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Why would a company relocate?

June 11th, 2007

30 Comments »

Almost everything a company will ever do is because they think it will in some way help to increase profit. Companies often relocate to a place where the cost of labor is cheaper. This is especially true of companies that have a lot of relatively low-skilled jobs. Certain companies may wish to relocate to an area where there is a higher talent pool of workers. Internet companies for example often move to Silicon Valley in California because of a relatively high number of people living there with appropriate skills to fill such positions. Some companies move to save costs on real estate or other costs such as hydro. Some move because of logistical reasons like they want to be closer to their suppliers to save on transportation costs. Some might move to a different country because they believe the government regulations there are more favorable to their particular business. I.e. the tax rate might be lower, the environmental laws may be more lax, or the worker’s rights may not be so strong. Some companies relocate to be near other companies in the same industry. This phenomenon is called clustering. Whatever the case, there are certainly many reasons a company may relocate, but basically it all comes down to profit.

 

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