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Assess the likely effects of protectionism on Northfield Cycles. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Question 2
Assess the likely effects of protectionism on Northfield Cycles.
Worked Solution & Example Answer:Assess the likely effects of protectionism on Northfield Cycles. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Step 1
Knowledge of Effects of Protectionism
Answer
Protectionism, through measures like tariffs and trade barriers, can have several effects on businesses. For Northfield Cycles, these may include increased demand for local products as imports become more expensive, thereby boosting local sales. Additionally, increased land prices due to local demand and potential technology transfer effects could arise.
Step 2
Application: Benefits to Local Businesses
Answer
Protectionism can benefit Indonesian textile and rubber businesses, thereby creating a more favorable market for Northfield Cycles. The reduced competition from foreign brands can lead to increased sales opportunities for NC's products. Furthermore, as prices of imported bicycles rise, consumers may turn to NC for better deals, reinforcing their market position.
Step 3
Analysis: Long-Term Implications
Answer
Long-term effects may yield increased profits for Indonesian retailers and suppliers, including Northfield Cycles. However, while initial advantages are clear, sustaining these benefits may require NC to improve product features or customer service to maintain competitiveness, as relying solely on protectionist policies could be detrimental in the long run.