What might the difference between economically developing an

What might the difference between economically developing and developed nations mean to an international company considering entry into a foreign market

Solution

The company has to price the products considering purchasing power of customers in the country. If it is developed country its per unit pce can be higher than in case of developing country. This is because purchasing power of people in developed countries is much more than in developing countries. Thus being poor people of developing countries can\'t pay higher prices and company may fail to make any impact if price is higher

The standards regarding pollution, labour laws, emissions (E. G cars in europe follow stringent emission standards than in india) are not stringent in developing countries than in developed countries. Thus country can make entry in developing countries without much regulatory conditions and can sell previous models in developing countries at a profit. This is particularly true in case of reaping economies of scale on goods where manufacturing was done earlier on large scale. The company can simply transfer it\'s old machinery to developing countries to produce output their. In case of developed countries since the regulations are tight and competition is greater such things can not be utilised