Question

With demand low in the home country, why might it make sense to relocate production to a developing nation?(400 WORDS)

Answer 1

When the demand in the home country is low, it is always advisable to relocate production to a developing nation. This is because the costs for establishing the unit would be low when compared to the developed nations. The competition would also be low as the country is still in developing state and hence the market would have plenty of opportunities to explore. Even innovations would be welcome in the market and consumers will be willing to try new products. In developing nations the cost of resources would be low and hence procurement of resources would not have heavy financial burden, Newcomers would be encouraged in a developing market when compared to an already developed market. So when we enter a developing nation , it would not be much problem fianancially when compared to what we are accustomed at our home country and also it would be easy for us to adapt to the new environment and sustain the competition in the market which might not be possible with established nations. Hence it makes sense to relocate production to a developing nation.