Georgia Assessments for the Certification of Educators GACE Practice Test

A company considering manufacturing a product in several different emerging markets will most likely consider which of the following factors in choosing between them?

1. All of the above

2. Cost of shipping goods from that country to the destination country

3. Labor costs and regulations

4. Likelihood of political instability

The correct answer is: All of the above

Choosing to manufacture a product in emerging markets involves a comprehensive analysis of multiple factors that can significantly impact the company’s operations and profitability. When considering cost of shipping goods, a company must assess logistics and transportation expenses, as these can severely affect the overall cost structure of bringing products to market. High shipping costs can negate any savings from lower local production costs, making this an essential consideration. Labor costs and regulations are also pivotal; they directly affect the cost of production, the availability of skilled workers, and compliance with local labor laws. A market with favorable labor conditions and lower wages might initially seem attractive, but employment regulations can also influence operational flexibility and costs of doing business. The likelihood of political instability is crucial for long-term investment decisions because political risk can lead to sudden changes in the business environment, affecting everything from policy and regulation to safety and security in the workforce. Stability in a region is usually correlated with a safer and more predictable investment climate. By evaluating all of these factors together, a company can make a more informed and strategic decision on where to establish manufacturing operations, thus the answer encompasses a holistic view of the complexities in market selection.