An Australian company has two manufacturing plants, one in Australia and the other in a Southeast Asian country. Both produce the same product, each for sale in their respective countries. However, their labour productivity and capital productivity figures are quite different. The analyst thinks this is because the Australian plant uses more automated equipment for processing while the other plant uses a higher percentage of labour. In your own words, explain how the aforementioned factors can cause productivity figures to be misleading. Is there another way to compare the two plants that would be more meaningful?

An Australian company has two manufacturing plants, one in Australia and the other in a Southeast Asian country. Both produce the same product, each for sale in their respective countries. However, their labour productivity and capital productivity figures are quite different. The analyst thinks this is because the Australian plant uses more automated equipment for processing while the other plant uses a higher percentage of labour. In your own words, explain how the aforementioned factors can cause productivity figures to be misleading. Is there another way to compare the two plants that would be more meaningful?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter16: Country Risk Analysis

Section: Chapter Questions

Problem 2BIC

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