BDO International Business Compass

International Location Index for the Medium-Sized Companies

Sub-Index Sales Market

A number of factors are crucial to a country's appeal as a potential market for a company's goods and services. For instance, a continuing increase of the price level leads to reduced purchasing power, an expectation of further losses and lower confidence in the local currency. A low inflation rate in a particular country is a sign of a stable price level and fewer fluctuations of consumer behaviour in the sales market are to be expected. Population size is an important indicator of the size of the sales market, because more inhabitants in a country mean more potential customers. Hence, countries with a particularly high population are of potential interest, but the demand also depends on the disposable income. For that reason, this sub-index also takes the per capital consumer spending into account. Higher per capita consumer spending indicates a higher purchasing power of private households. The political stability of a particular country also has a significant effect on the attractiveness of a potential sales market. A coup, a revolution or a civil war are likely to alter the situation in a country long-term. In otherwise similar conditions, a country with a stable political climate will therefore be more appealing against this background. The quality of trade and transport related infrastructure significantly affects the duration of freight movements in exports and imports. A good, high-quality infrastructure makes the transport of goods easier, thus lowering transport costs. Possible trade restrictions also affect the cost structure and hence the attractiveness of a particular country as a potential sales market. The easier it is to trade goods and services, the greater is the attraction of a country as a potential new sales market.