Location Decision and Sustainability

Topics: Risk, Corporate social responsibility, Corporation Pages: 7 (2553 words) Published: January 21, 2011
In this paper we are going to give an in-depth perspective on the subjects of location decision, clusters and corporate social responsibility. First, we will address the location decision subject. Second, we will discuss clusters and different cluster types. Last, we will review the corporate social responsibility subject. After giving an in-depth perspective on the three subjects, we will discuss the relationship between these different topics. Location Decision

Location decision is an important strategic decision that must be considered by a firm. It is important because the location strategy could affect the ability of the firm to reach it consumer, to produce in economic scale, or even to get access to the resource they needs. Location decision could also be able to give the firm a competitive advantage, because of transfer of knowledge, innovation, specialisation, and complementariness. In choosing a country, there are two main dimensions that usually be considered. Those two main dimensions are country competitiveness and also risk of the country. The country competitiveness usually is divided into two main categories, which are the market competitiveness and also the industry competitiveness. A firm should able to assess those categories to find out in which location or in which country they should operate to maximize their opportunity and profits and minimize their risks and costs. Country Opportunity

Assessing the market opportunity for a country means that we assessing the potential demand that available in a country. The variables that take into account for this assessment are the growth of the market, the size of the market, and also the quality of the demand that exist on the market in a certain country. This market assessment will define whether it is worth or not to start a business in that country, will the firm have a good demand or not, and will that demand able to generate profit for the firm or not. Looking some macroeconomics indicators can assess the market opportunity. Those indicators can be the GDP, GDP per capita, and income distribution, etc. looking to those indicators can give us an insight about the market size of the country or country buying power compared to another country, etc. the quality of demand is describing the segmentation of the countries. Generally countries are grouped into 4 main clusters:

Developing countries, low income per capita, and low growth
Emerging countries, relatively low income per capita but high in growth
The newly industrialized economies, high growth and moderate to high wealth
The final cluster, low growth and high wealth, usually these countries have already reached their ‘maturity’. The other important opportunity that needs to be considered is the industry opportunities. The industry opportunity is including a broad part of aspects. Those aspects are the resource (including human resource and natural resource), the infrastructures, and also government policies (such as government incentive to enhance foreign investment, or tax reduction). A company needs to consider the human resource issue. It is usually addressing the quality of the labor in a country. It is also considering the minimum wages or average wages of labor in a country. That issue is an important issue because it will affect the production cost and production process. The natural resource issue usually also become some major strategic issue because it enables the firm to get closer to the input that they needs including strategic geographical location that can benefits their mobility. Country Risks

Beside the opportunities, a firm should also consider the risks of the country. There are some major risks that need to be considered. Political risk, this risk have a high relation with the government policies and political condition in each country. A country with an unstable politic environment may have higher risk of rioting or policy changed. It can cause...
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