StartupTalky

Tag: labour

  • How to Analyse the Location for Your Business?

    The location of your business determines how much money you will save while running the business. Depending on the type of business you have, you need to figure out a number of things that directly impact your pocket. Analyzing the location that suits your business needs is one of the important factors that every business owner should consider.

    Here is a detailed and to-the-point article to help you to decide the best location for your business. So, without further ado let’s get started.

    Factors Affecting Business Location

    There are many factors that can influence your business location decision, and the success of your business depends on each decision you make. So despite talking about so many influential things, the three major factors that influence the business location are

    • Proximity to labour
    • Proximity to consumers
    • Proximity to raw materials

    Proximity to labour refers to how close your business is to having the skilled workers you want in your business. For example, some companies want so many labourers to work in their firm and to fulfil this requirement they set up their plant near a location where they can get skilled labours at a cheaper rate.

    The most prominent example of this is Bengaluru, where most of the IT companies are headquarters. IT companies choose Bengaluru because they easily get a relevant skilled workforce to work with them. Companies do not need to take care of the accommodation for the employees if they are local. The same is true for the IT hub in California.

    Similarly, proximity to consumers is for businesses that want to position themselves closer to their target customers. Proximity to materials for businesses that require extensive raw materials to use in their firm. The closer your business is to your requirement the more money you will save and earn while running the business.

    Nature of Your Business: Retail, Manufacturing and Service-Based

    Just like a doctor who recommends various tests and after analysing the test report, prescribes the medicine. Similarly, you also need to know your business in-depth, and based on the requirement of your business, choose the location. The first thing which should be recognized is the nature of your business.

    So to analyse the best location for your business we have categorised the business into three types based on its nature and evaluate each business with three parameters of proximity to labour, consumer, and material.

    Location for Retail Business

    If your business is a kind of Retail business then it needs to be closer to its consumers. The priority of this kind of business is to supply all the essential goods to consumers in a feasible way. You can find a relevant crowd for your business by analysing the people around your desired business location and identifying their needs. If their daily requirement supports what you sell, then that location is good for you.

    For the retail category, the area should be crowded and busy. If that area is suitable for your business then it might be suitable for other retailers also, hence you can see your competition nearby. Proximity to labour and proximity to material doesn’t play an important role for this kind of business but proximity to its consumer is the most important aspect.

    For example, restaurants and cafes need to be situated near a busy area where there is a sufficient crowd.

    Location for Manufacturing Business

    Proximity to raw materials is the most critical factor for manufacturing businesses as it saves a lot of money and time in transportation and storage. Manufacturing businesses may also be located near the place where they get skilled labour at a cheaper rate. This is the reason, most manufacturers build their plants outside the town and cities.

    In India, most of the manufacturing businesses like iron and steel plants are situated in the state of Jharkhand, West Bengal, Odisha, and Chhattisgarh in the cities like Jamshedpur, Bokaro, Bhilai, Rourkela, etc. The reason is simple, easy accessibility to raw materials and labour. Proximity to customers is not the most influential factor for such kind of business.

    Location for Service-Based Business

    Service-based business is not material-intensive hence it doesn’t need to be set up outside the city and towns. You will find restaurants, cafes, schools, colleges, carpenter shops, etc within your city. Location may vary depending on the service your business provides, for example, if you are a videographer you don’t need to think much about your location but if you are a restaurant owner then location is very important.
    The location of the service-based business should be closer to its customers, the other two factors (labour and material) don’t have that much influence.

    Impact of the Internet: eCommerce Business

    The Internet has changed the way of doing business. Today, so many businesses have their existence just because of the internet. One of the most well-known examples is the Ecommerce business.

    The target customers for this business are not limited to any particular region rather the seller can sell their product to anyone across the country. The market is open and possibilities are limitless. Location doesn’t matter a lot for such kind of business as it can be operated from anywhere.

    Demographics and Purchasing Power of Customers

    Every business owner should be aware of the demographics of their audience, and businesses should be near their potential customers. A successful business knows, who is the target customer and what they like to consume.

    The revenue you generate will depend on the customers visiting your store and their purchasing power. If people in an area have more purchasing power then they consume more goods and more services.

    Therefore, having an idea of the demographics and purchasing power of your potential customers around your business location would be beneficial for your business.

    The Demand for Products and Services

    What will happen when you open a non-veg restaurant in an area where everyone is vegetarian? Of course, this will affect your sales and therefore your revenue.

    There must be demand for the product or service you sell at your desired business location. This aspect should be considered as it affects the overall sales volume. Demand determines the price you can charge for the product, if demand is high you can charge more and if demand is low then you have to charge low.

    Conclusion

    It becomes very important to choose the best location for your business as it has the potential to affect your business revenue in the long run. So take your time to analyse the location of your business and consider all the points mentioned above.‌‌

    When you are just starting out, be smart and secure the place to operate your business. Also, keep in mind that your location may vary depending on the type of business and industry you are in.

    FAQs

    How to choose the right business location?

    Consider the following factors before choosing the best business location

    • Competition
    • Demographics
    • Foot traffic
    • Infrastructure
    • Overhead costs

    Is Location plays an important role in the success of your business?

    Yes, location plays an important role in business development and profit-making as it directly influences the condition and environment of your business.

    What kind of location would be best for your business?

    The key to finding and choosing a good location is to evaluate factors such as footfall, labour and raw material availability as it will increase the number of customers and lower the cost of functioning.

    What are the factors that affect the business?

    The following are the factors that can affect the business

    • Proximity to labour
    • Proximity to consumers
    • Proximity to raw materials

  • Who will be the next Global Leader of Cheap Labour?

    There is a unique kick in Unboxing something new, a new gadget, a new parcel because it has a sense of surprise in it. India is a country of festivals and we absolutely love to shop but have you ever wondered how these goods are made ? How do they land in the package ready to be used ? How are we able to get dreamy-deals that save us money ? There is a lot of behind the scenes of making a product, packaging the value in a box.

    In a world as fast as ours, we tend to forget the process and focus mainly on the outcome. This article talks about a product process and how a brand manages to save costs with countries with cheap labour. We will also discuss Pakistan as an emerging nation with cheap labour.

    What is Labour?
    Global sourcing of Labour
    Cheap Labour and its History
    China: The world’s factory
    Cheapest Countries in Asia
    The land of Pakistan
    Is Pakistan the new heir?
    Digital or Online Labour
    Pakistan and Digital Labour
    FAQ

    What is Labour?

    It is said that Labour is handicapped without capital, and our capital is handicapped without labour. The word labour has direct relations with inputs that we put in to get some final product.

    Labour can have many dynamics like mental, physical or social efforts that are required to manufacture something. Essentially on the basis of skillset, labour are of two types – Skilled, Unskilled and in some cases even Semi-skilled.

    As the name suggests they are categorised on the basis of skills and training required to make them work effectively. Unskilled labour is the cheapest form of labour and is required to do work that does not require any sort of training.

    Global sourcing of Labour

    The initial motive of global sourcing of labour is cost savings. With the progress of globalisation, product differentiation in contemporary markets is not that remarkable anymore, to some extent, which leads to a greater emphasis being placed on price competition.

    This has especially been the case with consumer products. Besides cost savings, plenty of studies have also identified quality and availability as critical aspects for global sourcing

    Cheap Labour and its History

    In every society around the globe, employers try to follow the downward trend of cost of labour. Thus, saving themselves the most capital. They pinpoint some stratum of people who are the most vulnerable and employ them with low wages.

    This topic can go further to the ‘apartheid’ faced by the South Africans in contrast to white population. Their wages were as low as one-fourteenth of white counterparts even when they comprised around 80 percent of the total population.

    Government implementing racist policies, commended employers with greater power over this section of workers. Which in turn employed discrimination among the general public.

    Another method employers follow is ‘De-Skilling’ which means to eliminate a skill that is required for a job. Making it easy for a worker to be replaced. This drives down labour cost.

    New technologies are also a way to increase competition among workers resulting in less wages. This makes the labour cheap and employers end up with more surplus. These are the usual cases in the world of manufacturing but there are some more natural ways on how labour can be cheap.

    Factors like economic development, growth of a nation and per capita income of citizens of the country matters in determining the cost of labour. China has been a global player.

    China: The world’s factory

    China is considered as a factory for the whole world, the reason being the huge population and cheap availability of labour. This trend was followed for a long time and now it is up for a spin. The world demographics are changing and we are witnessing a downward trend in the employability of labour, the prime reason is rising labour costs.

    Due to rising demands of people and rising cost of goods, China is not prized as the ‘cheapest’ country to produce goods anymore. Moreover this phenomenon has led some foreign countries to exit the country and find their nest somewhere else. There are several reports on how the trend is moving.

    According to one Report, it is observed that hourly rates in Mexico are lower than that of China. This might not be good news for monopolist China but it is surely good for developing countries where labour is relatively low.

    Cheapest Countries in Asia

    When the world’s factories are becoming a little expensive, the biggest players in the manufacturing sector are looking for a shift. The new home should obviously be cost effective. To answer this question satisfactorily, we will have to look through a lens of cost. The cheapest countries in the largest continent of the world i.e. Asia are listed below –

    • India
    • Pakistan
    • Nepal
    • Sri Lanka

    Included a Forbes article. This essentially shows where the manufacturing giants could move their base to. The list coincides with the trends that we see every other day, like Tesla coming to India, Apple pondering over ideas to start a manufacturing unit in India, Pakistan becoming the next hub for cheap labour in the world and much more. These are the hotspots where new industries are eyeing for better sustainability.

    The land of Pakistan

    Pakistan is the fifth most populous country in the world with a population of over 200 million. These statistics make it an important player in the world. Several studies have concluded that the country entails a good number of workers and manpower. With these numbers we can safely say that the country is rich in workforce.

    Is Pakistan the new heir?

    A populous country as Pakistan with abundance of labour seems a good choice for industries all over the world. The abundance can be a signal of cheap labour that can be used to produce goods and services with ease and with better efficiency.

    Salman Shah of ‘Taskforce on Textile’ during the TEXPO-2019 seminar mentioned that a recent survey concluded that the labour unit in their work in this domain is much cheaper than that of the dominant China. The textile expo (TEXPO) also witnessed clothing brands‘ total presence and active participation during the event.

    Moreover, rather than dismissing it as an impediment, we can use this unique aspect as a benefit for our nation. He also mentioned that this trait can become very useful when we talk about China-Pakistan economic corridor projects. Cheap labour in Pakistan can help build a soft spot for the country in the world where it already faces other economic and relational issues.

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    Digital or Online Labour

    What is digital labour? How is it different from online labour ? these questions might be popping in your head. The funny thing is that it is easier to understand. There is a famous quote that goes like this – “Software is eating the world”

    Almost all people on this planet are witnessing this (Except fewest of third world places) phenomena. We live in a digital era and we work digitally. You are reading this blog on a mobile or other device digitally. So you can easily see the blanket of technology that the world is wearing right now. It’s beautiful and gives us a sense of abundance.

    Examples of digital labor might include on-demand platforms, micro level of working and data generated by users of digital platforms like our favourite, social media. Digital labor generally describes work that entails a variety of online tasks. If a country has the structure to maintain this kind of digital economy, then this form of labour can incubate income for citizens without the limits of physical obstacles.

    Christian Fuchs cites that of the world’s 2,000 largest transnational corporations 11.6% fell under the umbrella of communications and digital media. Tech companies like Google, Amazon, etc. are shaping the economy in exciting ways.

    Pakistan and Digital Labour

    Online Labour Supply
    Online Labour Supply

    A report by the International labour organisation concluded that Pakistan already is the third largest provider of labour for digital or online platforms globally. The report also mentioned that India is the biggest labour supplier. Digital labour can be categorised in two types, location based and online web based.

    The web-based platforms are defined in which tasks are performed online or remotely by workers without being physically present. “These tasks may include translation, legal work, financial and patent services, designing and software and freelancing.

    Location-based platforms on the other hand are those done in person in specified physical locations by employees. These can include taxi driving, delivery services and home improvement (plumber or electrician), domestic labour and caretakers.

    Conclusion

    We are witnessing a decline in the Chinese empire of cheap labour. This is true for sure. While companies search for alternatives for meeting their manufacturing demands, Pakistan is going to be seen.

    On the other hand, India is a big player and it will shine in the search of  manufacturers to find a better place. However, the filter of cheap labour is sharp enough to cut India from the picture and put Pakistan in the spotlight. Who will rule this industry is hard to say because there are a lot of variables involved.

    Variables like globe conditions, Pakistan’s relations with the world and need shifts of brands. We live in a beautiful world of change and numerous probabilities. We can study numbers to tell a story but the reality may unfold in its own fashion.

    FAQ

    Is China still the Low Labour cost country?

    No, due to the rising demands of people and the increase in the cost of goods, China is no longer regarded as the ‘cheapest’ country to manufacture goods anymore.

    Is Indian Labour cheaper than China?

    The hourly wages in India are five times less than in China.

    Can Pakistan become the next cheap labour country for the world?

    Yes, Cheap labour force in Pakistan can help attract foreign industrialists.