A the lower market entry, in places such

A business must be aware of the type of economy different
countries have, such as free and command economies. In free market economies
where governments encourage stabilisation and privatisation, there is greater competition
between global businesses (Lipton et al,
1990). Although there may be less legal factors that a business may have to
adhere to due to the lower market entry, in places such as the United States the
competition is extremely fierce for some goods due to more global competitors
and the ease of trading in the US. Supply and demand greatly influence the cost
of goods in free markets, and this may make it hard for businesses to start up,
for example not being able to keep up with demand or be able to have low enough
prices when demand is low. This causes bigger brands to dominate the market.
For example, Tesco is the biggest retailer by sales in the UK (Winterman, 2013), and largely dominates
the supermarket industry. Due to Tesco’s large market share customer loyalty
where at its peak, one in every seven pounds is spent at Tesco (Winterman, 2013), it would be difficult for
a competitor to take over Tesco. However, although Tesco dominates the UK
supermarket industry and has over 60% of its operating space outside the UK (Lowe and Wrigley, 2010), it may not be
able to dominate everywhere. A clear example of this is the US. Tesco had tried
to expand into the US in 2007 however with little success; it closed its stores
in 2013. This may have been due to the free market competition such as from
Wal-Mart and local markets, and with Tesco not adapting to the market and the
American consumers, it failed to gain sales. Businesses have to have a clear
competitive advantage in order to survive, in particular in free trade markets,
such as lower prices or added value to make their goods stand out from
competitors and encourage repeat purchases and customer loyalty.  On the other hand, command economies make it
more difficult for certain businesses to trade due to the government deciding
how much of a product should be produced and at what price. Due to the
government controlling all business activities, there is no competition and
businesses cannot go out of business and so there is little dynamism and
innovation, with the economy tending to stagnate (Hill,
2012). However, command economies are usually a feature of a communist
society, and with further development and growth, there are only five communist
countries in the world. Therefore, businesses have to be aware of the type of
economy and the amount of competition in each market in order to not make a
costly mistake.


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