Wednesday, August 7, 2019
Answer Case Study Question Assignment Example | Topics and Well Written Essays - 500 words
Answer Case Study Question - Assignment Example It would also be appropriate for the firm to reserve enough funds for speculative purposes so as to grab any investment opportunities that may come up the countries where they start up their new branches. Funds to cover any calamities that may arise are also vital for the firm. The company should put into consideration the cost of labour in the countries where they plan to start branches. There are countries where the trade unions and government policies place very high minimum wages for labourers making the cost of labour high. There are also countries where the governments provide some amount of money for the unemployed. In such countries, people tend to only accept jobs that pay beyond certain amounts. These issues make cost of labour relatively high and the company should not invest in such countries. Availability of raw materials required by the firm for its production process is also an important factor. In countries where the raw materials are readily available, production will be much cheaper compared to countries where the raw materials have to be outsourced from elsewhere. In outsourcing raw materials, transportation costs and custom duty are incurred thereby increasing the cost of production. Where the resources are relatively scarce, the forces of demand and supply tend to raise their prices increasing the cost of production. The firm should also consider the economic status of the countries where they plan to start new branches. Countries facing recessions have low per capita income translating to lower purchasing power of its citizens. This may bring about low demand for goods and services leading to the company making losses due to poor sales of its products. In counties with stable economies, the chances of making profits are much higher hence more attractive for firms planning to go global. The company should also consider the level of technology in the various countries.