Legal, Social, and Financial Factor Considerations
Auto Edge has to guarantee that the automobile sector is a safe harbor for investment, growth, and sustainability. The national, federal, and municipal governments make rules and regulations that are based on legal considerations. Import and export restrictions, consumer standards requirements, quality assurance legislation, occupational health and safety standards, labor rules, and market regulations are some of the factors to take into account (Bylaws, 2021). The laws governing import and export in both nations are among these important problems. Moving away from either government will result in additional geographic restrictions on US exports.
Economic Factors to Consider
Economic considerations for Auto Edge include: firstly, it is necessary to determine how stable the economy is right now, that is, whether it is expanding, staying the same, or decreasing. Secondly, Auto Edge is to examine if critical exchange rates and inflation rates are consistent (Swanepoel, 2019). Thirdly, it is crucial to understand whether consumers’ discretionary income levels are increasing or decreasing. Next, assessing factors that are expected to change during the following several years is also important. Moreover, it is necessary to evaluate the unemployment rate: whether it will be simple to develop a competent workforce or if hiring qualified workers would be expensive.
Elasticity of Demand
Elasticity may be defined as a change in the price of a commodity that affects the demand for the good. A product is said to be somewhat elastic if its price changes slightly, but its demand varies significantly. Thus, after taking into account the fact that the American economy is not as robust as it once was in terms of auto parts. Raising the cost of the goods would not be a good idea. Considering the competition in this market, it is now not viable because customers may get their merchandise elsewhere.
Economies of Scale and Efficiency
It is necessary to take sensible steps before moving the company so that it may gain economies of scale. When a company can grow its production capacity while paying fewer input expenses, economies of scale occur. Alternatively, the corporation may reduce costs as it expands and its manufacturing capacity rises. Auto Edge can focus on specialization and the division of labor to obtain economies of scale. The firm will eventually experience scale diseconomies if it cannot employ the two efficiently.
Strengths, Weaknesses, Opportunities, and Threats
The fundamental goal of a SWOT analysis is to identify a company’s strengths and weaknesses so that suitable decisions may be made. Strengths are the internal resources that can provide a business with an advantage over rivals. A review of Auto Edge indicates that the firm has a sizable customer base. This is due to the items’ high quality, which distinguishes them from those of competitors. Assessing a business’s weaknesses entails identifying all the external and internal factors that are unfavorable when aspiring to attain a desired objective. These weaknesses are such as higher cost of labor and moving operations.
Opportunities are desired components that provide a business with the chance to produce outcomes that are above average. Organizations ought to be able to spot this chance whenever it arises and take advantage of it. Auto Edge may benefit from favorable microeconomic conditions such as low inflation and low interest rates to obtain low-cost financing. Finding workers may be possible due to high employment rates. Some of the threats are such as American regulations in the industry, and competitors can use the recall to their advantage opportunities.
Market Structure and Risk of Auto Edge Relocation
Market structure is the term used to describe the competitive environment in which product buyers and sellers operate. There are four market structures that Auto Edge should be aware of, and they include Monopoly, perfect competition, monopolistic competition, and oligopoly. Corporate migration carries major risks that could have a negative impact on operations and financial outcomes. Some of these risks that Auto Edge should take into consideration include unexpected expenses, losing important personnel, and strained relationships with clients, suppliers, and staff.
Costs and Internal Expansion
The transfer of production can be a very challenging process. Specialization and the division of labor can enable Auto Edge to reduce expensive inputs (Hortacsu et al., 2019). This can benefit from purchasing inputs in bulk to lower input prices and integrate the usage of specialized inputs to increase production efficiency. Internal expansion is the process of increasing a firm using resources already present in the company without the aid of any outside efforts. These factors include the availability of suppliers, skilled labor force, location of the business, financial assets, and attracting new clients.
Bylaws. (2021). Bylaws. The Leading Edge, 40(1), 1-80. Web.
Hortacsu, A., Tintelnot, F., & Flaaen, A. (2019). The production, relocation, and price effects of us trade policy: The case of washing machines. SSRN Electronic Journal. Web.
Swanepoel, E. (2019). Auto-regressive distributed lag model for long-run US household debt determinants. Investment Management and Financial Innovations, 16(3), 40–48. Web.