Chapter 12, page 168. decline. Other countries can offer huge marketing opportunities for increased sales,

revenue and profi ts.