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Strategic Use of Resources Essay

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Updated: May 25th, 2021

The gradual shift towards the international scope of the business has resulted in the emergence of new issues that complicate the process. While some of them coincide with traditional practices, others require the utmost attention in order to unforeseen losses. The following paper outlines the factors that should be considered by Bit Technology, Inc. during the placement of the facilities.

One of the most evident factors that need to be considered during the selection of location is the expenses associated with it. The primary source of the said expenses is the cost of the land that needs to be acquired by the company. However, the suitability of the acquired property also frequently factors in, mostly when the characteristics of the land limit its usability for the purpose. In this case, tailoring the location to the needs of the company may result in additional expenses. Next, the physical location and layout of the site must be assessed for suitability to the intended manufacturing needs.

In addition, the cost of construction of necessary buildings should be estimated or, if the buildings are already available on-site, the cost of renovation must be considered instead. In addition, the logistical issues need to be ruled out, such as the availability of the transportation routes, plumbing, and sufficient electrical supply. Finally, the availability of a suitable labor force must be taken into account. For the international corporation, relocation of employees from other facilities may be an option, but such practice is both expensive and relatively inefficient (Schroeder, Goldstein, & Rungtusanatham, 2013). It is also worth mentioning that in the case of an international placement, the language barrier may become a serious issue for the potential workers. While this factor can be mitigated, the cost of such action may vary and should be estimated in advance. Therefore, it is recommended to look for locations that are close to the adequate labor market.

In addition, several factors should be considered that have an indirect impact on the location’s feasibility. First, since the facilities are usually used for a significant amount of time, the local community will likely have an impact on the company’s operations. The impact can be positive (e.g., in response to the availability of jobs) or negative (e.g., in response to the violation of the ethical or environmental standards as well as due to logistical reasons). Therefore, the alignment of the intended operations with the views of the community must be evaluated. In a similar manner, several qualitative factors, including local ethical and cultural norms and the attitudes of the customers and workers, should be taken into account. Next, the local laws and regulations should be reviewed and the potential barriers identified and resolved since it is possible that some of them will conflict with the planned activities or introduce unreasonably high costs. Finally, in the case where the location from the other geopolitical region is used, it is recommended to obtain information on the political climate in the region and the potential risks for businesses in terms of economic stability and taxation (Schroeder et al., 2013). However, the potential benefits associated with the local government’s stance towards international corporate activities, such as incentives or the presence of a free trade zone, should also be taken into account.

The fact that Bit Technology is an international corporation introduces several additional points of consideration. First, the distribution of the company’s facilities across different geopolitical and economic regions introduces the factor of proximity to suppliers, resources, and customers. While some of these issues can be resolved by establishing transportation channels, in other cases, the regulatory specificities may undermine the feasibility of the solution through additional costs and extended time of delivery (Schroeder et al., 2013). Another important restriction is the limitation of the economies of scale. The placement of facilities on a per-country basis creates a competitive disadvantage for the business since the increase in geographical scale undermines the economic advantages of operations. In addition, the control over the quality of the products is diluted, which may eventually result in a damaged corporate reputation. Finally, some of the factors mentioned above, such as the ethical and cultural norms, language barrier, political stability of the chosen region, and compatibility with local regulations, require closer inspection. When entered without necessary preparations, the unfamiliar sociocultural and political environment may cause massive adverse effects on the company’s financial stability and corporate image.

Considering the factors identified above, it would be reasonable to recommend the international location to Bit Technology, Inc. Such a decision provides several advantages. First, the placement of facilities on an international basis allows for a relatively seamless transition of materials and products between individual facilities. Second, the materials can be selected from a broader array of options, ensuring the low cost of the final product. In a similar manner, a wider choice of labor markets would provide a competitive advantage in the form of cost-effective personnel. Finally, the global nature of operations will provide additional means of quality control, minimizing the risks associated with a national location.

The location of the facilities may pose a significant challenge unless all factors are acknowledged. Considering the available information, it would be reasonable to recommend international placement for Bit Technology, Inc. Such an option would minimize the most apparent risks and provide a range of cost-effective solutions and allow the company to retain a competitive advantage.

Reference

Schroeder, R. G., Goldstein, S. M., & Rungtusanatham, M. J. (2013). Operations management in the supply chain (6th ed.). New York, NY: McGraw-Hill.

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