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ASSESSMENT OF A COUNTRY AS A PRODUCTION LOCATION - Coggle Diagram
ASSESSMENT OF A COUNTRY AS A PRODUCTION LOCATION
COST OF PRODUCTION
Offshoring- low cost production to reduce labour costs, not corncerned about lcoal market
Trade off- cheap labour and tech skills, unskilled labour may be adequate so cheap pay is key factor
SKILLS AND AVAILABILTY OF WORKFORCE
wage costs- low costs can keep it competitive eg. China growth is from low wages but re demanding raise
costs of training
developing countries tend to be less regulated
availabily, cost and qualities can influence
skills and education- may need to have an education or some skills to be able to work
INFRASTRUCTURE
trade requires transport, to bring inputs and deliver finished products
weak or unreliable slows transport down, raising costs
may affect communication- uncertain and difficukt
harder to maintain supply chains and production techniqies like JIT
less likely for firms to set up where infrastructure is lacking
GOV INCENTIES
gov may go out way to attract FDI
may reduce tax rates, to attract it eg. Luxemburg, Ireland
Tax inversion
China - Special exconomic zones, foreign businesses didn't hve to pay tax and no trade barriers
Location of trade bloc
common for businesses to locate within a bloc access a huge market with no barriers eg. NAFTA, EU
EASE OF DOING BUSINESS
offshoring- need to be able to get products to market in good time at a reasonable cost
outsourcing- buying from suppliers than setting up own business, ease matters less
bsuiness wnat to locate where intellectual property rights are respected, can rely on legal system
POLITICAL STABILITY
ideally a place where law is reliable, reduce risk
legal stystem helps enforce contracts and payments
NATURAL RESOURCES
bsuinesses may locate to exploit resoruces eg shell Nigeria
export products where there is a demand for them
emerging economies has increased demand for raw materials and commodities
China leading player in seeking raw materials
RETURN ON INVESTMENT
choose location which is profotable in long run
forecasting this may be difficult
emerging economies may be promising but have potential risks