More Benefits of Starting a Business in High Economy than Low Economy - Case Study Example

More benefits of starting a business in high economy than low economy By + Starting a business needs consideration of economy where the business is located with the factors that are available to operate the business and the returns from the start of the business (Champ & Freeman, 2001). The essay brings out the factors that a business should consider in choosing an economy to start in. the essay brings out high economy being advantageous to start a business in compared to low economy (Champ & Freeman, 2001). Named in the essay are the low cost economies and high cost economies. Introduction Low cost economy is that which the population high with low standards of living and characterised with low developed industries than other countries. A high cost economy is an economy with a high growth and security in the economies. There are characteristics that are considered in both the economies to ensure there is satisfaction in the business that is put up in an economy (Cipolla, 2007). The economies are evaluated through the degree of per capita in the countries, the general living standards of those that live in the country, the infrastructure that is available and the level of industrialization. Examples of high cost economies in the world include Italy, Norway, Denmark, Japan, United States, Germany, France and Canada among others (Cipolla, 2007). Low cost economies include most African countries, Vietnam, Afghanistan, Philippines, Pakistan and India. There are factors that are considered before starting and operating a business. Knowledge and expertise is considered in the success of a business. This will dictate the production in the business. Market and demand are also considered in starting a business. A business is started so that it satisfies the needs of consumers through demand (Hargreaves, 2007). Other factors to be considered include costs of starting the business, capital in the economy, competition and the location of a business. Body Starting a business in a high cost economy is better than stating a business in a low cost economy. In operation a business in a high economy, the economy is able to benefit from the high level of literacy in the regions as these results to high trained workforce. The business will be able to acquire the skills that they need for operation. The situation is different for a low economy (Perry, 2002). A low economy is characterised with low level of literacy with low level of skills of the workforce. The economies depend on the government for providing education and have low ratio of public expenditure assigned to education. Operating a business in the low economy will require hiring of skilled personnel from other high cost economies which may turn to be expensive (Thirlwall, 2009). High cost economies have a big tertiary sector and most of the labour force in the economies is engaged in service industries. The large tertiary in high economy is important in a business as they are able to aid sales and production of goods and services of a business. Large tertiary sector provides adequate services to a business enabling production of high technology goods and services (Thirlwall, 2009). This increases the productivity of a business and also demand of the goods as they are of high quality. In low economies, primary sector are the major contributors to GDP. This results to low GDP per capita in the economies. When a business is established in low economies the businesses will be mainly those that deals in agricultural products or those that depends on natural resources and import of goods from developed countries. The imports will increase the costs of production of the businesses. Low technology in low economies results to production of goods of low value and low quantity goods. This will affect stability of the business that is in the economies as the demand in the low economies is also low. The population in high economies are low but the population has high demand of goods and services as compared to low economies where there are high population with low demand of goods and services. This makes starting a business in high economies better as compared to starting a business in low economy. With consideration of investment, high economies have 80% of investment. The high investment in the countries favours starting a business in the economies as there are high chances of prosperity in the business with consideration of the rate of investment. Investment in low economies is 20% (Thirlwall, 2009). Low investment in the economies discourages business operation in the economies as compared to high economies. Considering investments, starting a business in a high economy will be of more advantage as compared to starting a business in a low economy. Savings is an important aspect to consider in starting a business. The rate of savings in an economy will determine the demand that goods and services will have in the economy. In high economies, the rate of savings is high as compared to savings in low economies (Perry, 2002). High rate of savings in high economies favours business operation in the high economies than in low economies. Starting a business in high economies will be of advantage as compared to low economies. Growth rates in the economies are factors that should be considered in starting a business. Growth rates in high economies are high leading to increase in the demand of goods and services produced. Growth rate in low economies is low (Thirlwall, 2009). This makes the demand to be low. The growth rates in the economies favour starting a business in a high economy as compared to starting the business in a low economy. Purchasing power which involves expressing currency in terms of goods and services that can be bought by a unit of currency. Purchasing power is high in high economies. When a business is started in high economies, the business will be able to acquire good returns for its production as compared to low economies where the purchasing power is low. Purchasing power also involves consideration of consumer price index that is low in low economies but is high in high economies (Perry, 2002). Starting a business will also consider consumer spending in the economy. Consumer spending involves the amount of money that a household spends in the economy. In high economies, there is high consumer spending as compared to low economies where there is low consumer spending. High consumer spending will favour a business that is started in a high economy as compared to a business that is started in a low economy (Perry, 2002). A business in a high economy will be able to sell more of the goods and services due to increased demand of the goods by the households. Trading in economies is also considered in investment and starting a business in an economy. Export and import in an economy is important in starting a business in an economy. In high economies, there is high rate of exports as compared to imports. High exports in the economies imply high rates of production in the economies with demand in the goods and services that are produced in the economy. Low economies have a high rate of imports as compared to export rates. The high rates of imports imply low demand in goods that are from the economies as there are reduced rates of production. Competition in high economies is high as compared to competition in low economies. The high competition in high economies leads to improved quality of products and services in the economies so that the competition is met (Perry, 2002). Production of high quality goods increases the demand for the goods as compared to low competition in business in low economies. Return on investment calculated as net profit divided by the investments that are made. Return on investment is high in high economies as compared to low return on investment that is in low economies (Barrow, 2011). Return on investment is compared with any other source of income such as money which is earned from investment in the stock market. Return in investment makes starting a business in a high economy to be more advantageous than starting a business in low economy where there is a low return to investment. Though starting a business in a high economy advantageous than the disadvantages that it is exposed to, low economy also has benefits that one is able to acquire when a business is started in the economies. Starting a business in a low economy is advantageous through implications such easy and low costs involved in acquiring resources (Barrow, 2011). Labour in the economies is also acquired on a low cost as compared to high economies. Competition is low in the economies. Conclusion Starting a business in a high economy is advantageous to a business and it enables a business to achieve the objectives that it has. The economies also enable expansion of the business through the technologies and resources available in the economies (Bohlin, 2004). Factors that bring about the advantage over low economies include high level of literacy in the regions as which results to high trained workforce. High economies have a large tertiary sector and most of the workforce in the economies is engaged in service industries (Bohlin, 2004). High investment and high savings are also characters of a high economy that make starting a business in a high economy to be advantageous than a low economy. 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