4.2.3 Assessment of a Country as a Production Location

• What does assessing a country as a production location involve?

  Evaluating suitability for operations
• Key considerations in production location assessment include labor costs and availability
• Infrastructure quality is a high priority factor in production location assessment.
• Why are government policies and regulations important in production location assessment?

  They affect operational costs
• Access to markets is a key factor in determining the suitability of a production location
• Match the factor with its description:

  Labour Costs ↔️ Cost of hiring workers

  Infrastructure ↔️ Quality of roads, ports, etc.

  Government Policies ↔️ Tax incentives, regulations

  Market Access ↔️ Proximity to target markets
• What is the primary impact of high labor costs on production location decisions?

  Reduces profitability
• The quality of roads and ports is part of a country's infrastructure.
• Government policies such as tax incentives and regulations can significantly impact the attractiveness of a production location
• Why is market access crucial for a production location?

  Proximity to target markets
• Order the economic factors that impact production location assessment from most to least direct impact:

  1️⃣ Exchange Rates

  2️⃣ Economic Stability

  3️⃣ Inflation Rates
• Higher inflation rates reduce profitability and raise operating costs
• Countries with stable GDP growth attract more business investments.
• What is the primary impact of socio-political factors on production location assessment?

  Operational stability and efficiency
• Political stability, exemplified by countries like Denmark and Switzerland, ensures predictable government policies
• Cultural norms in countries like Japan must be respected to operate successfully.
• What is the definition of production location assessment in global business expansion?

  Evaluating factors for suitability
• One key factor in production location assessment is labour costs and availability
• Infrastructure quality is a critical factor in production location assessment.
• What is the primary purpose of assessing a country as a production location?

  Determine its suitability
• A company considering expanding into Asia may assess countries like China, Vietnam, or Indonesia
• What is one economic factor that can reduce profitability when assessing a production location?

  Inflation rates
• Overall health and consistency of a country's economy is referred to as economic stability
• What is one socio-political factor that ensures predictable government policies in a production location?

  Political stability
• Stringent labour laws in a country can affect production location decisions.
• Match the socio-political factor with its description:

  Political Stability ↔️ Predictable government policies

  Labour Laws ↔️ Regulations on worker rights

  Cultural Norms ↔️ Local traditions affecting business
• How does modern technology and digital connectivity enhance production efficiency in a country?

  Technological infrastructure
• The quality of roads, ports, and logistics is crucial for facilitating the movement of goods and supplies
• Technological and infrastructural factors complement economic and socio-political considerations in production location assessment.
• Which country is cited as an example of a production location with advanced digital connectivity and robust transportation networks?

  Singapore
• The availability of modern technology and digital connectivity enhances efficiency and productivity
• Transportation networks facilitate the movement of goods and supplies.
• Why is a country with advanced digital connectivity and transportation networks more attractive for production?

  Efficient and reliable operations
• High labor costs can reduce profitability
• Insufficient labor availability can hinder production capacity.
• What does higher labor productivity increase?

  Overall production efficiency
• Match the labor market factor with its description:

  Labor Costs ↔️ Cost of hiring workers

  Labor Availability ↔️ Availability of skilled workers

  Labor Productivity ↔️ Output per worker
• Vietnam is cited as an example of a country with competitive labor costs and improving labor productivity
• What can businesses achieve by evaluating labor market conditions in different locations?

  Informed production decisions
• Steps in assessing a country as a production location:

  1️⃣ Evaluate labor costs and availability

  2️⃣ Assess infrastructure quality

  3️⃣ Analyze government policies and regulations

  4️⃣ Determine access to markets