International production in developing economies, changes in key factors for management

Many manufacturing companies have become involved in international production. The primary reasons for moving manufacturing offshore are access to low labor cost, access to markets and/or access to skilled labor. However, many companies fail when operating in international markets. Historically Western companies have been faced with challenges when operating in international situations, in some instances leading to huge losses. This indicates that operating in international markets, and in particular in developing countries, is a challenging task. Few models exist that can aid the management of overseas, in particular developing countries´, operations. In This work, based upon ongoing research since 1971, we present a model that is aimed at helping managers in these situations. The model distinguishes factors that can be different in international markets, and combines these with their effect on different manufacturing cost categories. The model facilitates managers in their assessment of international cost differences and, eventually, with preventing costly mistakes.