decisions of the firm anticipating to relocate to South Africa, Philippines, or Mexico

decisions of the firm anticipating to relocate to South Africa, Philippines, or Mexico

Introduction

The organizations are highly affected by market dynamics, which emanates from the external environment. This hence forces companies to relocate in anticipation of expanding their operations and generate sufficient returns for the shareholders. The management should be cautious while making relocation decisions since it can lead to firm dissolutions as going concern in the competitive environment. The case will explore the decisions of the firm anticipating to relocate to South Africa, Philippines, or Mexico.

Mexico

Mexico was suggested as one of the countries for relocation by the consultant. Mexico was considered favorable due to the existence of affordable labor, favorable environment for conducting business, and low cost of productions as compared to the USA. Optimal and effective production is essential since it contributes towards the minimization of the inputs costs while contributing to the optimization of the final output (Contractor & Kumar, 2010). The existence of cheap labor in Mexico is vital since it contributes to the minimization of the company’s expenditure. The country also allows its employees to execute their roles while exposed to the chemical. This is because the issue has not emphasized or overlooked by the government. The levels of competition in Mexico are low; hence, this offers an opportunity for the company to flourish in a dynamic environment. This results in the organization gaining monopoly power. Relocating to Mexico will be considered favorable due to the existence of a favorable business environment.

Philippines

Philippine is a developing country; therefore, it has few laws and regulations governing the organization operates as compared to the USA. Companies venturing into the productions of electronic products will benefit from this market since the market is not flooded. The production costs are lower in the Philippines hence leading to an organization generating sufficient returns for its operations. The challenge of relocating to the Philippines is about the employment of minors aged 16years (Contractor & Kumar, 2010). The uses carcinogenic chemical they usually have adverse effects on health on these children. This might lead the organization facing the wrath of UNCHR, which is responsible for protecting the children. The company or organization can be sued if it employee these minor, which can drain the profits margins of the company and also affects its reputation in the marketplace. Hence relocation to Philippine should have been the last option due to the repercussion linked to the recruitment of minors.

South Africa

South Africa fall under developed countries; hence, it was among option suggested by the consultant. The country hence has strict rules about the recruitment of employees, competition as well as mode of business operations. The consultant documented that the minimum wage per day is $10. This, therefore, portrays that the operational costs are will be higher for the organization. The country also prevents companies that use carcinogenic chemicals from entering their market. This is because this chemical poses health threats to employees. The other issue is that competition levels are very high in South Africa; hence, this can lead to a company being outshined by existing companies since it is a new entry (University, 2019). The company will be required to formulate viable strategies to survive the competitive environment. Finally, South Africa has a well organized labor union tailored towards protecting the welfare of employee across the country

Conclusion

The organization hence should consider relocating to Mexico; due to the existence of the right environment for conducting business. Mexico is also closer to the USA; hence, this will lead to cost-saving for the organization.