UNIT 11 NEW BUSINESS

UNIT 11
NEW BUSINESS
Group 11
1. Lê Nhật Tân 4115435
2. Nguyễn Minh Luân
CHOOSE A LOCATION FOR A NEW FACTORY
•
Background
•
Background
Marcia Lee Jeans
- Is a U.S.A company based
in New York City with wide
recognition and acceptance
throughout the country
- It industries Clothing
Marcia Lee Jeans has its own stores
but does not own any factories
Marcia Lee Jeans- Competitors
1. G- STAR
Marcia Lee Jeans- Competitors
2. DIESEL
Competition in this segment of the
market is strong, so the company
has to keep costs as low as
possible in other to remain
profitable
Goal
•
Expand in Europe and Southeast Asia
•

Decide to build its own factory in an
overseas country.
•
Our company is considering four countries
as a location for the factory: code-named
A, B, C and D.
BACKGROUND
Company Marcia Lee jeans
Based in New York
Price range
…
Segment ………………………………………
Factories East Coast US, not owned by Marcia Lee
Jeans
Cost
……………
Wants to expand into
………………………………………
New factory-number
of worker
…………
Sour of denim
…………………… ……
New factory –location To be decided among A, B,C, D
upper
Fashion conscious people aged 15-40
Kept low
Europe and South-east Asia
2,000
Imported from several countries

CHOOSE A LOCATION FOR A NEW FACTORY
•
Background
II. Advantanges and Disadvantages
The criteria used to decide whether or not
to invest in one country will be based on 3
main aspects: economy, transport, and
labour.
A
D
C
B
Country A
Economy: general lot of debt, trying to modernise
Growth
……………
inflation average
interest rates high
unemployment
……………
Transport
good rail but poor roads and seaports,
new airport
Labour: skilled workforce
no
unionised no
Wages
……………
Other comments: business good government grants
general military government, bribery, political

problems (independence for north)
low
very high
very low
Country B
Economy: general
modern
Growth low
inflation

interest rates high
unemployment ………
Transport
……………………………………
Labour: skilled workforce
no
unionised yes
Wages
…………
Other comments: business member of trading group, strict
pollution laws, no tax incentives,
high taxes
general Stable government
very low
low
good road and rail, airport, no seaport
high
Country C
Economy: general
unstable exchange rate

Growth high
inflation
……………
interest rates average
unemployment
……………
Transport
good near ports, good airport, bad
roads
Labour: skilled workforce
no
unionised
……………
Wages
……………
Other comments: business limit on profits to be taken out of
country, not much paperwork, strong
protest movement against foreign
business
general first free elections last year
high
high
yes
low but rising
Country D
Economy: general
government encouraging
privatisation
Growth average
inflation

……………
interest rates
……………
unemployment high
Transport
bad road and rail, but ten-year
investment plan
Labour: skilled workforce
…………………………
unionised yes
Wages low
Other comments: business lot of paperwork, pollution
problems, tax-free profits for first
three years, part of profits into
training fund
general -
average
high
yes, but short hours
•
CHOOSE A LOCATION FOR A NEW FACTORY
•
Background
3. The Final Decision
To compare the economy, labor and
transport of each country, then score
them.
IN SUMMARY……
Country A Country B Country C Country D
Economy: general lot of debt, trying to

modernise
modern unstable exchange
rate
government
encouraging
privatisation
Growth low low high average
inflation average
very low high
average
interest rates high high average high
unemployment very high low high high
Transport
good rail but poor roads and
seaports, new airport
good road and
rail, airport,
no seaport
good near ports,
good airport, bad
roads
bad road and rail, but
ten-year investment
plan
Labour: skilled
workforce
no no no yes, but short hours
unionised no yes yes yes
Wages very low high low but rising low
Other comments:

business
good government grants member of
trading group,
strict
pollution
laws, no tax
incentives,
high taxes
limit on profits to
be taken out of
country, not much
paperwork, strong
protest movement
against foreign
business
lot of paperwork,
pollution problems,
tax-free profits for first
three years, part of
profits into training
fund
general military government,
bribery, political problems
(independence for north)
Stable
government
first free elections
last year
-
Economy & Policy

-
General: lot of debt, trying to
modernise.
-
Growth: low
-
Inflation: average
-
interest rates: high
-
Unemployment: very high
- Government contribute 30% cost
Country A (4)
Country B (9)
-
General: modern
-
Growth: low
-
Inflation: very low
-
interest rates: high
-
Unemployment: low
- With many anufacturing industries.
Member of a trading group.
Country C (5)
Country D (8)
- General: encouraging privatisation
- Growth: average

- Inflation: average
- interest rates: high
- Unemployment: high
- Much paperwork is required.
- Must pay 5% of the profits for
training workers.
Color RED means: not good.
-
General: unstable exchange rate
-
Growth: high
-
Inflation: high
-
interest rates: average
-
Unemployment: high
- Limit on profits, strong protest
movement against foreign business

Labor
A
A
B
B
Unskilled labor available
No unions
Very low wage rates
C
C

D
D
Not a lot skilled labor available
Strong unions
High wage rates
Not much skilled labor available
Strong unions (clothing industry)
Low wage rates, but rising fast
A lot skilled workers (short hours)
Strong unions
Low wage rates
Color RED means: not good.
5
6
7
9
Transport & Tax
Pay attention:
I : International \ : unknown H : high : improving 3y: 3 ↑
years
Rail Road Airport Seaport Tax Score
A
A
Good Poor New, I Poor \ 6
B
B
Good Good I No
Business
(H)
7

C
C
\ Not bad
Small,
good
Good No 8
D
D
Poor( )↑ Poor( )↑ \ \ Free(3y) 6
Overall
23
23
Country A
20
20
22
22
15
15
Country B
Country C
Country D
The Final Decision : Country D
The Final Decision : Country D


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