Project in colombia - Essay Example

However, since 20110, the ethnic and political violence has significantly reduced thereby developing a business environment. The United States entered the free trade agreement with Colombia in an attempt to develop the previously small economy thereby possibly creating some stability. The agreement that allows both Colombian and American nationals ease of movement between the two countries has so far benefited both countries. Colombia produces cotton and is a great exporter of the same to the United States.

The free trade agreement allows for the unregulated exploitation of the resources in the two countries by nationals from either country. While the country exports such large amount of cotton, she still suffers from massive levels of unemployment with the rate estimate at ten percent. It is therefore in the spirit of the free trade agreement that the projects seeks to set up a textile company in the republic of Colombia. The project is likely to benefit Colombia in a number of ways while the investors target a substantial profit margin.

With an unemployment rate of ten percent, it is more probable that Colombia has cheaper labor than the United States, the company will therefore solicit the readily available labor, coupled with lower rates of cotton in the country and the company is more likely to make great profits. The free trade agreement protects the investments of nationals from either country in case of any insecurity incident. Additionally, to obtain better protection the republic of Colombia has a number of insurance company most of which are American based offering American tariffs in the country (Pickton & Broderick, 2005).

The success of the bilateral trade between the two countries relies on their efforts in upholding the terms of the agreement. The agreement benefits both the countries and they signed to it owing to its lucrative nature and the possibility of developing the countries. In the spirit of the country, the two countries have effective tax schemes to investors and goods produced in either country as though are in the mother country. This prevents exploitation of investors. Additionally, it prevents the mistreatment of foreign nationals in the countries.

The Americans therefore access Colombia markets as though Colombians and vice versa. Additionally, the countries should coexist peacefully. Peace favors investments thus growth. Inter country squabbles destroy the diplomatic relations between countries thus stunts growth and creates animosity between the countries thereby eliminating any business possibilities (Bahreini, Willis & Primack, 1988). The American textile industry therefore has a number of success possibilities key among which is the effective management of the available resources in the republic of Colombia.

With readily available cotton retailing at the local market value and cheaper labor, the company is more likely to make more profit. In setting up in Colombia, the company forgoes the cotton transportation and importation duties. Besides, the country has reliable yet cheaper electricity a fact that implies that producing the textiles in Colombia is cheaper than a similar production in the United States of America (Petrickv& Quinn, 1997). To maximize profits, the company should access both the