Assessing a country as a production location

• Factors to consider before setting up production locations in other countries

  businesses may choose to set up production facilities in other countries

  this a different process from choosing a country as a potential market for customers

  production includes both manufacturing and any services associated with the business
• Factors to assess

  when setting up production facilities in another country, several factors need to be assessed to ensure a successful outcome
• Factors - cost of production

  businesses want to keep costs of production low as this can help them increase their profit margin or allow them to sell at a lower price to gain a competitive advantage
• Factors - skills and availability of workforce

  quality of workforce important as it will impact the quality of goods and services

  consider literacy rates and whether they have the right skills

  businesses may choose to locate production in a market where the labour costs are lower
• Factors - infrastructure

  businesses need to consider the infrastructure needed such as roads as this will affect the production process
• Factors - location in a trade bloc

  allows easier access to markets within those countries - reduced protectionist methods

  can reach lots of countries with specialised products with these reduced trade barriers
• Factors - Return on investments

  assessing the return on investment in different markets will reduce the risk of the initial investment not being paid for
• Factors - natural resources

  it is often important that a business has easy access to their raw materials as this can help to reduce transportation costs and help to reduce any potential delays to the production process
• Factors - political stability

  businesses may be at risk of not gaining a return on their investment in a country with political instability

  a country with instability will be subject to corruption, lack of law enforcement and higher levels of crime - more likely to have disruption to production

  an economy with stable economy and gov is seen as a less risky investment for a business
• Factors - ease of doing business

  a business will want to locate in an area where there is limited bureaucracy so the process of establishing production facilities is not delayed or does not incur high costs
• Factors - government incentives

  businesses may be offered incentives by the government e.g grants, business loans and tax breaks