GBA 490 Lecture 7: Chapter 7

• School: University of Alabama
• Department: General Business Administration
• Course: GBA 490
• Professor: Houston

Document Summary

Higher worker productivity lower energy costs fewer environmental regulations lower tax rates lower inflation rates. Proximity to suppliers and technologically related industries. Proximity to customers lower distribution costs available or unique natural resources. Impact of government policies and economic conditions in host countries. Positives tax incentives low tax rates low cost loans: site location, worker training. Negatives: environmental regulations, subsidies and loans to domestic competitors import restrictions tariffs and quotas local-content requirements, regulatory approvals, profit repatriation limits, minority ownership limits. Cross-country variations affect both the opportunities available to a foreign entrant and the risks of operating within the host country. Political risks stem from instability or weaknesses in national governments and hostility to foreign business. Economic risks stem from the stability of a country"s monetary system, economic/regulatory policies, lack of property rights protection. Fluctuating exchange rates post significant economic risks to a firm"s competitiveness in foreign markets.