As we suspected before we even fully researched, Namibia is likely to be our most promising country to produce in. The main reason behind this is their labour market. Namibia’s high population is going to give our business a huge chance of finding the best and most productive workers. The fact that 34% of Namibia’s population (Source: PRB 2012 World Population Data Sheet) is under 15 means less costs for the business, as these workers will obviously be on a lower wage rate. This increases the efficiency of the business and hopefully will lead to wider profit margins in the sales of our smart phones. Having said this, our business would be able afford to pay these workers a higher wage than they would normally be getting and still produce efficiently, the positive side to this is it improves the corporate social responsibility which makes for great advertising and press releases.
Continuing on from corporate responsibility, it is imperative that we develop a good image. Therefore by producing in a less economically developed country such as Namibia can only be good for our image, particularly if we take the approach that we are trying to eradicate the low levels of unemployment, which currently stand at 51.2% (PRB 2011 Word Population Data Sheet) and also low levels of GDP per capita which in 2011 stood at $5,293. Using these reasons for producing in Namibia should generate support and is a great angle for advertising. It may also be the case that by bring custom, and jobs to a poor country like Namibia, that we could take advantage of grants and government schemes for extra capital.
On the other hand, there are some reasons against producing in Namibia, the key one being the unskilled nature of the labour force. The problem with this is, our business will have to spend quite a large deal of money at the outset in order to train the staff, particularly as the product, a smart phone, will be very technical to build, and will require a high level of skill. This would probably mean that key decisions would be made at base in the UK, messages would then be sent out. This can also be difficult to manage and control.
From an economic point of view, high levels of inflation in Namibia -5%, are only going to be difficult for business, increasing the costs of equipment and raw materials. This may outweigh the capital saved in…