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Microsoft is a multinational technology company headquartered in Redmond, Washington. It creates, manufactures, licenses, and sells consumer electronics, computer applications, personal computers, and services (Jahromi & Shirazi, 2015). The company's strategic plan calls for an ambitious development agenda that would necessitate investments in machinery and services, productivity improvement, and labor over the next five years. Vietnam will be the site of the company's first assembly facility.
Factors Influencing a Country's Productivity
Since an economy's production is equal to its revenue, a nation's standard of life is directly dependent on its citizens' efficiency. Productivity is the quantity of products and services that are produced from every unit of labor input. The location of the new manufacturing plant considers human capital, physical capital, technological knowledge and natural resources. There is the need for the company to locate the new manufacturing plant in Vietnam to increase its growth as compared to when it is situated in U.S (Rothaermel, 2015). The human capital refers to the knowledge and skills that the employees obtain through training, experience, and education. Physical capital refers to the stock of structures and equipment that are utilized in the production of goods and services. The technological knowledge is the comprehension concerning the best techniques for producing goods and services. The natural resources refer to the inputs that are offered by the nature_x0092_s bounty, for instance, mineral deposits, land and rivers.
The cost of manufacturing most consumer electronics and personal computers is relatively cheap in Vietnam in comparison to the U.S. Thus, Microsoft Company will save cost by locating the new manufacturing plant in Vietnam. Vietnam produces numerous qualified engineers that possess technical skills that are essential for building the multifaceted apparatus s that can be compensated below the engineers in the U.S. There are large numbers of individuals in Vietnam that form part of labor supply hence leading to increase in production. The manufacturing factories of Microsoft Company are larger and well established in Vietnam than in U.S. Microsoft Company needs to focus the shipping jobs in a foreign country owing to the lower cost of manufacturing (Jahromi & Shirazi, 2015).
How the Country_x0092_s Policies Influence its Productivity Growth
There are different policies in the country that influences its growth in productivity. The policies such as legislation on protection of employment, minimum wages, and the unemployment benefits influence the workers' productivity that in turn affects the company productivity growth. The policies pertaining to the labor market influences a product through their effect on employment. Some national policies have a direct effect on the level of productivity of individuals through generating incentives for the workforces to invest in development programs pertaining to skills and upholding the relevant job matches (Rothaermel, 2015).
The county_x0092_s policies fortify the labor market that encourages the creation of employment and augments the productivity growth. They strengthen Microsoft's business milieu and increases productivity in numerous economic sectors. The Vietnam government has developed numerous policies to get rid of the concerns that limit the citizen's productivity and the corporations that operate within the country (Rothaermel, 2015). The policies of the government encourage efficient utilization and allocation of the productive factors of the economy comprising the human resources. The policies have the capability to match Microsoft Company with the employees that have pertinent skills that are sufficient for the jobs provided.
How the Country_x0092_s Financial System is related to the Key Macroeconomic Variables
Vietnam has distinctive and ever changing forces govern its capability to grow and maintain its own economy. Vietnam is deliberated as a free country for exchange of products and services making it an ideal place for extending the American-centered business. The country makes an exertion to reduce crime and strives to get natural resources that are more sustainable (Tung & Thanh, 2015). Vietnam is more suitable for locating the new manufacturing plant due to more global support in policies, better trade, and efforts on the growth of the market. The key indicators of macroeconomic variables include consumer price index, gross domestic product, unemployment rate, rate of inflation, balance of trade and supply of money in the economy. These indicators of macroeconomic variables are related to the nation_x0092_s financial system owing to their effects on economic growth.
The increase in economic undertakings and credit default within a country is triggered by the increase in gross domestic product causing a decline in the liquidity of the banks. The bank liquidity determines the lending practices of the financial institutions in Vietnam. The current unemployment rate in Vietnam is 2.30% indicating a strong economy and the current inflation rate is 4.4% that is low compared to most nations across the world. The country_x0092_s consumer price index is roughly 105.9 index points (Tung & Thanh, 2015). The increase in inflation rate has the possibility of decreasing the purchasing power amongst individuals making them demand more money from the financial institutions to purchase similar products. This will in turn augment the lending of the banks thus decreasing the liquidity rate of the banks. The decrease in the unemployment rate may increase income amongst individuals since they will be able to get jobs leading to increase in aggregate demand for products and services and increase in standard of living.
How your Organization can reduce the risk they would face in Relocating
Microsoft Company can minimize risks that are involved in relocating its new manufacturing plant by selecting an individual from Vietnam who have expertise in business operations within the country. It can involve neutral industrial expert when relocating the new manufacturing plant who already has the required knowledge and skills (Jahromi & Shirazi, 2015). Most of large companies realize the significance of involving the support of an enterprise relocating expert when making decisions on relocation.
Risk reduction can also be achieved through considering the customer base in that a company that provides service to their customers should be near their income source. The customer base may decrease owing to extreme changes in the neighborhoods. Thus, relocation can assist in attracting large and newer collections of customers. Moreover, minimizing risks necessitates hiring highly skilled labor force that requires considerable remuneration. The labor force will carry out their tasks efficiently and effectively with risk reduction in consideration (Rothaermel, 2015).
The Current and Projected Unemployment over the Next Five Years
The current rate of unemployment in U.S is approximately 5%. Around eight million workers are presently unemployed in U.S. The rate of employment is anticipated to augment over the next five years. There is the likelihood of unemployment rate to approximately six percent by the culmination of 2020 (Rothaermel, 2015). Microsoft Company has roughly 120,850 employees across the world. The relocation of the new manufacturing plant to Vietnam will increase the company_x0092_s number of workers. The Trading Economics indicate that the current unemployment rate in Vietnam 2.30% and it is anticipated to be approximately 2.60% in 2020 (Tung & Thanh, 2015). The unemployment rate in Vietnam is expected to decrease due to the relocation of the new manufacturing plant of the Microsoft Company. The new manufacturing plant will offer employment opportunities to the individuals in Vietnam.
Microsoft Company is a famous company that offers computer software and consumer electronics amongst other products worldwide. Currently, Microsoft Company made a decision to construct a new manufacturing plant in Vietnam to realize growth in productivity. A company can experience drastic transformations after relocation. They considered the financial system in Vietnam and its association with the key macroeconomic variables for the company. Moreover, the company made an exertion to find the techniques for reducing risk that they may encounter after relocation and they assessed the rate of unemployment in both Vietnam and U.S.
Jahromi, N. M., & Shirazi, S. M. (2015). The effective factors on Microsoft Company_x0092_s success in the production of game console device. International Science and Investigation journal, 4(2), 30-44.
Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.
Tung, L. T., & Thanh, P. T. (2015). Threshold in the Relationship between Inflation and Economic Growth: Empirical Evidence in Vietnam. Asian Social Science, 11(10), 105.
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