Sample Business Paper on Factors to Consider in Relocation of a company

The main objective of any business company is to produce maximum profits at a minimal operational cost. Whenever a company starts making losses, shareholders withdraw their shares because they don’t perceive its continuity and long term survival in the market. In reference to the case study above, it is advisable to relocate the company from America to a favourable country before it completely collapses. Given that the companies competitors have already relocated to other countries and its profit margins are still declining, it is enough evidence that the conditions are not favourable and product is not performing well in the market.

The conditions in Mexico and Philippine can only favour a company whose aim is to exploit workers. People are willing to take up the jobs at lower wages despite the high cost of living. This will make the company to practice social dumping whereby disadvantaged workers are paid relatively low wages as compared to their output but they can’t resist. In the long run, the company may end up lugging behind in terms of technological advances in its area of specializations (Hepple. B, 2005). The constant labour turnover in Mexico and strikes by the locals put the continuity of the company operations in jeopardy.

While choosing a location for a firm, there are key factors to consider which include favourable government policies and environmental factors (Ellram, L. M et al, 2013). For that reason, South Africa becomes the best destination for the firm. The labour wage is favourable at $10 per a day as compared to $15/hr demanded in the USA. The presence of a labour union that works hand in hand with the government means the firm can solve its issues with workers legally.

 

 

References

Ellram, L. M., Tate, W. L., & Petersen, K. J. (2013). Offshoring and reshoring: an update on the manufacturing location decision. Journal of Supply Chain Management49(2), 14-22.

Hepple, B. (2005). Labour laws and global trade. Bloomsbury Publishing.