It is important to understand the political situation and stability of the host country in order to know present and future implications of starting an entrepreneurship. Many (LDC) were colonies of European countries; democracies are still in a process of transition, civil riots, dictatorships, and internal rivalry among civilians are serious business that must be always consider by a manager. It’s important to understand how all may possibly affect labour conditions of employees and the internal structure must be flexible enough to adjust to any changes.
Even though the process on how the business started (acquisition, merge, subcontract, franchise or simply just opening a new branch) are different, in involves in most of the cases people form the host country as well as people from the company’s origin. Therefore it is important to consider how the political situation might affect all the persons implicated on the performance of the company. On the contrary, most of western countries (DC) have a political situation that is stable and where sudden changes won’t affect the performance of a company.
Resources are also fundamental, because it is essential to know the availability of them and also all costs that must be applied when dealing with them. As mentioned before, most of (LDC) have many rough materials that are essential for the manufacture of other products. Many of this companies that decide to go to other places have the technology and the knowledge that (LDC) lack. The abundance of resources or the lack of them is a key issue for a manager; it also determines the infrastructure and the direct investment needed.
When looking to (DC), many of them are concerned on environmental aspects when it comes to natural resources; most of them have strong legislations that probably they will not find on (LDC). Culture will always be a major issue to consider not only on (LDC) but also on all countries. Religious and social aspects must be taken in consider because its culture what builds a society and it members, and its also what differentiates them. When thinking of western civilisation, it is a concept that tries to embrace a way of living under capitalism and all its implications. Western society, western economy, western culture etc.
are all terms that sound familiar but in a different world such us ours and despite globalisation, their still remains cultural differences that establishes boundaries where they no longer exist. (LDC) are nations and countries with diverse backgrounds and cultures that make them different form one another. It is not just being Latin Americans, or Africans or Southeast Asians; there are many differences that sometimes (TNC’s) and (MNEs) ignore completely when going to a host country. Despite the advances in transport and communications it is indeed important to have a strategic location of where to start a business or establish a company.
Many factors have to be part of the location issue, it is important to be located in place where resources, and labour force are available, it is also important to have all the conditions to reach other markets and have all the structure needed to have access to all necessary resources and conditions required when staring an entrepreneurship. (LDC) are sometimes countries located in regions known to have difficult conditions and environment and weather, they sometimes are in remote areas with complicated access.
When compared with (DC), many times we find the despite their location is sometimes remote or affront some of the similar conditions of (LDC), the have reach a status in which many factors such as technology have had a positive incidence assuring that they have the proper facilities to achieve success. Human Resources are essential in any type of organization and entrepreneurship, not only they are a key factor but the in many cases the success relies on human resource management on both (LDC) and (DC).
However, it is essential the knowledge and skills of human resources in the application of them on every aspect of the organisation. “… Human resource – rich countries have demonstrated that they can develop even if they are poor in natural resources. … Land, labour and physical capital may be subject to diminishing returns, but knowledge is not”. (Meier, 1964 p. 265) When thinking as manager in a (LDC), human resources is one of the most critical issues; despite of finding plenty of labour force in many of this countries the lack of knowledge and skills makes it difficult when starting a new operation in a (LDC).
“Nearly 95% of the growth in the world’s population in the next 25 years will be in developing countries”. (Meier, 1964 p. 266) Even though there have some efforts to try to assist (LDC) on preparing their population, there are many problems that affect population such as nutrition; health problems, discrimination, gender and poverty; that make it difficult to reach the minium levels of a standard education in (LDC).
“While investing in human beings has been a major source of growth in advanced countries, the negligible amount of human investment in underdeveloped countries has done little to extend the capacity of the people to meet the challenge of accelerated development. The characteristic of “economic backwardness”*3” (Meier, 1964 p. 313) However we can see that their has been cases of success where countries that once were in the group of (LDC) nowadays have a reach success when investing in education.
Many countries in the East Asia, such as Korea have successfully developed along with educating its population. “By 1960, just before Korea’s economic “take off” 90 percent of the children were already completing primary school, and over one-third were going on to secondary education… by 1987, the East Asian countries had all achieved primary education for girls, virtually eliminating the gender gap at that level”. (World Bank, East Asian Miracle 1993 p. 45) Managers have to affront this type of problems when it comes to human resources.
They have to bring people from other places or train people, but all this costs money. In order to be attractive to investors many (LDC) have insisted to prepare and educate its population, however as mentioned before, sometimes it is not only a problem of education but of poor social conditions that do not permit them to reach their goal. We can also see the example of many companies installing their factories and all types of production plants on Eastern Europe, where besides of finding some natural resources above all they found a well educated labour force with knowledge and skills.
“As you know we have a different system here for 40 years and it wasn’t very good, And Czech people know how to work they are smart creative and flexible. ” (Czech Manager, Cyr, Dianne 1997. p 380. “Organizational Transformation at Skoda in Czech Republic”). Human Resources is definitely the most important issue in a global and more dynamic evolution of management solutions. Skills and knowledge are essential, and workers and managers must be prepared to know the right conditions of needed skills depending on the type of work.
“The competitiveness of modern enterprises is dependent upon the qualifications and skills base of their workforce, with the added requirement that qualifications and skills be constantly upgraded to keep the workforce abreast of a rapidly developing technology and constantly changing business environment”. (Rix 2001, p 5) Many of the western theories of approaching (LDC) as manager have to be very carefully examined. We have discuss that in many cases despite the optimal conditions to starting a new enterprise, there are many factors that should be considered.
Some of them are discussed in this essay and perhaps you will find many others, however, the one that I consider to be the most important issue are the Human Resources. Many (DC) have achieved a successful breakout in the international context, even though they are in remote areas, and in some cases lack of natural resources; they have invested in education and knowledge and that has been the key to their accomplishment. Even though we have seen that the world is becoming one, and that it all obeys to an economic evolution; there are still and would always be cultural differences that present barriers.
Managers must be flexible and must be open minded and dynamic to respond to all upcoming events and changes. In the mean time, (LDC) must be aware of preparing themselves and specialise their labour force in order to be competitive and attracting to investors. In my opinion, education is the major emphasis that many (LDC) must have as a priority to achieve their goal of becoming developed countries but as mentioned before, this must also come with the support of vast programs of social equity that guarantee the minimum and basic necessities of human kind.