Page 342 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 6 External influences on business activity

Exam-style case study

Halo Enterprises
Appendix 1
Halo Enterprises is a retail company that
Fact fi le for Countries Y and Z
manufactures beauty products and is based in
Country X, which is in Europe. The company is
dedicated to offering the best ethical, natural and Country Z
Country Y
eco-certifi ed beauty products available. Its products Southern Africa
Location Southern Asia
are made with natural and organic ingredients; 10 million
they contain no animal ingredients or alcohol and Population 50 million
are never tested on animals. It also uses eco- Language English is the most English and three
preferred language other regional
friendly packaging and aims to be sustainable by languages.
for communication.
considering the impact of its business activity on the There are eight other
environment. off icial languages.

Despite the economy going through a recession, Halo Proximity to The country has two Landlocked (country
a port ports that are used for entirely enclosed by
has experienced tremendous growth in the last ten
international trade. land).
years and is thinking of expansion into international
markets as a growth strategy, either by exporting
its goods or by setting up operations in the host
countries. The company wants to fi nd out which is
the best country to focus on. It has gathered relevant
340 information on Countries Y and Z, see Appendices.

Appendix 2

Economic and political profi les of Countries Y and Z

Country Z
Country Y
5%
Expected GDP growth rate 3%
Average change in +2.5 % +1%
inflation in the last year
Average interest rates in 5% 2.5%
the last year Currency X : Currency Z
Exchange rate with Currency X : Currency Y
respect to the currency of 1:15 1:5
Country X
7%
Unemployment rate 12%
Barriers to entry Tariff s and quotas exist for many sectors of Very few tariff s and quotas.
trade.
Boom
Health of economy (stage Growth
of business cycle) Liberal policies that encourage foreign
Regulatory framework Protectionist/strict policies that are not
very encouraging for foreign firms to invest investment.
in the country.
Cont.