Nowadays organizations are setting up factories in countries different from where their head office is situated. Are the advantages of this more than disadvantages?
In contemporary times, a new trend has started where renowned companies have commenced setting up their manufacturing units in other nations. This perspective is considered to be laden with certain benefits, but this also has a potential to cause harm as well. In subsequent paragraphs, I will elucidate both sides before concluding.
To begin with, a prominent school of thought propounds that expanding businesses to other regions provides an opportunity to multiply the profits. This is feasible because of the manpower availability at cheaper wages and most importantly resources, due to this, the initial investment cost is remarkably reduced. Further, this also helps other countries by creating employment for the impoverished. For illustration, a recent survey conducted by BBC revealed that Zara has reduced poverty by 20% in Africa by providing jobs to poor people, and the company has witnessed rapid proliferation in their profits too.
However, a lobby of experts asserts that managing business in other countries brings unforeseen risks which could have immense detrimental effects. Any major or fatal accident inside the premises will attract the unwanted attention of local authorities giving the latter an opportunity to tarnish the image of the company, if not bribed as per their requirements. This all is possible because of the difficulty of implementation of health and safety policy. Moreover, such an arrangement also exposes organizations to financial scams committed by permanent local representatives appointed for liasoning who can misappropriate the funds.
Overall, I will conclude that although expansion of business may bring unbearable consequences, the positives surely have an edge over the negatives as it ensures employment across the globe. Hence, in my opinion, setting up factories in different parts of the world is a good option.
