There are various factors to consider before setting up a manufacturing plant in a particular location. These include; taxation laws, labor laws, costs of production, transport and communications infrastructure, presence of supporting industries, and external market opportunities for finished products. The three most important criteria that need to be considered before setting up a manufacturing plant are; taxation laws, labor laws, and market opportunities for finished products. I picked these three criteria because they have a large impact on a firm’s overall performance. Some countries have strict tax and labor laws that discourage foreign investors. A firm should invest in a location that has effective marketing channels to ensure customers access its products easily (Misra, 2009, p. 67).
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Germany is a better manufacturing location compared to the US and Britain because its laws do not bar foreign investors from repatriating profits. It is also easy to set up a new company in Germany than in Britain because there are fewer bureaucratic processes an entrepreneur is required to satisfy before setting up operations. The country has strong intellectual property laws that allow foreign investors to have innovative operations (Hisrich, 2010, p. 97). Many German manufacturing zones are connected to other European countries through reliable transport networks. Germany has a skilled labor force, which is an advantage to a foreign firm that seeks to establish operations in the country.
Another country that offers more manufacturing benefits needs to be chosen to improve the firm’s prospects in the market. This will allow the firm to reduce costs incurred in production to make its operations in the market more profitable. The firm needs to carry out a cost-benefit analysis of the new location chosen to determine how manufacturing conditions that exist there are better than those in Germany.
Choosing another country will allow the firm to market its products to different consumers, and this will improve its profile globally. The firm needs to focus on countries that have favorable labor laws where labor unions do not wield a lot of power. If I was preparing this plan five years ago, I would still choose Germany as my favorite manufacturing location. The country offers a lot of benefits to foreign investors, and this makes it an attractive investment destination. The country’s transport sector is well connected to other markets in Europe, and this allows the firm to distribute its products quickly (Gaspar, 2011, p. 124).
Gaspar, J. (2011). Introduction to global business: Understanding the international environment. Mason, OH: Cengage Learning.
Hisrich, R.D. (2010). International entrepreneurship: Starting, developing, and managing a global venture. London, UK: Sage Publications.
Misra, S. (2009). International business: Text and cases. New Delhi, India: PHI Learning Pvt. Ltd.