Cambridge A‑Level Business (9609) requires candidates to explain how eight external‑environment factors shape the way firms operate in international markets. The table below summarises each factor, its typical impact on trade and a concrete example. Detailed notes on the technological influence follow, as this sub‑section is most heavily examined in the syllabus.
| External Influence | Typical Impact on International Trade | Illustrative Example |
|---|---|---|
| Political‑Legal | Regulates market entry (tariffs, quotas, licences), protects intellectual property, and shapes operating costs through employment, health‑and‑safety and competition law. | UK rail privatisation created franchise opportunities for foreign investors; EU competition rules blocked a proposed merger between two telecom giants. |
| Economic | Macro‑policy (monetary, fiscal, supply‑side), exchange‑rate movements, inflation, unemployment and growth affect demand, pricing, financing and profitability. | US Federal Reserve rate hikes raised borrowing costs for a German car exporter, reducing its order book in North America. |
| Socio‑Demographic | Population size, age structure, cultural values and CSR expectations shape market potential, product adaptation and brand positioning. | The “youth bulge” in Nigeria drives demand for low‑cost smartphones; Japanese firms adapt packaging to suit an ageing consumer base. |
| Technological (focus of this note) | Reduces transaction and transport costs, speeds communication, enables new business models (e‑commerce, digital finance) and underpins global value chains. | Containerisation cut shipping costs per TEU by ~30 % since the 1970s. |
| Competitors‑Suppliers | Global supply‑chain integration and rivalry affect pricing power, bargaining strength and the need for differentiation. | Apple’s multi‑sourced component strategy reduces the risk of disruption from any single supplier. |
| International (macro‑environment) | Trade agreements, geopolitical tensions and global economic cycles influence market access, risk and strategic timing. | RCEP lowers tariffs for member countries, encouraging Asian‑Pacific firms to expand regionally. |
| Environmental | Emissions regulations, resource scarcity and consumer “green” preferences shape production, logistics and brand image. | Carbon‑tracking software helps a logistics firm meet EU Green Deal reporting requirements. |
Technology is the engine of modern globalisation. It simultaneously lowers the cost of moving goods, services, information and capital, and shortens the time required to do so. Consequently, firms can serve distant markets as efficiently as domestic ones.
| Technology | Typical Cost / Time Reduction | Source / Period |
|---|---|---|
| Containerisation (1970‑2020) | ≈ 30 % lower shipping cost per TEU; 40 % faster loading/unloading | UNCTAD, “Review of Maritime Transport” 2021 |
| Video‑conferencing vs. face‑to‑face | Travel cost savings of 70‑90 % per meeting; decision‑making time cut by ~50 % | McKinsey, “Digital Collaboration” 2020 |
| 3‑D printing for spare parts | Inventory holding costs reduced by up to 80 %; lead time from weeks to hours | World Economic Forum, “Additive Manufacturing” 2022 |
| FinTech (blockchain settlement) | Cross‑border payment processing time reduced from 3‑5 days to <24 hours; transaction fees cut by 40‑60 % | Bank for International Settlements, “Payments 2023” |
| Technology | Primary Impact on Trade | Real‑World Example |
|---|---|---|
| Internet & Communication | Reduces information costs; enables virtual negotiations and remote management. | Video‑conference with a supplier in Vietnam to approve a new product design. |
| Containerisation | Standardises cargo handling; cuts shipping time and per‑unit freight cost. | 40‑ft containers moving electronics from Shenzhen to London. |
| 3‑D Printing | On‑demand production close to the end‑user; reduces inventory. | Spare‑part hubs in the EU printing automotive components for local dealers. |
| E‑commerce platforms | Provides direct access to foreign consumers; bypasses traditional distributors. | Hand‑crafted jewellery sold on Etsy to customers in the United States. |
| FinTech (Blockchain) | Speeds up cross‑border payments; automates settlement via smart contracts. | Smart‑contract‑based import‑export settlement between a German car‑parts maker and a Mexican assembler. |
| Green‑logistics software | Tracks carbon emissions, optimises route planning to lower fuel use. | Electric‑truck fleet managed through a cloud‑based emissions dashboard in the Netherlands. |
How technology enabled expansion
Challenges faced by TechWear
| Syllabus Sub‑section | Exam‑style Prompt |
|---|---|
| Political‑Legal | Evaluate how changes in trade‑related legislation (e.g., tariffs, sanctions, privatisation of state‑owned utilities) can affect a UK exporter of automotive parts. |
| Economic | Discuss the impact of monetary‑policy‑induced exchange‑rate volatility on the pricing strategy of a multinational retailer. |
| Socio‑Demographic | Analyse how an ageing population in a target market influences product development for a health‑care firm, and consider CSR pressures. |
| Technological (focus) | Explain how advances in communication technology have changed the way firms conduct international trade. – OR – Evaluate the role of FinTech in reducing currency risk for firms trading abroad. |
| Competitors‑Suppliers | Assess the advantages and disadvantages of relying on a single overseas supplier in a global value chain. |
| International (macro‑environment) | Discuss the effect of a regional trade agreement (e.g., RCEP) on the market‑entry decisions of a European electronics firm. |
| Environmental | Evaluate how green‑logistics technology can help a multinational shipping company meet environmental regulations while remaining competitive. |
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