International Development Overview 1

MEMO
To: Company X International Location Development Team
From: Colin Gilbert (ccg24@companyx.com)
Date: September 26, 201x
Subject: International Development Overview

INTRODUCTION
As Company X continues to expand and develop new international locations, Ive
researched the following factors which are vital for success: literacy rates, wage rates,
government corruption, and infrastructure. This memo will provide insight and
recommendations as to where Company X would prove most successful in the
prospective countries of Brazil, the Czech Republic, Thailand, and South Africa based
on the above factors.
LITERACTY RATE
While perhaps not considered an important factor when maximizing productivity and
increasing output, the literacy rate of a company can have significant impacts on
profitability. Higher literacy rates lead to higher productivity. Companies lacking proper
training and education continue to ineffectively operate and succeed, regardless of
capital investment. Overall, companies which provide literacy training and continued
education for employees report better team performance, increased quality, reduced
time per task, increased profitability, and increased customer retention, among other
benefits.1
Of the four countries, the Czech Republic has a clear advantage with a 100% adult
literacy rate. Undoubtedly, it would be logical to infer they would have the most
productive workforce based on the information previously stated. Thailand, South
Africa, and Brazil, however, appear fairly close in literacy rate, presenting 96.6%,
94.3%, and 92.2%, respectively. It is notable that Brazil achieved the highest increase,
0.4%, from 2013 to 2014. South Africa only improved their rate by 0.2% and Thailand
presented no change. These statistics are detailed in the graph below.

Adult Literacy Rates

2014

2013

South Africa
Thailand
Czech Republic
Brazil
86

88

90

92

94

96

98

100

102

International Development Overview 2

WAGE RATE
In almost every company, the ultimate goal is to generate the highest output at the
lowest cost possible. Of all the factors involved in determining the bottom line, the
wage rate is one of the most important. Different companies have varying forms of
employee compensation, however, wage rate is generally determined by two factors:
productivity at work and the number of production hours.2 For future developers, the
wage rate is a good indicator of company success, as more profitable companies
usually pay higher wages for the same occupation than those with fewer profits. Other
factors, such as cost of living, skill and education, and labor supplies could potentially
affect the validity of that statement, but generally, the higher the wage rate, the more
successful the business.3
The following data is based on the wage rate per hour in manufacturing, reported in
2014 USD fixed exchange rates. Thailand paid out the least in wage rates, averaging
3.8. This information is somewhat concerning, as the Consumer Price Index of 40.47 is
higher than both Brazil and South Africa. The Consumer Price Index (CPI) is an
economic indicator, providing information about cost of living and economic
effectiveness.4 Thus, having a higher CPI and a lower wage rate indicates that the
wage has much less value in Thailand compared to other countries. Brazil reported a
wage rate of 3.4 and a CPI of 38.03, while South Africa had a wage rate of 3.8 and a
CPI of 39.54. The Czech Republic had both the highest wage rate and CPI, at 7.0 and
42.52, respectively. Although Thailand would be the most economically efficient, Id
infer the Czech Republic as the most successful country in this factor, too, due to its
significantly higher wage rate and only somewhat higher CPI compared to the other
countries.

Wage Rate
7.5
6.5
5.5
4.5
3.5
2.5
1.5
0.5
-0.5

Consumer Price Index

43
42
41
40
39
38
37
36
35

Brazil

Czech
Republic

Thailand

South
Africa

Brazil

Czech
Republic

Thailand

South
Africa

GOVERNMENT CORRUPTION
Simply stated, the more corrupt the government, the less efficient business is. Aside
from leading to lower GNP per capita and lower investment and growth rates,
government corruption creates operational inefficiency and ultimately destroys the
nations wealth and business climate. In addition, managers who hire for their personal
benefit rather than the benefit of the company unnecessarily raise costs for not only

International Development Overview 3

GOVERNMENT CORRUPTION, contd
consumers, but for other industries, as well. Countries with a more stable government
will most likely have a healthier economic status.5
Based on the 2014 Corruption Perceptions Index, the Czech Republic is the least
corrupt government. This index is based on a scale of 0 as highly corrupt and 100 as
very clean. Thus, the higher the rating, the less corrupt a government is perceived to
be. The Czech Republic scored 51 in 2014 and 148 cumulatively from 2012-2014. That
averages 49.33 annually, showing the country has been consistently clean in recent
history. South Africas score of 44 places it second least corrupt, with Brazil trailing
close behind at 43. Thailand scored much lower than the other countries, receiving a
38. This low score acts as a major warning when considering Thailand for international
development. The graph below details cumulative scoring, reinforcing the scores have
remained fairly consistent over the past three years. I would recommend the Czech
Republic for its consistently low rate of government corruption, leading to economic
efficiency and company success.

Government Corruption Index

2012

South Africa

43

Thailand

38
48

43

20

44

35
49

Brazil

2014

42

37

Czech Republic

2013

51

42

40

60

43

80

100

120

140

160

INFRASTRUCTURE
Infrastructure, or the basic, underlying framework or features of a system, is vital to
economic success. Ranging from canals and highways to telecommunications and
internet networks, infrastructure lays the foundation for economic development and
growth. In addition to economic success, increased investment in infrastructure
facilitates improved health care, sanitation, and overall well-being.6 For business
development, infrastructure is needed for transportation, communication, and
manufacturing. Thus, countries with greater infrastructure will have a better business
environment.
Unsurprisingly, the Czech Republic once again has the highest score of the four
countries, at 50.8 on the Global Innovation Index for Infrastructure. This score is based
on information and communication technology, ecological sustainability, and the
general infrastructure of each country. While Brazil remained in the middle at 39.4,
South Africa scored lowest, with 32.9, below Thailand with a score of 36.5. Its notable

International Development Overview 4

INFRASTRUCTURE, contd
that each of the bottom three are all within a seven-point range, whereas the Czech
Republic scored 11 points higher than the second highest country, all of which can be
viewed on the graph below. Once again, I would suggest the Czech Republic for
development due to its high amount of infrastructure, facilitating business and
promoting economic efficiency.

Global Innovation Index for Infrastructure

60
50
40
30
20
10
0
Brazil

Czech Republic

Thailand

South Africa

CONCLUSION
After careful review, Id recommend the Czech Republic as the best location for
international development. Thailands government corruption and extremely low wage
rate would prove inefficient for the company and unethical for workers. The lower
literacy rates in Brazil and South Africa wouldnt facilitate company success or
innovation. The Czech Republic offers a high literacy rate, fair wage rate, low
government corruption, and ample infrastructure, providing an optimal environment for
a new Company X manufacturing plant.
NEXT STEPS
Discussion of this International Development Overview will occur at the follow times
in Conference Room C:
Thursday, October 8 from 8:00 to 9:00 a.m.
Monday, October 12 from 2:00 to 3:00 p.m.
Wednesday, October 14 from 11:00 a.m. to 12:00 p.m.
Tuesday, October 20 from 10:00 to 11:00 a.m.
You are not permitted to attend more than one session.
Please RSVP your preferred session via e-mail to Jean-Louise DuBois
(jldubois@companyx.com) no later than the end of the day on Monday, October 5
to be added to the attendance list for your session.
Your input is crucial to the development process. Please review information
carefully and be prepared to actively participate in discussion.
Please contact me via e-mail (ccg24@companyx.com) for any additional questions
regarding this information. Id be happy to provide further explanation or resources.

International Development Overview 5

DATA ACQUISITION
Literacy Rate
http://www.portal.euromonitor.com/portal/statistics/rankcountries
Wage Rate
http://www.portal.euromonitor.com/portal/statistics/rankcountries
http://www.numbeo.com/cost-of-living/
Government Corruption
http://www.transparency.org/cpi2014/results#myAnchor1
Infrastructure
https://www.globalinnovationindex.org/content/page/interactive-Comparision/
ENDNOTES
1
http://www.nald.ca/library/research/economic/economic.pdf
2
http://strategiccfo.com/wikicfo/wage-rate/
3
http://dlc.erieri.com/onlinetextbook/chpt07/text_main.htm
4
http://www.bls.gov/cpi/cpiadd.htm#2_1
5
https://www.gsb.stanford.edu/insights/research-corruption-causes-businessinefficiency
6
http://photos.state.gov/libraries/amgov/133183/english/P_Infrastructure_Brings_Econo
mic_Growth_English.pdf