Why is it that some firms locate their investments close to their markets whilst others appear to have the luxury of a much greater choice of location?

Thèmes abordés

Firm - location - investments - domestic - choice - globalization - international - business - multinational - economy - outsourcing - FDI - strategy - country

Résumé du document

In a context of financial globalization and outsourcing, the choice of firms' location has become a complex issue. Indeed, some companies prefer to locate their investments close to their markets whereas others make the choice to establish themselves in the most appropriate country where ever it be . These options depend on market types, the firm's strategies and worldwide business context. In order to understand these two different approaches, we will present the actual international business environment and the necessity to establish the firm close to the market. Finally, we will explain the reasons to be located outside the domestic country.

The international business environment has bitterly changed because of the interdependence between the markets. Now, globalization of the economy increases expansion of multinational companies through foreign direct investments which enable outsourcing of means of production.

Extraits

[...] So, it improves marketing strategy in function of consumers and enables to pay attention at the expenses Necessities linked with marketing strategy o To use face-to-face contact Service industry is the most concerned by relational marketing. While new technologies quickly change firms interactions with their clients, it is necessary that enterprises keep face-to-face contacts with their customers. It enables to build strong relationships and long-term success. That is why, companies focus their research and strategies on the role of face-to- face interactions. [...]

[...] International trade relates mainly to Northern countries which want to open world markets to their products and use cheap labor force from the South. So, there is a gap between the triad market composed of Western Europe, North America and Japan, and the under industrialized countries located in Africa and Latin America Multinational firms increase FDI The most visible aspect of globalization is probably multinational firms: it is a company from one country which makes a physical investment (managing production or delivering services) in another country. [...]

[...] Consequently, the importance of obtaining new market shares and new customers has conducted firms to expand new international marketing strategies. In other words, these plans consist in the improving of internationalization of sales. Enterprises have to outsource in order to stay at the same level of their rivals. They have to locate their investments abroad to gain in terms of profitability and lower costs. Indeed, the main motivation of manufacturing and service outsourcing is cost reduction and greater efficiency. However, it is also linked with the aim to develop relations with strategic partners and to satisfy customers successfully. [...]

[...] International trade: Why is it that some firms locate their investments close to their markets whilst others appear to have the luxury of a much greater choice of location? Introduction In a context of financial globalization and outsourcing, the choice of firms' location has become a complex issue. Indeed, some companies prefer locate their investments close to their markets whereas others make the choice to establish themselves in the most appropriate country. These options depend on market's types, firm's strategies and worldwide business context. [...]

[...] This system enables to resolve the problem of maintaining an inventory of raw materials and a store inventory. Moreover, outsourcing reduces working costs because there is an inequality of employee wage between industrialized and emerging countries. Moreover, Global Meccanica for instance, which is an engineering outsourcing company, helps firms to diminish their manufacturing costs by making their products in Asia. More precisely, the wage in US is $20-$40 per hour for a specific engineering work whereas the same task in Asia is around per hour. [...]