When a business corporation plans to invest in a foreign land, there are factors that have to be put into consideration before making the step. Philippines both has factors that favor international business and factors that may hinder a foreign company especially from large countries like the US from placing their investments. The elements are dependent on the country’s cultural values, economic conditions, political and civic conditions, as well as factors as investment restrictions, restrictions in operations, and quotas.
The Philippines is situated right in the middle of Asia (Alderighi, 2014). The location makes the accessibility of Philippines easy as it only 4 hours flying from the major capitals in Central Asia. An American Corporation will thus be attracted as it can easily access the business and, therefore, boosting business management. It is an important entry point for very many individuals in the association of Southeast Asian Nations (ASEAN) making it suitable for international business.
Philippines can easily be chosen as a good site for placing multimillion businesses by an American corporation due to the low costs of operation that the country provides (Denicolo, 2009). Philippines has a low cost of living when compared to the other countries in the Southeast Asia. The government has set $8 as the daily minimum wage. Employers pay as low as 30% of what they would have paid in the European countries. The small cost of operation is also due to the other expenses such as supplies, leasing of office space, and third-party services.
The government of Philippines gives support to the international businesses in the country as this helps in fostering economic growth after the political instabilities that had much affected the state. The nation has maintained stability thus the reason for improved economic growth.
Education is highly valued in the Philippines, and the government re-enforces the attainment of it in the country (de Kluyver, 2012). The literacy rate in Philippines is approximately 92%. Primary education has been made obtainable by both the poor and the rich in the country. It has schools with great reputation including the University of Philippines and the University of Santo Tomas which produce graduates who are efficient in the job market internationally. The country has 4200 college graduates every year. The workforce has individuals who are characterized by creativity, and are adaptable to varying cultures, lifestyles and work processes in the world.
The Philippines are very much compatible to Western cultures as compared to the Chinese and the Indians. They have a way of getting accustomed to any given situation ( Denicolo, 2009). The US had control over the country after the Spanish colonization and therefore had a lot of impact on the country. Their televisions and movie theatres are highly devoted to Western productions making it incline to Western cultures. The inclination makes it easy for an American corporation to easily establish a business there. English is also the main language for communication on businesses. It has a government system that is quite similar to that of the United States of America making it very easy for a US corporation to run a business there.
The economy of Philippines is highly stable as a result of the BPO industry (Masiero, 2017). The government gives support to the industry making it expand to higher levels. It is also in a good position to develop the greatest offshore outsourcing destination globally. The BPO industry has with time expanded as it can be seen in most places in Metro Mania and small cities and provinces.
Though Philippines is highly suitable for businesses, it has other factors that may hinder an American corporation from establishing subsidiaries there.
Many businesses have been established in Philippines while the population does not grow as fast. The low population may lead to reduced make capability for all the products produced. The demography may not also support all types of goods as it favors only a given range of goods. The highly increasing businesses may lead to a high level of competition to the companies leads to lower profit margins. The competition maybe unhealthy when other companies do not go by the given rules concerning competition in the market for goods making it difficult for the American corporation to achieve success.
The government has a policy of low payment for the labor force. It may demotivate the workers from putting maximum input in their work due to minimal pay. Most graduates would not enjoy working under low pay after attaining high grades in the university and therefore would opt not to give their best in the jobs allocated to them.
I would highly advocate for an American corporation to establish its business in Philippines as the favorable conditions outweigh the negatives. A foreign business can easily prosper in the country due to the favorable conditions such as government support and the good positioning of the country. The culture which is compatible to the western culture and ways and the availability of highly skilled labor due to the effective education system may bring positive impact to the American corporation which will go ahead and establish its business there.