Here is the scenario I need help with: "You are the director of new business development for your company, and your vice president wants to expand into new markets overseas. Your company's core competency is in the area of constructing, staffing, and operating customer call centers. Your VP reasons that since the cost of labor is cheaper overseas, the company will automatically generate a higher rate of return by investing overseas."
May you help point me in the right direction on how I could answer the following questions?
- What should be my reaction to the vice president's premise? Is what the VP saying true or false? Why? Is it really that simple?
- What are some other types of risk that play a role in making such a decision to expand internationally.
- Should I always assume that foreign projects need to generate higher returns when compared with equivalent projects in the U.S.? Why or why not?
If you could give me a few pointers on how to answer these 3 questions that would be great!