Sundeep answered on
Mar 15 2020
We are considering the opportunity of starting a mobile phone manufacturing factory in a country. Hence keeping the factors in mind
Conclusion 1: Considering the population / Area for a case where we need huge labour force for the manufacturing of the machine parts which would be used to manufacture the mobile phones. Therefore for country 1: Population / Area is 24 people per sq. Kilometre and for country 2 Population / Area is 290 people per sq. kilometre which means that country 2 is better in this case for production. As more labour force will reduce the cost of production by the introduction of economies of scale. Also the u
an population is less which means that the cost of labour will reduce further and for the rural population, training would be provided which will make the labour skilled. The main exports include electronics which mean that some percentage of the population is already skilled in the manufacturing of the electronic parts which makes the job easier for us since training costs would be reduced (International Business, 2012)
Conclusion 2: Considering the GDP and Labour force by population to understand the distribution network for the country and the u
an to rural area ratio. The country 1 has a population of 207.35 million and the population is divided in the ratio of 10% agriculture, 39.8% industry, 50.2% services. i.e. majority of the population works in the service and industrial sectors which indicates the economy is either developing quickly or is developed while in country 2, the population is 96.16 million and they are divided into 48% agriculture, 21% industry, 31% services which indicates that either the country is underdeveloped or developing. The developed economy market may be saturated and the developing economy may provide various opportunities. Also in a developed economy the rules of business conduct and safety are very strict which are not as stringent in the developing economies. Hence country 2 can be prefe
ed. Also adult literacy is at 94.5% which proves beneficial in service and industrial sector (Principles of Macroeconomics, 2014)
Conclusion 3: Considering the main imports, main exports and the inflation in the economy. The main imports of country 1 include Machinery, electrical & transport equipment, chemical products, oil, automotive parts, main exports are Transport equipment, iron ore, soybeans, footwear, coffee and the inflation rate is at 3.7% while in country 2 the main imports are: Machinery & equipment, petroleum products, steel products, raw materials for manufacturing industries, automobiles, main exports are Clothes, shoes, electronics, seafood, rice, wooden products, crude oil and the inflation rate is at 4.4%. Country 2 has an upper hand here since the country is exporting electronics and also importing heavy machinery parts which are used for manufacturing in the mobile phones. The country 1 has no machinery parts neither in import nor in export and hence we cannot say if the country is marching towards further development. We understand the inflation rate is high in country 2 but it will reduce due to further developments and hence we can foresee the future to be sustainable(International Business, 2012)
Timeline graph of the % Change in GDP for these two countries for the years 2013 to 2023.
Companies now have a great pressure to be sustainable and profitable in the near future due to global competition and saturations. This pressure has forced the companies to find out creative ways to improve the adaptability and sustainability in managing business firms (managing the joint venture success, 1986). Joint ventures are a ray of hope for these firms. By combining the strengths of 2 or 3 companies, perhaps a new competency can be developed which could have been impossible considering the environment. Also this cooperation could improve cooperation and boost productivity. The pooling of the complementary strengths in a separate new venture is the key. A wholly owned subsidiary is a company fully owned by the parent company. Some risks of wholly owned subsidiary are: Risk of multiple taxations, lack of business focus, conflicting interests between subsidiary and the parent company. Benefits include that the technology stays within the company and it is the Point of differentiation. Joint ventures has their own set of benefits and risks. The benefits of joint ventures are that the core competencies of both the organisations can be utilized to provide the best insights. Also the distribution network of the national company can be utilised to the maximum to spread the product among the target audience. Also joint ventures provide the local know how which helps the venture to grow. The risks associated with joint ventures are that the national company may understand the other company’s technology and may use it for its own betterment (Strategies for joint venture success, 2012)
Killing, P. (2012). Strategies for joint venture success (RLE international business) (Vol. 22).
Ariño, A. (2003). Measures of strategic alliance performance: An analysis of construct validity. Journal of international Business studies, 34(1), 66-79.
Griffin, R. W., & Pustay, M. W. (2012). International business. Pearson Higher Ed.
Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.
Killing, P. (2012). Strategies for joint venture success (RLE international business) (Vol. 22). Routledge.
%change in GDP per annual For China and United Kingdom
CHINA 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 7.8 7.3 6.9 6.7 6.9 6.4 6.3 6.2 5.4 5.2 4.9000000000000004 UNITED KINGDOM 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2.052 3.0539999999999998 2.3460000000000001 1.9359999999999999 1.8029999999999999 1.5 1.4 1.6 1.8 1.9 2