4.2.3 Assessment Of A Country As A Production Location Flashcards
What factors need to be considered when assessing a country as a production location? (9)
1. Costs of production
2. Skills and availability of the labour force
3. Infrastructure
4. Trading blocs
5. Ease of doing business
6. Government incentives
7. Political stability
8. Natural resources
9. Likely return on investment
How does costs of production influence the assessment of a country as a production location?
Businesses can often pay foreign workers much lower wages which keeps labour costs low.
The cost of land and office space is usually cheaper overseas.
How can skills and availability of the labour force influence the assessment of a country as a production location?
Some businesses need skilled labour so they might relocate to a country with the right skills. Businesses may also looks for countries with high unemployment rates to increase the size of their labour force.
How can infrastructure influence the assessment of a country as a production location?
A business needs to see if a country’s infrastructure is suited to their needs. May consider:
- transport links
- availability of utilities such as waste disposable and energy supplies
- effectiveness of security and law enforcement (may not want to invest in a country with high crime)
How can trading blocs influence the assessment of a country as a production location?
A business may relocate production to within a trading bloc to reduce tariff payments on imports/exports.
How can ease of doing business influence the assessment of a country as a production location?
Sticking to a country’s environmental protection laws could be expensive and difficult.
Businesses may consider moving production to countries that are close to the markets they want to sell in to decrease distribution costs.
How can government incentives influence the assessment of a country as a production location?
Business may want to locate production in counties with government incentives such as:
- availability of specialist advice about local regulations and laws
- lower tax rates
- lower interest rates for loans
- grants for training staff
How can political stability influence the assessment of a country as a production location?
Businesses may avoid locating in politically unstable countries as there’s a risk of the government seizing its assets.
How can natural resources influence the assessment of a country as a production location?
Businesses may locate production to a country with the raw materials they need because it reduces delays and cost of transport.
How does likely return on investment influence the assessment of a country as a production location?
Relocating production is expensive so a business will need to know if these expenses will be returned as profit.
