Analyse an emerging/developing economy and a developed economy as a possible site for a firm to establish a subsidiary • ‘Emerging/Developing’: Thailand • ‘Developed’: United States Assume that you are responsible for a large Australian manufacturing firm that is keen to internationalise by establishing a subsidiary (office) in the host economy

Advantages of Developing Countries :

• There is a cheap labor force available in the country and thus the cost of production would be low.
• There is an easy entry for the foreign companies as the government is quite supportive.
• Tariff charges implied on imports are not high.
• Demand is high due to large population.

Disadvantages of Developing Countries

• Customers cannot afford to pay high as the income of the population is low.
• High level of Bureaucracy and Corruption discourages the new business and their owners.
• People have conservative mindset and very negative attitude towards the foreign companies.
• Infrastructure facilities are not much developed.

Advantages of Developed countries

• Customers are quite wealthy and can afford to pay high as the income of the population is high.
• There is no Bureaucracy and Corruption and thus starting the new business is quite easy.
• People have advanced mindset and very positive attitude towards the foreign companies.
• Infrastructure facilities is much developed.

Disadvantages of Developed Countries

• Wages paid to labor force is high in the country and thus the cost of production would be high.
• There is a difficult entry for the foreign companies as the government is not much supportive.
• Tariff charges implied on imports are high.
• Demand is low due to less population.
• Quality norms are quite strict and thus need to maintain high level of quality standards.