Introduction
The motivation for initiating a facilities location or relocation project differs depending on what factors are considered as the reason for this decision. Domestic and international locations have their advantages and disadvantages. This paper aims to identify the motivation that makes companies relocate. Another purpose of this paper is to find out the positive and negative effects of domestic and international locations.
Motivations for Company Relocation
One of the main reasons for stakeholders to consider relocation projects is the possibility of growth. If the current facility does not meet the demands for space or resources, the company needs to expand. Relocation means access to a new market and attracting a new pool of customers (“Most common reasons why a company relocates,” n.d.). It means the possibility of hiring new employees as well. All these changes lead to improving the productivity of the company.
Effects of Domestic vs. International Locations
Domestic Locations
There are many advantages of a company’s domestic location as opposed to international. The ability to control the quality of the product, the absence of import taxes, and shorter lead times are one of them. However, domestic location always means a higher cost of labor (Gravalot, 2020). This influences the price of the good, making them more expensive. It certainly affects the decision of the management board on location.
International Locations
The significant positive effects of international locations are due to the shortcomings of domestic ones. The first advantage is the lower manufacturing price. The other benefits are high-volume capacity and more options for sourcing. The adverse effects of international location are the risk of violation of intellectual property, cultural barriers, and vulnerability in cases of global crises, including natural disasters. (Gravalot, 2020). These shortcomings are a solid reason to weigh up the relocation project.
Conclusion
In conclusion, companies should consider starting the relocation project in order to expand and grow. The new market gives the company many new possibilities and benefits. Domestic location is profitable due to advantages in time and quality, but it is unfavorable because of the labor cost. The international location provides a lower price, but it is more exposed to global disasters.
References
Gravalot. (2020). Local vs international sourcing and manufacturing: Pros and cons. Medium. Web.
Most common reasons why a company relocates. (n.d.). Helpmovingoffice. Web.