Introduction
Company location is a key to successful business operation and overall growth. In choosing a location to set up a company, several factors need to be taken into consideration including the workforce, tax incentives, customers and equipment needed in the manufacturing process among other strategic factors. Globalization has come with some important benefits especially the ability to easily transfer capital from one region to another and that gives companies that ability to operate almost everywhere. In this paper, the discussion explores the strategic importance of locating a computer software manufacturing company in three locations: Bangalore in India, San Francisco in the US and Nairobi in East Africa.
Discussion
The Indian city of Bangalore is a hub for information technology companies in Indian just like Silicon Valley is the hub for information technology in San Francisco in the US. In fact, Bangalore is the new Silicon Valley of the world. Bangalore is an ideal location due to its tax incentives, cheap and skilled labor force. Bangalore emerged as computer software and a research and development subcontracting center back in 2012. As of now, it boasts of a skilled labor force due to the high literacy rate in India. Moreover, unlike in the US, the labor is cheap and there are tax havens and incentives by the Indian government to encourage foreign investment (Neelankavil 195). The downside to this strategy is that the logistics of setting up a hub in Bangalore may be initially costly.
The other strategic place to locate the company would be at the Silicon Valley in San Francisco in the US. Having been the parent site for the Information technology revolution in the world, the company would benefit from a very skilled and knowledgeable work force. For a company that is seeking to expand, the high quality of the manufactured software could be the competitive advantage that the company could anchor itself on. However, the cost of operation would be high due to the high cost of labor in the US as well as the absent tax havens by the government. Moreover, with the saturated US market, the company would not be able to enjoy high returns because the sales would be low and the operational costs being high.
The last viable location is Nairobi in Kenya, the most advanced country in East Africa that also serves as the entry into the African Market. Kenya has one of the literacy levels in the region and hence it has a knowledgeable and skilled work force to meet the production needs. The labor force would also come cheap as there are no minimum wage regulations in the country. The country also has tax incentives for foreign countries as it seeks to attract foreign investors and many other global multinationals such as Boeing have rushed there. On the downside, there are few laws governing intellectual property rights and therefore, the process of manufacturing the product must be kept a secret less the product is replicated into the market by other firms that may not have bothered to invest in research and development (Neelankavil 196). Moreover, with its virgin markets in this sector, the company can sell into the East African market and make some supernormal profits in the medium and short term.
Conclusion
The paper has explored three distinct regions for the establishment of the company. Each of these locations offers some unique opportunities and challenges. As noted, most of the locations outside the US have the opportunity of cheap labor and tax incentives because they aim at attractive foreign firms into their countries. Moreover, these regions have the advantage of unsaturated markets and could potentially become important markets for the company to sell its products. However, they have the challenges of the quality of the labor and insufficient laws to prevent intellectual property thefts and other regulations against unfair competition. On the other hand, locating the company in the US would guarantee it of high skilled labor and an established industry but has the challenge of high operational costs due to lack of government incentives as well as the high cost of labor and a saturated market.
Work Cited
Neelankavil. Basics of International Business. New York, NY: M.E. Sharpe, 2015. Print.
