Page 240 - Cambridge IGCSE Business Studies
P. 240
Cambridge IGCSE Business Studies Section 4 Operations management
■ To avoid legal barriers and import tariff s – although many countries have removed
or reduced their barriers to free trade, they still exist. One way around this is to
locate in the country. The business does not then have to pay import tariffs and will
not be affected by legal restrictions on foreign companies.
■ Government incentives – governments around the world can see the benefits of
attracting overseas businesses to locate in their country. Such benefits include
providing employment, improving workforce skills (including management skills),
introduction of new technologies, improved product quality and increasing
consumer choice. These benefits lead to economic growth and the long-term
improvements this brings to a country’s citizens.
238
Inside a garment factory in Dhaka, Bangladesh
Th e benefits need to be balanced against the limitations of international location,
Multinational: see such as:
Chapter 26, page 327.
■ Cultural diff erences – these may affect the workplace and/or the market place.
Global markets: see
Products that are popular in one country may be less popular in some international
Chapter 26, page 327.
markets due to different consumer tastes or religious beliefs. The workplace culture
Import tariffs and free in one country may not be right for another.
trade: see Chapter 26,
■ Communication problems – language differences may be a barrier to
page 330.
communication between workers, managers and suppliers. Communication
Economic growth:
problems may also arise as a result of the distance between Head Office and the
see Chapter 24, page 300.
operation unit based in another country.
Ethical issues: see
■ Ethical concerns – a decision to relocate to another country may aff ect the
Chapter 25, page 313.
workforce in the home country. Although some managers may be prepared to
relocate to another country, other employees may not be given the opportunity
or wish to do so, resulting in high levels of redundancy. There have been several
reported concerns about the exploitation of workers in low cost economies,
including issues of child labour. These issues could damage the reputation of a
Quality: see Chapter 17, business and affect revenue and profits in all of their markets.
page 229. ■ Quality issues – it may be more difficult to control the quality of supplies and the
quality of finished products in international markets.
