Assessment of a Country as a Production Location

• list the factors a business should consider when assessing a country as a production location

  • costs of production
  • location in a trading bloc
  • return on investments
  • political stability
  • ease of doing business
  • government incentives
  • natural resources
  • infrastructure
  • skills and availablility of labour force
• why should a business consider costs of production?

  should aim to keep low to increase profit margins, or be able to set lower prices to gain a competitive advantage
• what does being located in a trading bloc allow for a business?

  able to access many advantages such as reduced protectionist measures
• what should a business use to measure return on investments?

  investment appraisal techniques
• why is a country with political instability a risk for a business?

  risk not gaining a return on investment as subject to corruption, lack of law enforcements and higher levels of crime, likely to disrupt production
• explain ease of doing business as a factors affecting production location

  should have limited bureacracy so the process of establishing production facilities is not delayed or does not incur high costs
• what government incentives are appealing to a business?

  • grants
  • business loans
  • tax break
• what does it mean by natural resources as a factor affecting production location?

  • should be easy to access raw materials, reduce transportation costs, reduce any potential delays
• why does infrastructure affect production location?

  may affect the transportation of raw materials or the production process
• how does skills and availability of labour force affect production location?

  • impacts the quality of goods produced
  • a business should consider literacy rates
  • a business should aim to keep labour costs low