Assessing Global Markets and Locations
~50 min · WBS14 · 4.3.2
WBS14 · 4.3.2 · 50 min
A business doesn't decide to sell into a country and decide to manufacture in it for the same reasons. and factors explain why a firm looks abroad at all; assessing a country as a market and assessing the same country as a production location are two genuinely different questions underneath — and a stimulus that asks one is testing whether you can tell it apart from the other, not just recall the right list of factors.
Key terms in this lesson
Before you read on
Two or three questions on exactly what this lesson teaches. Being wrong here is fine — it's the fastest way to find out what to pay attention to next.
Conditions that prompt trade: four related but distinct ideas
Spec 4.3.2.1 names four separate conditions that can lead a business to trade internationally, and they split cleanly into two directions of cause. A is a problem located in the firm's CURRENT market that reduces the value of staying there — a saturated market, where most of the customers who will ever buy the product already have, leaves little unclaimed demand to grow into; intensifying competition means existing rivals are fighting over that same, largely fixed pool of customers, compressing the margin available to any one of them. A is the opposite direction entirely: an attractive feature of a market the firm doesn't yet serve, drawing it outward rather than pushing it away from home — increased sales and profitability from a genuinely under-served market, risk spreading (a firm selling into several markets whose economic cycles don't move in lockstep has a steadier total revenue than one dependent on a single market's ups and downs), and economies of scale from the larger combined output selling into more markets at once makes possible.
The other two conditions work through a different channel entirely — cost, not demand. Cost competitiveness by or (4.3.2.1.c) is about lowering what it costs to PRODUCE, not about finding more customers; extending the (4.3.2.1.d) is about giving an existing, already-developed product a genuinely new population of potential buyers, rather than developing anything new. Both are covered in full below — the point worth fixing now is that all four conditions answer the same underlying question ("why would a business trade internationally at all?"), but from genuinely different angles: two through the pull of extra demand or the push of losing it at home, and two through the separate lever of cost.
Mechanism
Why push and pull are opposite directions of the same question, not two words for the same thing
The exam doesn't reward reciting "push factors are saturated markets and competition; pull factors are sales, risk-spreading and scale" as an unordered list — a stimulus almost never labels which type it's describing, so the actual skill being tested is locating WHERE the cause described actually sits. Every push factor, without exception, describes something true of the firm's current market: a ceiling on how much more it can sell there, or a shrinking margin from fighting existing rivals for what's left. Every pull factor, without exception, describes something true of a market the firm doesn't yet serve: more revenue available, steadier total revenue from spreading across markets, or a lower cost per unit from a larger combined output. That single test — is the cause described located at home, or located abroad? — is what a stimulus is actually testing, not whether you can recall the four sub-factors as a checklist. And because a real business decision is rarely driven by only one of the two, a strong answer doesn't stop at correctly labelling both; it goes further and explains which one is actually doing the deciding work for THAT specific business, which is precisely the step the real examiner report below confirms most candidates skip.
Worked, in full
Deriving push vs pull from a real relocation case — not asserting the label
- 01
Locate the cause geographically before labelling anything: a push factor's cause sits in the firm's current market; a pull factor's cause sits in a market it doesn't yet serve. This single test is what actually needs applying to a stimulus — not recall of the four named sub-factors as an unordered list.
Earns: K — the test stated precisely, ready to apply to real evidence rather than to a labelled textbook example.
- 02
A real example, honestly labelled: this specific case — rising US/China tariffs raising the cost of continuing to manufacture in China for firms serving the US market — comes from a top-scoring candidate's OWN outside-knowledge answer, reproduced inside the real June 2022 examiner report as a model of the kind of real-world example that earns credit. It is genuinely real and genuinely credited, but it is the candidate's own knowledge, not Pearson's own official question stimulus. The disadvantage described is a rising cost of STAYING in the current production country — by the stage-1 test, that's a push factor, regardless of how attractive any alternative destination looks.
Earns: An1 — the push factor identified from where the cause is located, not from a keyword like "tariff" alone.
- 03
The same candidate example names Vietnam, India and Mexico as lower-cost alternative destinations. The advantage described here sits in the countries being CONSIDERED, not the current one — by the same test, that's a pull factor, operating on the same decision at the same time as the push factor already identified.
Earns: An2 — both factor types routinely co-occur on one real decision; a strong answer's job is not to spot that both are present (usually easy) but to weigh which one is actually deciding the outcome for this specific business.
- 04
The real examiner report on exactly this question confirms most candidates correctly named both factor types and stopped there. The marks lost were for the next step: giving a REASON, tied to the specific business, for why one factor type outweighs the other — for instance, a business with a flexible, easily-relocated supply chain can act on a pull factor almost immediately, while a business physically tied to a single scarce input (a mine, an oilfield) has no real freedom to respond to any pull factor, however attractive, because relocating means abandoning the resource itself.
Earns: Eval — the judgement made conditional on a named feature of the specific business, which is exactly the move the real mark scheme rewards and the real examiner report confirms most candidates never reach.
Source — Examiner report, June 2022
"candidates gave a choice with "no rationale or justification" for it"
Cost competitiveness: off-shoring and outsourcing chase the same prize, different ways
Both and chase the same prize — a lower cost of production than the firm's current location offers — but they trade away different things to get it, which is exactly why the choice between them is a genuine trade-off rather than a rule to memorise. Off-shoring keeps ownership: the firm builds or buys its own facility abroad, often via , which means it keeps full control over quality, process and intellectual property — but also carries the full capital cost and risk of that facility itself. Outsourcing gives ownership up entirely: an independent, already-existing external firm does the producing, so there's no capital outlay and no direct management burden for the firm paying for it — but also no direct control over how the work is actually done, which is exactly why quality and IP-protection concerns are the standard argument against it.
Which one 'wins' for a specific business depends on what that business has most to lose from giving up control. A firm making a low-differentiation, easily-specified product — a plain T-shirt to an exact stitch count and fabric spec — has little to lose from outsourcing's loss of day-to-day control, so the capital-free option usually wins. A firm whose entire value depends on a closely-guarded process or design — an advanced semiconductor, a proprietary formulation — has much more reason to pay off-shoring's higher capital cost to keep that process in-house. The right answer to "off-shore or outsource?" is never generic; it follows from what, specifically, the business is trying to protect.
Extending the product life cycle: not a new product, a new population
A product's decline stage isn't really about the product getting worse — the model derives decline from market saturation: once nearly everyone in the addressable population who will ever buy the product already has, each further sales push meets a shrinking pool of remaining first-time buyers. A genuinely new country's population is a SEPARATE addressable pool that hasn't been through that adoption process at all, which is the entire mechanism behind extending the product life cycle internationally: launching the SAME, unmodified product there doesn't require a new development cycle, because it just gives an already-developed product a second, untapped population to climb the adoption curve through. This is a genuinely different move from an , which delays decline in the SAME market by changing an element of the marketing mix (a new pack size, a new flavour) — extending the PLC internationally changes the market instead, and leaves the product itself untouched.
The real, examiner-reported error here is answering with the generic benefits of any new-market entry — more sales, more profit — instead of the specific PLC mechanism. A confirmed examiner report notes many candidates missed the "extending the PLC" angle entirely and defaulted to that generic answer; the stronger, credited answers focused specifically on reusing an already-developed product to restart its life cycle in an untapped market, and named the development-cost saving that makes this move distinctly cheaper than launching a genuinely new product — the saving, not just the extra sales, is what the question was actually asking about.
Two decisions, one overlapping vocabulary
Once push and/or pull factors make trading abroad worth pursuing, two genuinely separate decisions still have to be made — often about the very same country. Is this a good country to SELL into? And is this a good country to actually MAKE the product in? Pearson's spec lists two different sets of factors for these two questions (4.3.2.2 for market, 4.3.2.3 for production location), and several factor names — infrastructure, , — appear on both lists. That overlap is a genuine feature of the two decisions, not a spec error, and treating it as an error is the single most predictable way to lose marks on this content: a stimulus that asks you to assess a country as a MARKET and gets answered with production-location reasoning (or the reverse) is answering a different question from the one that was actually set, however correct the individual facts used might be.
Mechanism
Why market-assessment and production-location factors overlap in name but test different reasoning
Trace what each question actually forces a firm to check, and the two lists stop looking arbitrary. "Will enough customers here buy my output, at a price and reliability that makes selling here worthwhile?" requires: customers with money and rising spending power (levels and growth of disposable income); the ability to physically and legally reach them (ease of doing business, and infrastructure read as DEMAND-side — roads, ports, retail networks and digital payment rails that get a product to a shopper); and confidence the revenue earned there is safe and translates back to something worth having (political stability protecting against disruption to trading, exchange rates determining how much home-currency value that foreign revenue converts into). "Can I build and run an operation here that makes my output at a competitive cost, reliably enough to be worth the switch?" requires an entirely different check: an input cost low enough to justify the switch (costs of production); a workforce that can actually deliver the required output at the needed quality (skills and availability of labour); the ability to get raw materials in and finished goods out (infrastructure read as SUPPLY-side this time — the same word, a genuinely different question, about a plant's own logistics rather than a shopper's ability to buy); tariff-free access to a wider market once produced (location in a trade bloc); a government actively courting the investment (government incentives); and a capital-recovery question a market-only entry doesn't carry the same way (likely return on investment on the capital actually sunk into the site). The three shared-name factors diverge specifically because each protects a different stake: a market entry commits marketing and distribution spend that can usually be scaled back at relatively low extra cost if conditions worsen; a production-location decision commits a large, illiquid, physically-fixed capital investment — a built factory, installed machinery — that cannot simply be relocated if the political situation changes. Political instability therefore threatens the entire sunk investment in a location decision, a bigger, more binary risk than the steadier revenue risk it poses to a market-only presence — which is exactly why the same factor name carries a different WEIGHT, not just a different definition, depending on which of the two questions is actually being asked. The real mark scheme for this exact question also credits two further, distinct channels beyond sunk-capital risk: political stability makes a sudden, disruptive change in economic policy less likely, and it correlates with lower corruption — which itself lowers the ongoing costs and problems a business operating there has to absorb.
Mechanism
Applying Porter's five forces to a market-entry decision — not re-deriving it
itself — why supplier power, buyer power, new-entrant threat, substitute threat and rivalry each pull value away from incumbent firms — was already derived from first principles in this course's Business Objectives and Strategy lesson, and that mechanism doesn't change here; re-deriving it from zero would be repeating work already done. As a compressed reminder rather than a re-derivation: suppliers squeeze margin by charging more for the inputs a firm needs; buyers squeeze margin by demanding a lower price or better terms; a credible threat of new entrants and of substitute products both cap how much a firm can charge before customers switch away or a rival simply enters to undercut it; and rivalry among firms already in the industry competes price and market share away directly. All five forces do the same underlying job — pulling potential value away from an incumbent and toward suppliers, buyers, entrants, substitutes or rivals instead — which is exactly the lens the rest of this section applies to a foreign market rather than the home one. Anyone who wants the full first-principles derivation of why each force does this, not just the compressed version, should revisit the Business Objectives and Strategy lesson via the glossary link above. What 4.3.2.2.b actually adds is narrower: running that same tool on a FOREIGN country's industry structure, specifically to test how much of an attractive-LOOKING market's size actually converts into profit for a NEW entrant. A market can score well on every demand-side factor above — fast-growing disposable income, a large addressable population — and still be a poor market-entry choice if its five-forces picture is weak: high rivalry among entrenched local incumbents, low switching costs that let existing firms undercut a newcomer on price, or buyer power concentrated in a small number of powerful domestic retailers. Five forces answers a question market-size and income figures alone cannot: not "how big is the opportunity," but "how much of that opportunity would a new entrant actually get to keep." That application is no longer spec-certainty alone: a genuine standalone October 2025 exam question tests exactly this, worked through in full immediately below. One further, real and confirmed trap belongs here by name, because Pearson's own examiner reports show candidates making it even after correctly learning one of the two tools involved: five forces (4.3.2.2.b, assessing a market) is a genuinely different model from Porter's Strategic Matrix — cost leadership, differentiation, focus (4.3.3.1.d, this course's Global Marketing lesson) — and confusing the two is covered in full in the trap-taxonomy below.
Worked, in full
Deriving five forces' real payoff and real limit from a genuine standalone exam question — the pet-food case
- 01
State what's actually being asked before applying anything: a real October 2025 Section B question asks candidates to Evaluate the usefulness of Porter's five forces for a global business assessing potential markets in the pet-food industry — a genuine, standalone 20-mark Evaluate on exactly 4.3.2.2.b, not folded into a wider market-assessment question. "Usefulness" is the operative word: the mark scheme rewards applying all five forces AND judging how far the tool itself can be trusted, not just running through the five headings.
Earns: K — the real command word (Evaluate, not Assess or Discuss) and the real spec point (4.3.2.2.b specifically) identified before any force is applied.
- 02
Apply the first two forces to the real evidence the mark scheme itself uses: rivalry among existing competitors is named directly — the pet-food market is dominated by several large incumbents, named as Nestlé, Mars, Hill's Pet Nutrition, Blue Buffalo and Colgate-Palmolive, real rivals a new entrant would have to displace. The threat of new entrants runs the other way: regions the mark scheme calls relatively underdeveloped — Latin America, Asia Pacific, the Middle East, Africa and Eastern Europe — are flagged as likely to attract more entrants precisely because thinner existing competition there makes entry easier, not harder.
Earns: An1 — two of the five forces applied to real, named evidence (real rivals, real regions), not asserted as generic "strong competition" or "growth potential."
- 03
The real mark scheme doesn't stop at those two forces on a question that names all five in its own command word, and a complete answer shouldn't either. Threat of substitutes is named directly too — other businesses are already successfully providing pet food, but the mark scheme itself flags a genuine opportunity inside that same force: niche areas such as organic or natural pet food. The remaining two forces both work in a new entrant's favour, and the mark scheme gives the specific reason for each rather than asserting it: supplier power is low because the greater the number of suppliers, the more that power sits with the business buying from them rather than the suppliers themselves; buyer power is fragmented rather than concentrated because the pet-food market is global, with many millions of individual customers, rather than a handful of powerful buyers able to dictate price.
Earns: An2 — the remaining three forces (substitutes, supplier power, buyer power) applied with the mark scheme's own real reasoning, closing the gap a two-forces-only answer leaves on a question that asks for the whole model, not half of it.
- 04
Weigh what the five-forces picture adds up to before reaching for its limitation: the real indicative content concludes the pet-food market carries genuine risk from that established rivalry, but that the market's expanding size and expanding geography still leaves considerable opportunity for a new entrant — the same five forces surfacing a warning and an opening at once, not a single flat verdict.
Earns: An3 — all five forces held together as competing evidence pointing in different directions, rather than collapsed into one conclusion.
- 05
The evaluative payoff is the real mark scheme's own stated limitation, not an invented caveat, and it comes with a real number attached: the pet-food market is set to expand to $145.3bn by 2028, and a five-forces snapshot taken today has no mechanism for reading that trend at all — it only looks at the current state of the market. The mark scheme names exactly what else that static snapshot misses: rising demand for organic or natural pet food, a growing trend of pet humanisation, and the growing popularity of raw pet food — three further real, named shifts a one-off five-forces read cannot register — and it adds that the incumbents named under rivalry above are themselves introducing new, innovative products, so even the "current state" the model captures today needs continuous re-monitoring, not a single read. The weakness isn't the generic "models are imperfect" — it's that a static competitive-structure snapshot specifically undercounts how attractive a fast-growing market like this one becomes, and misses several further named trends already in motion, which is exactly why the mark scheme's own conclusion treats five forces as a guide needing real market research alongside it, not a verdict on its own.
Earns: Eval — the genuine limitation tied to the real growth figure AND the further real, named trends and competitive dynamics it also misses, showing WHY a static snapshot specifically understates THIS market, rather than asserting the caveat as a generic disclaimer that would apply equally to any model.
Source — Mark scheme, October 2025
"Porter's five forces "only looks at the current state of the market" and does not account for the pet-food market's own projected growth to $145.3bn by 2028"
Worked, in full
Deriving why market-assessment and production-location factors diverge — even when the country and the factor name are the same
- 01
State the two questions precisely: a market assessment asks whether enough customers here will buy the firm's output at a viable price; a production-location assessment asks whether the firm can build and run an operation here at a competitive cost. Different verbs — sell versus make — and the entire divergence below follows from that one difference.
Earns: K — the two questions stated precisely enough to derive the rest from, rather than assumed as obviously different.
- 02
"Infrastructure" diverges first because it means a different physical system in each question, even in the same country: in a market assessment it means the roads, ports, retail networks and digital payment rails that get a product to a shopper (demand-side); in a location assessment it means the roads, ports, power and water that let a plant receive its own inputs and ship its own output (supply-side). Same word, genuinely different infrastructure.
Earns: An1 — the shared factor name traced to two physically different systems, not treated as a coincidence.
- 03
Political stability diverges by consequence, not just definition, and the size of what's at risk is provable rather than asserted: a market-entry decision commits marketing and distribution spend that can usually be scaled back at relatively low extra cost if conditions worsen; a production-location decision commits a large, illiquid, physically-fixed capital investment that cannot be relocated at will. Instability therefore threatens the entire sunk investment in a location decision — a bigger, more binary risk than the steadier revenue risk it poses to a market-only entry.
Earns: An2 — the divergence traced to a genuine asymmetry in what each decision has actually put at stake, not just to two different textbook definitions.
- 04
Real mark-scheme evidence for this doesn't have to cross between the market and location lists — it's visible within a single production-location decision instead. WBS14 January 2023 Q1(d) (Publications Code WBS14_01_2301) asks candidates to Assess the importance of political stability when choosing a production location — entirely a spec 4.3.2.3.a production-location question, not a market-assessment one. Its own indicative content makes a real paired comparison: Senegal held up as politically stable against its close neighbours Guinea and Mali, both named specifically for coups and terrorist attacks — before the mark scheme reaches, in its own balancing counter-evidence, for two OTHER production-location factors that can outweigh political stability in practice: JLR's decision to expand production in Slovakia (labour cost/availability), and Nissan's need for a deep-water port at Sunderland (infrastructure).
Earns: Eval — real mark-scheme evidence that even a single, named location factor's importance is never absolute: political stability is weighed against, and can be outweighed by, other factors from the same production-location list. Not asserted as evidence of the market and location lists crossing over — this anchor is a production-location question throughout, so it doesn't support that claim.
- 05
A second verified production-location case confirms the same principle. Vietnam's real Ease of Doing Business ranking (70th) genuinely beat neighbouring Cambodia (144th) and Laos (154th) — but the real mark scheme's own balance for this exact comparison is that supply-chain quality and workforce skill, both flagged as weaknesses for Vietnam specifically in the source extract, can matter more than the ranking alone, and that a resource-extraction business must locate near its resource regardless of any country's ranking on either list.
Earns: Eval — a second, independent real case confirming the same principle: a favourable score on one factor from either list is evidence toward a conclusion, never the conclusion itself.
Source — Mark scheme, October 2021
"Vietnam ranked 70th on the Ease of Doing Business index used in the source extract, while neighbouring Cambodia ranked 144th and Laos ranked 154th."
In your own words
In one sentence: why does political stability protect a market-entry decision and a production-location decision against a genuinely different kind of loss, rather than the same loss twice?
Complete it yourself
Complete the chain — using Porter's five forces to assess Country X as a market, not a production location
- 01
Country X's smartphone market is large and growing quickly, with disposable income rising strongly year on year — an attractive demand-side picture on every 4.3.2.2.a factor.
- 02
But three domestic manufacturers already control most retail shelf space, switching between rival phone brands costs shoppers nothing, and a national import tariff makes new entrants' handsets noticeably more expensive at the till than the country's own brands.
Named traps
- push-pull-listed-not-judged
- Confirmed directly in the real June 2022 examiner report on exactly this content: most candidates "limited their marks by just...producing lists of push and pull factors without developing or analysing them," and although most did state a preference for one factor type over the other, they gave "no rationale or justification" for the choice. The fix is the one modelled in the worked chain above: tie the judgement to a named feature of the specific business (how portable its supply chain is, how tied it is to a fixed resource), not to the factors in the abstract.
- plc-extension-answered-as-generic-market-entry
- Confirmed in the real January 2024 examiner report: many candidates missed the specific "extending the product life cycle" angle of the question and defaulted to generic new-market-entry benefits (more sales, more profit) instead. The credited, stronger answers named the specific PLC mechanism — reusing an already-developed product to restart its adoption curve in an untapped population — and the development-cost saving that makes it distinctly cheaper than launching a genuinely new product.
- five-forces-vs-porters-strategic-matrix
- Confirmed directly in a real October 2023 examiner report, describing a significant number of candidates who "knew little, or nothing, about Porter's matrix" and "confused it with Porter's five forces." These are two different tools answering two different questions, mapped to two different spec sub-points: five forces (4.3.2.2.b) analyses an industry's competitive structure when assessing a MARKET; Porter's Strategic Matrix (4.3.3.1.d, this course's Global Marketing lesson) is about which competitive strategy — cost leadership, differentiation, or a focused version of either — a firm should choose. Name which tool a question is actually asking for before answering, rather than reaching for whichever one comes to mind first.
- roi-dismissed-without-development
- Confirmed in a real October 2023 examiner report: "likely return on investment" as a location factor was the worse-answered of that series' two 12-mark questions. Many candidates either misunderstood the term as a location factor, or conflated it with the separate, quantitative investment-appraisal CALCULATION technique — a different content point entirely. Candidates who did understand the term often "dismissed it without development" before pivoting to an unrelated list of other location factors, rather than explaining what specifically makes a projected return on THIS investment more or less certain (currency risk, political risk to the capital, how quickly the specific market can absorb the extra output).
- market-factor-answered-with-location-reasoning
- Not itself the subject of a single quoted examiner-report instance in the five series sampled for this course — flagged honestly as this lesson's own derivation from the mechanism above, not a confirmed past-paper pattern, though it follows directly from a general warning that IS confirmed and repeated across the series sampled (the spec's own unit description requires globalisation's impacts to be understood "in relation to businesses specifically," and examiner reports repeatedly warn against generic, business-unlinked answers). Because market-assessment and production-location factors share names (infrastructure, political stability, ease of doing business), a stimulus set up to assess a country as a MARKET can be answered with production-location reasoning almost without the writer noticing the switch — talking about factory input logistics and capital sunk into a site when the question actually asked about reaching and retaining customers, or the reverse. The fix is the same sell-vs-make check derived above, applied explicitly to whichever word the question actually uses.
The conditional move
Complete: "A favourable Ease of Doing Business ranking is likely to be the deciding factor in a production-location decision only if ___."
Complete: "Off-shoring production to a lower-wage country genuinely lowers a firm's unit cost only if ___."
Beyond the spec
Pearson's spec gives two separate lists of factors — for assessing a market, and for assessing a production location — without saying why international business scholarship groups exactly these kinds of factors together in the first place. Knowing the underlying academic framework is what lets an answer explain WHY a specific factor matters for a specific business, rather than working through the spec's list as an unconnected checklist.
Pankaj Ghemawat's CAGE framework (Harvard Business School, 2001) scores how genuinely "distant" a potential market or production location is across four dimensions: Cultural distance (differing language, tastes, values — the content of this course's own Global Marketing lesson, 4.3.3.3); Administrative or institutional distance (differing regulation, currency, legal and political systems — mapping closely onto ease of doing business and political stability above); Geographic distance (physical distance, but also time zones, transport infrastructure, and whether the country shares a border or a trade bloc with the firm's home market); and Economic distance (differences in income levels, cost of labour, resource availability — mapping onto disposable income, costs of production and natural resources above). Ghemawat's own central argument, made in his 2001 Harvard Business Review article "Distance Still Matters," was that businesses systematically underestimate all four kinds of distance when a market looks large and attractive on paper, which is exactly the trap the five-forces application above is built to catch: a market can score well on disposable income and population size (low economic distance on the surface) while still being a poor entry choice once its administrative and competitive realities are properly weighed. The CAGE framework doesn't replace Pearson's own factor lists — it explains why those specific factors, and not some other list, are the ones international business scholarship keeps converging on.
Retrieval — with feedback on every choice
A UK kitchenware brand's flagship saucepan range is in the decline stage of its product life cycle in the UK, with sales falling every year as the domestic market becomes saturated. The brand launches the SAME, unmodified saucepan range in Brazil, where it has never sold before.
Which of the following best explains why this counts as extending the product life cycle, rather than simply "entering a new market for more sales"?
A firm's home workforce produces 4 units per worker-hour at a $28 hourly wage. It is considering off-shoring production to a country where workers produce only 2.5 units per worker-hour, at a $6 hourly wage. By approximately what percentage does labour cost PER UNIT change if it off-shores?
A UK business's Nigerian subsidiary earns NGN 18,000,000 in local revenue each year. At an exchange rate of £1 = NGN 165, this converts to about £109,091. The naira then depreciates against sterling to £1 = NGN 198, and the subsidiary earns the same NGN 18,000,000 the following year. (VERIDIAN-original numeric example — the real, verified exchange-rate case on this paper uses Kenya, spec item 4.3.2.5, taught in this course's Global Expansion, Mergers and Uncertainty lesson; this is a deliberately different country so the two aren't confused.)
What happens to the GBP value of that same NGN revenue once it is repatriated to the UK parent company?
A UK bakery chain is assessing Country Y as a potential market. Country Y's disposable income is growing strongly and its overall bakery market is large — but three domestic chains already control most prime retail locations, switching between bakery brands costs shoppers nothing, and a national tariff makes imported bakery equipment noticeably more expensive to install.
Applying Porter's five forces to this specific market-entry assessment, which conclusion is best supported?
In a real Ease of Doing Business ranking used in genuine Pearson past-paper source material, Vietnam ranked 70th, while neighbouring Cambodia ranked 144th and Laos ranked 154th. The real mark scheme for this question also notes that supply-chain quality and workforce skill were flagged as weaknesses for Vietnam specifically in the source extract.
A footwear manufacturer is choosing between these three countries purely as a production location, and is told Vietnam's Ease of Doing Business ranking makes it the "easiest" of the three to do business in. Which of the following best applies the real mark scheme's own balancing logic to this decision? (VERIDIAN-original single best-answer question, built from the real 12-mark Assess-style balancing logic confirmed on this paper — not a reproduction of the real question's exact wording, and not itself worth 12 marks in this format.)
Two countries, P and Q, are both projected to deliver an 18% annual return on a new $5m factory investment over its first five years. Country P's government has not changed hands unconstitutionally in over 40 years and has no record of seizing a foreign-owned factory. Country Q has had three military coups in the last 12 years, and its government seized two foreign-owned factories without compensation during the most recent one. (VERIDIAN-original numeric example, illustrating "likely return on investment" as a location factor — not a reproduction of any real Pearson question.)
Applying "likely return on investment" as a LOCATION FACTOR (4.3.2.3.a) — not as a separate investment-appraisal calculation — which of the following best compares these two identical 18% projected returns?
Same question, every level
Discuss the extent to which launching an already-established product, unchanged, into a country a business has never sold into before can extend that product's life cycle. (VERIDIAN-original question, written to this paper's own confirmed 8-mark Discuss tariff and real spec point 4.3.2.1(d) — the real January 2024 series tests this exact 'extending the product life cycle' content point as its own Q1(c) 8-mark Discuss; this question is written to the same real, confirmed examiner-reported pattern above, not a reproduction of the real question's own wording, per this course's standing discipline against near-verbatim past-paper reproduction.)
8 marks available
Selling the product in a new country means more customers and more sales, so the business will make more money and grow.
The exact confirmed real trap this lesson's own trap-taxonomy names ('plc-extension-answered-as-generic-market-entry'): answering with the generic benefits of any new-market entry (more sales, more profit) rather than the specific product-life-cycle mechanism the question actually asks about — no reference to the product's own life-cycle stage or to why a new country specifically restarts it. Matches the confirmed 8-mark L1 (1-2) descriptor: isolated recall, weak or no relevant application, generic assertions.
Same question, every level
Assess the importance of Ease of Doing Business ranking when a footwear manufacturer chooses between Vietnam, Cambodia and Laos as a production location. (VERIDIAN-original question, written to this paper's own confirmed 12-mark Assess tariff and real spec point 4.3.2.3.a — the real October 2021 series tests this exact Ease-of-Doing-Business comparison as its own Q1(d) 12-mark Assess question; this question is written to the same real, confirmed mark-scheme pattern already cited in this lesson's worked-chain 3 stage 5 and MCQ 5, not a reproduction of the real question's own wording, per this course's standing discipline against near-verbatim past-paper reproduction. WBS14's real 12-mark Assess level table — L1 1-2, L2 3-4, L3 5-8, L4 9-12 — differs from both this paper's own 8-mark Discuss table above and the 10-mark Assess table this course uses elsewhere; confirmed verbatim against the real Jan 2023, Oct 2021 and Oct 2023 mark schemes.)
12 marks available
Vietnam has a better Ease of Doing Business ranking (70th) than Cambodia (144th) or Laos (154th), so a footwear manufacturer should build its factory in Vietnam.
Exactly the real trap this lesson's own MCQ 5 and conditional-judgement drill are built to catch: one favourable ranking treated as automatically decisive, with no supply-chain, workforce-skill, or resource-tie consideration at all. Isolated factual recall of the ranking with no attempt at assessment — the lowest band on this paper's real 12-mark Assess descriptor (1-2 marks).
Same question, every level
Evaluate the extent to which the factors that make a country an attractive MARKET for a business are also the factors that make it an attractive PRODUCTION LOCATION. (VERIDIAN-original question, written in the confirmed Evaluate/20-mark style for this paper — not a reproduction of any single real past-paper question, and not a head-to-head framing Pearson itself has asked; the real, verified political-stability case for Senegal, Jan 2023 Q1(d), and the real, verified Ease of Doing Business case for Vietnam, Oct 2021 Q1(d), are cited here only for topic and tariff pattern, never for wording.)
20 marks available
A country can be a good market if people there want to buy the product and have money to spend. A country can be a good production location if it is cheap to make things there. Some factors like infrastructure matter for both.
Both questions are recalled at a surface level and infrastructure is noted as shared, but the answer doesn't say WHY it's shared or explain any mechanism — three separate assertions placed next to each other, not yet an evaluation.
- Push = problem at home (saturation, competition) forcing a firm outward. Pull = opportunity abroad (sales, risk-spread, scale) drawing it in.
- Off-shoring = own production moved abroad. Outsourcing = paying an external firm instead.
- PLC extension = same product, untapped population — no new development cost.
- Market assessment = "where do I sell?" (income, EDB, infrastructure, stability, exchange rates, five forces).
- Location assessment = "where do I make?" (cost, skills, infrastructure, trade bloc, incentives, EDB, stability, resources, ROI).
- Same factor names, different question, different weight — a factory is sunk capital; a market entry usually isn't.
Not affiliated with or endorsed by Pearson Edexcel. Every quotation attributed to a mark scheme or examiner report above is drawn from documents fetched live from qualifications.pearson.com — this paper has no local archive. Confirmed against the original 5-series sample (Oct 2021, Jun 2022, Jan 2023, Oct 2023, Jan 2024): push/pull as a 20-mark essay topic, PLC extension, the Senegal political-stability case, the Vietnam/Cambodia/Laos Ease of Doing Business case, the return-on-investment trap, and the Porter's-five-forces-vs-Strategic-Matrix confusion. Porter's five forces application (4.3.2.2.b) was originally flagged as spec-certain-but-not-past-paper-confirmed in that sample; it is now separately confirmed via a single targeted primary-source fetch made after the original pass specifically to close that gap — a genuine standalone 20-mark Evaluate question, Section B Q2 of the October 2025 series (Publication Code WBS14_01_2510_MS), independently re-downloaded and re-verified for this update rather than trusted from any secondary transcription. That fetch covered only that one question, not the rest of the October 2025 paper, so nothing else from that series is asserted as confirmed here. NOT confirmed against a standalone question in either sample, though it follows directly from a general warning that IS confirmed and repeated across the original series sampled: the "market factor answered with location reasoning" trap named above is this lesson's own derivation from the mechanism, not a single quoted examiner-report instance — flagged as such at the point it's taught, not blended in with the confirmed material. The US/China-tariff push/pull case in the first worked chain is genuinely real and genuinely credited, but it is a top-scoring candidate's own outside-knowledge example reproduced inside the June 2022 examiner report, not Pearson's own official question stimulus — flagged as such where it's taught, for the same reason. UPDATE, four-persona council fix: this lesson previously had a genuine gap the council caught — its only worked level-exemplar sat at the single highest (20-mark Evaluate) tariff, with zero lower-tariff coverage, despite this file's own PLC-extension content already citing the real, confirmed January 2024 Q1(c) 8-mark Discuss. Closed by adding an 8-mark Discuss exemplar on PLC extension (spec 4.3.2.1d) immediately above the 20-mark one, correctly capped at Level 3 (Discuss has no L4 band at this tariff) — VERIDIAN-original in its exact wording, not a reproduction of the real question's own text. UPDATE, mark-scheme-bullet coverage audit (2026-09-13): the October 2025 Q2 pet-food mark scheme was re-downloaded and re-extracted directly for this pass rather than trusted from the prior addendum's own transcription; the pet-food worked chain previously modelled only two of the five forces (rivalry, threat of new entrants) against the real evidence, when the same mark scheme gives equally real, equally specific evidence for the other three (substitutes — the organic/natural niche; supplier power — low, from supplier count; buyer power — fragmented, from millions of global customers) on a question that asks for the whole model. Fixed by adding a new stage applying all three remaining forces, and by folding three further real, named trends the model's static-snapshot limitation misses (organic/natural demand, pet humanisation, raw pet food, plus incumbents' own ongoing product innovation) into the existing limitation stage alongside the $145.3bn figure already taught. UPDATE, second independent reconciliation pass (2026-09-14), reconciled against PRs #416-#422: the Jan 2023 Q1(d) Senegal citation (worked-chain 3 stage 4, and level-exemplar 2's L3-top band) was labelled throughout this file as "assessing Senegal as a MARKET on political-stability grounds" — factually wrong against the primary source, which is Assess the importance of political stability when choosing a PRODUCTION LOCATION (spec 4.3.2.3.a), entirely a production-location question with no market-assessment content to borrow from. Both citations corrected to the real spec categorisation, and both now name the real paired comparison the mark scheme itself draws (Senegal held up as stable against unstable neighbours Guinea and Mali, both named for coups and terrorist attacks) rather than citing only the Senegal half. A genuine coverage gap was also closed: this lesson's own spec scope carries three real 12-mark Assess anchors (Jan 2023 political stability, Oct 2021 Ease of Doing Business, Oct 2023 ROI) — its single most-tested tariff — yet had zero level-exemplar blocks at that tariff; a new one was added on the Vietnam/Cambodia/Laos Ease of Doing Business case (already correctly labelled production-location in this lesson), using the real, confirmed WBS14 12-mark Assess level boundaries (L1 1-2, L2 3-4, L3 5-8, L4 9-12). The political-stability mechanism block was also extended with two further real mark-scheme channels beyond sunk-capital risk — policy-consistency and lower corruption — that the block previously omitted. See WBS14-verified-facts.md's second-independent-pass log for the full accounting, including which findings from this same pass were dropped as already covered by PR #416.
A UK kitchenware brand's flagship saucepan range is in the decline stage of its product life cycle in the UK, with sales falling every year as the domestic market becomes saturated. The brand launches the SAME, unmodified saucepan range in Brazil, where it has never sold before.
Which of the following best explains why this counts as extending the product life cycle, rather than simply "entering a new market for more sales"?
- AIt works because Brazilian consumers have higher disposable income than UK consumers
The stimulus gives no information about relative disposable income, and even if it were higher, that alone wouldn't be the PLC-extension mechanism being tested — it's a demand-side market-assessment factor, not the reason this specific move restarts a product's life cycle.
- BIt works because the saucepan range will now be classified as a new product for regulatory purposes in Brazil
Product life cycle extension is a marketing and strategy concept, not a regulatory classification — nothing in the scenario supports this claim, and it isn't the actual mechanism being tested.
- CIt works because launching in a new market always resets a product's average price back to its introduction-stage price
There is no such rule connecting new-market entry to pricing being reset — this invents a mechanism the model doesn't claim, rather than explaining the genuine one.
- It works because Brazil's population hasn't yet adopted the range, so the SAME already-developed product can restart its adoption curve there without the firm re-incurring the original development cost
Correct. Decline happens because a market's addressable population becomes saturated; a genuinely new country's population is a separate, untapped pool, so the same product can restart the adoption curve there — the saved development cost is exactly what makes this a distinct PLC-extension strategy, not just "more sales."
Traps tested: Irrelevant factor · Wrong concept entirely · Invents a rule
A firm's home workforce produces 4 units per worker-hour at a $28 hourly wage. It is considering off-shoring production to a country where workers produce only 2.5 units per worker-hour, at a $6 hourly wage. By approximately what percentage does labour cost PER UNIT change if it off-shores?
- AFalls by about 78.6% — the wage itself falls from $28 to $6 per hour
This compares wage rates only ($28 vs $6) and ignores the fall in output per worker. Labour cost per unit is wage ÷ output per worker, not the wage rate alone — this overstates the real saving.
- Falls by about 65.7% — home cost per unit is $28 ÷ 4 = $7.00; foreign cost per unit is $6 ÷ 2.5 = $2.40, a fall from $7.00 to $2.40
Correct. Labour cost per unit is wage divided by output per worker. Home: $28 ÷ 4 = $7.00. Foreign: $6 ÷ 2.5 = $2.40. The fall from $7.00 to $2.40 is a 65.7% decrease — smaller than the headline wage gap alone would suggest, because foreign productivity is also lower.
- CRises by about 65.7%, because output per worker-hour falls from 4 to 2.5
This correctly notices productivity falls but gets the direction wrong — the much larger fall in the wage rate more than offsets the productivity fall, so cost per unit still falls overall, not rises.
- DCannot be determined without knowing the firm's total output
It can be determined directly from the wage-to-output ratio given — labour cost per unit doesn't require total volume, only the per-worker wage and the per-worker output.
Traps tested: Ignored productivity difference · Direction reversed · Overclaims uncertainty
A UK business's Nigerian subsidiary earns NGN 18,000,000 in local revenue each year. At an exchange rate of £1 = NGN 165, this converts to about £109,091. The naira then depreciates against sterling to £1 = NGN 198, and the subsidiary earns the same NGN 18,000,000 the following year. (VERIDIAN-original numeric example — the real, verified exchange-rate case on this paper uses Kenya, spec item 4.3.2.5, taught in this course's Global Expansion, Mergers and Uncertainty lesson; this is a deliberately different country so the two aren't confused.)
What happens to the GBP value of that same NGN revenue once it is repatriated to the UK parent company?
- Falls to about £90,909 — a fall of roughly £18,182, about 16.7% — because the same NGN revenue now converts to fewer pounds once the naira has weakened against sterling
Correct. NGN 18,000,000 ÷ 198 ≈ £90,909, versus £109,091 at the old rate — a fall of about £18,182, roughly 16.7%. The same local-currency revenue is worth less once translated back at a weaker exchange rate.
- BRises to about £130,909, because a weaker naira makes Nigerian exports more price-competitive
Export price-competitiveness is a real effect of currency depreciation, but it's a different effect from repatriation — this question asks what the SAME local-currency revenue converts to in GBP, which falls, not rises, when the local currency weakens.
- CStays at about £109,091, since the underlying NGN revenue figure hasn't changed
The NGN figure is unchanged, but its GBP value isn't — that's the entire point of an exchange-rate movement. Ignoring the currency translation step treats the local-currency number as if it were the GBP number.
- DCannot be assessed without knowing Nigeria's rate of inflation that year
The GBP value of a repatriated NGN amount is fully determined by the exchange rate conversion given — inflation might affect real purchasing power, but it isn't needed to answer what's actually being asked here.
Traps tested: Confuses export competitiveness with repatriation · Ignores currency translation · Overclaims uncertainty
A UK bakery chain is assessing Country Y as a potential market. Country Y's disposable income is growing strongly and its overall bakery market is large — but three domestic chains already control most prime retail locations, switching between bakery brands costs shoppers nothing, and a national tariff makes imported bakery equipment noticeably more expensive to install.
Applying Porter's five forces to this specific market-entry assessment, which conclusion is best supported?
- ACountry Y is clearly an attractive market, since income growth alone determines how attractive a market is
This ignores the five-forces picture entirely. Demand-side growth is one input to market attractiveness, not the only one — a market can be growing and still be structurally unattractive to a new entrant.
- BA five-forces analysis is irrelevant here, since Porter's five forces is only used for assessing a production location, not a market
This reverses the actual spec placement — Porter's five forces is spec-named under 4.3.2.2.b, assessing a country as a MARKET, not under the production-location factors.
- Country Y's demand-side numbers are attractive, but the five-forces picture is weak for a new entrant — high rivalry among established chains and low switching costs mean a new entrant would have to compete hard on price just to win share, which caps how much of that market size converts into actual profit
Correct. This weighs the demand-side attractiveness (4.3.2.2.a) against the competitive-structure attractiveness (4.3.2.2.b) separately, and correctly identifies that rivalry and low switching costs limit how much of the market's SIZE a new entrant would actually capture as profit.
- DThe equipment-import tariff is the only relevant force here, since it's the only cost mentioned in the stimulus
The equipment tariff is a real cost factor, but it isn't one of Porter's five COMPETITIVE forces (which are about rivals, buyers, suppliers, entrants and substitutes) — treating it as "the" force ignores the genuine five-forces evidence the stimulus actually gives.
Traps tested: Treats demand alone as decisive · Misplaces which spec point five forces belongs to · Misidentifies what counts as a five force
In a real Ease of Doing Business ranking used in genuine Pearson past-paper source material, Vietnam ranked 70th, while neighbouring Cambodia ranked 144th and Laos ranked 154th. The real mark scheme for this question also notes that supply-chain quality and workforce skill were flagged as weaknesses for Vietnam specifically in the source extract.
A footwear manufacturer is choosing between these three countries purely as a production location, and is told Vietnam's Ease of Doing Business ranking makes it the "easiest" of the three to do business in. Which of the following best applies the real mark scheme's own balancing logic to this decision? (VERIDIAN-original single best-answer question, built from the real 12-mark Assess-style balancing logic confirmed on this paper — not a reproduction of the real question's exact wording, and not itself worth 12 marks in this format.)
- AVietnam should be chosen outright — the lowest Ease of Doing Business rank number always identifies the single best production location
This treats one factor as automatically decisive, which is exactly the move the real mark scheme's own balancing evidence argues against — a favourable ranking is one input, not the whole answer.
- BEase of Doing Business ranking is irrelevant to a production-location decision, since it only measures how easy it is to register a company, not how efficiently a factory can run
This swings too far the other way — the real mark scheme treats the ranking as a genuine, relevant advantage; it just doesn't treat it as decisive on its own. Dismissing it entirely loses the credit available for using it as one input among several.
- CSince Cambodia and Laos rank lower than Vietnam on Ease of Doing Business, the manufacturer should assume all other location factors — labour skill, infrastructure — are equally more favourable for Vietnam too
This assumes the three factor lists move together, which the stimulus itself contradicts: Vietnam's OWN weaknesses on supply-chain quality and workforce skill are flagged specifically, despite its better ranking.
- Vietnam's favourable ranking is a genuine advantage, but a full assessment weighs it against supply-chain quality and workforce skill specifically — both flagged as weaknesses for Vietnam relative to what its ranking alone might suggest — rather than treating the ranking as decisive on its own
Correct, and this is the fully-balanced version: it credits the real advantage (the ranking), names the specific real counter-evidence (supply-chain quality, workforce skill), and reaches a weighed judgement rather than stopping at either extreme.
Traps tested: Treats one factor as decisive · Dismisses a real factor · False correlation across factors
Two countries, P and Q, are both projected to deliver an 18% annual return on a new $5m factory investment over its first five years. Country P's government has not changed hands unconstitutionally in over 40 years and has no record of seizing a foreign-owned factory. Country Q has had three military coups in the last 12 years, and its government seized two foreign-owned factories without compensation during the most recent one. (VERIDIAN-original numeric example, illustrating "likely return on investment" as a location factor — not a reproduction of any real Pearson question.)
Applying "likely return on investment" as a LOCATION FACTOR (4.3.2.3.a) — not as a separate investment-appraisal calculation — which of the following best compares these two identical 18% projected returns?
- ACountry Q should be preferred, since a government that has already shown it will act decisively through three coups is more likely to act decisively for investors too
This reads a history of unconstitutional government change as reassuring rather than as the risk it actually is — the same instability that produces coups is exactly what makes a projected return, and the capital behind it, less secure.
- BThe two projected returns are equally reliable, since both are stated as 18% and that percentage figure is what a location decision should be based on
This treats the headline percentage as self-certifying. "Likely return on investment" as a location factor asks how likely that stated figure actually is to be realised — a projection is only as good as the risk sitting underneath it, and the two countries' risk pictures here are not remotely equal.
- CThe two returns cannot be compared as location factors at all until each country's payback period and average rate of return have been calculated using investment-appraisal formulae
This is the exact conflation the real examiner report warns against: "likely return on investment" as a location factor and investment-appraisal calculation are different content points. Nothing here requires computing payback period or ARR — the comparison is about how CERTAIN an already-stated projection is, not about deriving one from scratch.
- Country P's projected 18% return is more likely to actually be realised than Country Q's identical headline figure, because Q's record of unconstitutional government change and uncompensated asset seizure puts the capital itself — not just the revenue stream — at meaningfully greater risk of being lost outright
Correct. Both countries state the same headline return, but "likely return on investment" as a location factor is precisely about weighing that certainty, not restating the figure or reaching for a separate appraisal calculation — and political risk to a large, sunk, physically-fixed capital investment is one of the specific things that certainty turns on.
Traps tested: Misreads political risk as a positive · Treats the headline figure as self certifying · Conflates location factor with appraisal calculation
Practice this for real
This site teaches the mechanism; the exam is sat on Pearson's own real questions. Go find and attempt these yourself — nothing here substitutes for actually sitting a timed paper.
- Examiner report
- June 2022 · Q3 — cited directly in this lesson
- Mark scheme
- October 2025 · Q2 — cited directly in this lesson
- Mark scheme
- October 2021 · Q1(d) — cited directly in this lesson
Select International Advanced Level → Business → any series, then look for WBS14.
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Global Expansion, Mergers and Uncertainty
Ten named reasons for a global merger, takeover or joint venture look like ten flashcards — they're really five strategic questions wearing different names, plus a genuinely different risk calculus for a joint venture specifically, and two forms of global uncertainty that can undo a well-reasoned expansion after the deal is already signed.
38 min