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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 can affect businesses, such as Northfield Cycles, in various ways. It may lead to increased demand for domestic products as consumers are directed to buy locally due to tariffs on imports. Additionally, it can raise prices of imported goods, giving local businesses a competitive edge.
Step 2
Application: Benefits for Northfield Cycles
Answer
- Indonesian retailers will see an increase in demand for locally produced bicycles and accessories, boosting sales for Northfield Cycles.
- Lower costs may emerge for Indonesian retailers who no longer rely heavily on foreign imports due to protectionist policies.
- There may be increased land prices as the demand for local businesses rises, benefiting Northfield Cycles if they continue to sell locally.
Step 3
Analysis: Long-term Implications
Answer
While Northfield Cycles may initially benefit from increased sales and reduced competition from imports, they will ultimately have to manage higher land costs and competition from other local brands. This situation may encourage technology transfer and innovation, potentially leading to better products and services for consumers.