Question

international business

When evaluating which foreign markets to serve, a company must consider certain variables that influence the location-specific costs and benefits of serving those markets. Identify several of the most important variables to consider and the implications of each on potential profitability.

Answer 1

For setting up the international grounds to make your business diverse, many important variables are studied under the location factor which makes the organisation decide whether the particular location is suitable or not. The most important variables under the same heading are:

1. Facilities: The first factor talks about the facility. If the location you are selecting is feasible or not, it has the appropriate availability of the resources or not, the technological as well as the economic factors are considered that makes a location favourable for an organisation.

2. Logistics: The next factor is the logistics factor. The location that you are selecting, what would be the transportational cost, the logstics cost and how much the plant and deliveriables of the raw materials and finished goods would cost is also taken into consideration.

3. Labour: Third factor talks about labour. For example, many organisations select India to outsource the work as the labour there is cheap and skilled as well. Thus the costs associated with the labour are also taken into considerations.

4. Government Taxes: Fourth factor talks about the taxes and the government regulations. Different countries have different tax approaches, some have higher tax rate, some have low. Tax and government interventional cost are also taken into scope for selecting the location.

5. TradeZones: At last, the last important factor taken into consideration is the Tradezone factor. In many locations and in many countries trading and import as well as export tax are minimal or not. Thus, many organisations try to find these tax free heaven to conduct their business.