Question

Unicola has now decided that it wants to build a $500,000,000 manufacturing facility to produce the packaging for a series of new soft drink and snack food lines. The company is doing this in order to save costs and maximize efficiencies in its quest for a better market presence in the Asia region. They are interested in potentially locating, building, and operating a single manufacturing facility in one of these foreign markets: Bangladesh, Hong Kong, India, Indonesia, Malaysia, Pakistan, Singapore, South Korea, Sri Lanka, Thailand, and Vietnam.

When answering the questions take into consideration the following

1. Per capita income: labor costs.

2. Water source: consider how water intensive this form of manufacturing would be.

3. Inflation rate: costs of doing business (positive = costs increasing, negative = costs decreasing).

4. Land: a proxy for real estate availability and prices.

5. Stability of financials: reliability of formal institutions and assessment of risk.

6. Tax rate: how does this impact Unicola's profit margins.

7. Forest area: Another proxy for land availability and potential materials (?).

8. Energy imports: energy costs (consider how energy intensive the plant will be) (negative = energy exporter, lower prices?; positive = energy importer, higher prices?).

Unicola has contacted your international business strategy consulting firm to analyze these markets and give expert advice on which two (2) foreign marketswould provide Unicola with the best environment to locate and operate a manufacturing facility. Thus:

1. Whichtwo (2) foreign marketswould be the most conducive economic environment for Unicola to establish a manufacturing facility to produce packaging for their new soft drinks and snacks. Your team must decide which variables of interest are important, or not important, for this particular consulting project.

2. Discuss each of the two (2) foreign markets separately and explain which variables your team considered relevant in its analysis for choosing the foreign markets that would best fit Unicola’s strategic plan.  

Answer 1

Foreign markets that would provide Unicola with best economic environment :-

Countries	Labour cost	Water source	Business costs	Land(Price to income ratio )	Risk assessment	Tax rate	Forest area
Bangladesh	4040	Groundwater	5.56	12.33	Risk management guidelines	20	125th
Hong Kong	64100	Reservoirs	2.30	49.42	ML/TF risk assessment report	16.5	129th
India	7060	Lakes	2.92	11.28	CRISIL /ICRA	30	10th
Indonesia	11900	Springs, Lakes , Groundwater	3.32	13.81	KPMG	25	9th
Malaysia	28650	River basins	0.20	9.36	Financial stability and payment system reporting	24	34th
Pakistan	5830	rivers , ground water	9.41	14.06	KPMG	31	79th
Singapore	90570	Imports water through Malaysia	0.80	22.11	MAS /TRM	17	188th
South Korea	38260	Scarce freshwater sources	0.70	17.58	KPMG	25	73rd
Sri Lanka	12470	Internal renewable ground water resources	5.00	26.32	Public Financial Management System	28	113th
Thailand	17090	Rain water harvesting	1.1	21.94	COFACE / SGS	20	42th
Vietnam	6450	Rivers and aquafiers	3.00	22.63	COFACE / SGS	20	45th

The above table shows a tabular comparison between all the countries .

After comparison , the two best countries taking in account their inflation rates , water availability and tax rates , we find that :-

India and Vietnam are the best countries to invest , which will allow the company to keep its costs low due to cheap labour and availability of resources and profits higher due to low tax rates .