The Real Economy in the Long Run Report Many different factors influence organizations that relocate to foreign countries. Learning Team D has composed a report detailing each of these factors for the Coach Company, a manufacturer of women’s handbags, transferring to the country of Cambodia. The team analyzed factors that included Cambodia's productivity, policies, macroeconomic variables, and unemployment rates. There is also an important emphasis on the risks that the organization will face and how they can be mitigated. Determining Factors of Productivity There are essentially five factors that affect the economic growth of a country. The first factor is the country's resources both human and natural. Human resources are the quality and quantity of the population. While natural resources are resources provide by nature and are either on or under the land. Cambodia is known for large expanses of land, forest, and water. Another factor is capital formation, which can also be part of the natural resources as it includes land but it also includes machinery, power, transportation, and communication. Lastly technological development and social/political factors, which make up some of the most important factors, as they are the most sought after when companies are expanding. It is important that the countries technology is available and the customs, traditions and government are in position to encourage growth. According to the Asian Productivity Organization Cambodia has enjoyed rapid growth in the last decade. “Cambodia made a strong, consistent move from a traditional to a modern economic structure, and thus Cambodians enjoyed rapid growth in the last decade. Furthermore, to cope with the effects of globalization, productivity and quality development in both the public and private sectors is deemed to be a contributor to economic growth and poverty reduction. Political stability in Cambodia has opened up a window of opportunities for social and economic development after a decade of political instability and insecurity as well as economic and social chaos.” (Sieng Hong) Influence of Productivity Growth The country of Cambodia has passed legislation that is focused on improving foreign business relations and growth. In 1993, Cambodia created a constitution that was the foundation in the development of a national economic market structure. The economic structure has been improved through new law developments. A 2010 Anti-Corruption law was passed in order to better regulate organizational ethics during growth. Huge benefits were realized when the country decided to join the Association of Southeast Asian Nations (ASEAN) and World Trade Organization (WTO). Cambodia's membership in these two organizations has advanced both local and international cooperation that contribute directly to the country's economic growth. The country's future challenges are based around growing and maintaining a skilled workforce to handle the ever-increasing marke ...

1. The Real Economy in the Long Run Report
Many different factors influence organizations that relocate to
foreign countries. Learning Team D has composed a report
detailing each of these factors for the Coach Company, a
manufacturer of women’s handbags, transferring to the country
of Cambodia. The team analyzed factors that included
Cambodia's productivity, policies, macroeconomic variables,
and unemployment rates. There is also an important emphasis
on the risks that the organization will face and how they can be
mitigated.
Determining Factors of Productivity
There are essentially five factors that affect the economic
growth of a country. The first factor is the country's resources
both human and natural. Human resources are the quality and
quantity of the population. While natural resources are
resources provide by nature and are either on or under the land.
Cambodia is known for large expanses of land, forest, and
water. Another factor is capital formation, which can also be
part of the natural resources as it includes land but it also
includes machinery, power, transportation, and communication.
Lastly technological development and social/political factors,
which make up some of the most important factors, as they are
the most sought after when companies are expanding. It is
important that the countries technology is available and the
customs, traditions and government are in position to encourage
growth.
According to the Asian Productivity Organization Cambodia has
enjoyed rapid growth in the last decade. “Cambodia made a
strong, consistent move from a traditional to a modern economic
structure, and thus Cambodians enjoyed rapid growth in the last
decade. Furthermore, to cope with the effects of globalization,

2. productivity and quality development in both the public and
private sectors is deemed to be a contributor to economic
growth and poverty reduction. Political stability in Cambodia
has opened up a window of opportunities for social and
economic development after a decade of political instability and
insecurity as well as economic and social chaos.” (Sieng Hong)
Influence of Productivity Growth
The country of Cambodia has passed legislation that is focused
on improving foreign business relations and growth. In 1993,
Cambodia created a constitution that was the foundation in the
development of a national economic market structure. The
economic structure has been improved through new law
developments. A 2010 Anti-Corruption law was passed in order
to better regulate organizational ethics during growth. Huge
benefits were realized when the country decided to join the
Association of Southeast Asian Nations (ASEAN) and World
Trade Organization (WTO). Cambodia's membership in these
two organizations has advanced both local and international
cooperation that contribute directly to the country's economic
growth.
The country's future challenges are based around growing and
maintaining a skilled workforce to handle the ever-increasing
market development. In order to get ahead of a deficiency of
educated and skilled workers, legislators will need to enact
policy that helps students pay for and receive higher education.
These types of policy can be controversial and create a rift in
the population of even a well-developed nation such as the
United States. Caution will need to be taken in any further
policy development to ensure all advancements in human rights
and working conditions are sustained.
Cambodia’s Financial System and Macroeconomic Variables
Each country has its own financial system that is made up of
institutions coordinating one individual’s investment with
another person’s savings. With and average GDP growth rate of

3. 6%, Cambodia is currently in a period of economic growth.
During a period of growth, it is imperative that the banking
systems continue to evolve and gain trust from investors
throughout the world. According to "Asian Development Bank"
(2012), “Cambodians share a vision of a prosperous future that
includes access to decent employment and the good living
standards that come from economic development. The strategy
of the government is to lead, manage, and coordinate in order to
achieve this vision, especially with regard to helping Cambodia
to compete regionally and globally.” (Financial Sector
Development Strategy 2011–2020). In an effort to further
stimulate the economy, the Cambodian Government has offered
incentives and eliminated price controls. As a result of the
government’s involvement, there has been growth in the
manufacturing sector of Cambodia. Dependent upon imports
such as consumer products and oil, Cambodia’s growth in
manufacturing enables them to actively participate in world
trade and become a leading market for producing items such as
Coach handbags. As a developing country, Cambodia offers
great potential for economic growth with an ample yet
inexpensive workforce.
Reducing the Risk of Relocating
Coach relocation is associated with a lot of risks which can
have an adverse impact on the operations and financials of the
company. Unforeseen costs, human resource loss, damaging
customer relations, and suppliers can have significant
consequences on the company’s relocation. An incorrectly
planned relocation can cause temporary or permanent damage
on Coach Handbags. Therefore, to minimize these risks, a
comprehensive and detailed strategy must be developed,
managed and coordinated well (Christersson & Rothe, 2012).
The first step that should be considered in this strategy is
planning through a corporate team. The senior management

4. should be assigned the plans control. Coach should also
consider hiring a professional consultant to give advice or
manage the relocation process. Timing and scheduling are
critical in this strategy where co-dependent relocation tasks
must be monitored. In the relocation process appropriate
communication between personnel, customers and suppliers
must also be ensured. Effective communication will facilitate
cooperation and decisions support. The employees will need
morale, and retention and suppliers will require notification for
future supply chain coordination (Altman, 1991). On the other
hand, Coach Handbag customers will need to be aware of the
company’s move and severing ties. They may also need to
accelerate their credit payments.
An inventory buildup before relocation will ensure the
organizations does not lose sales due to production delays that
may arise. The corporation should consider the potential
constraints in the context of its working capital. The company
can also consider running parallel operations in its original
location for awhile before it’s new site is well established
(Christersson & Rothe, 2012). This would provide cover for
relocation challenges. Finally, a budgeted cost will ensure
Coach is prepared for the potential productivity loss and
increased costs.
Current and Projected Unemployment
The current and projected unemployment over the next five
years in Cambodia will appear to look different. The
unemployment rate in Cambodia is projected to be 0.12 percent
by the end of this quarter, according to Trading Economics
global macro models and analyst’s expectations. In the long run,
the Cambodia unemployment rate is projected to average around
0.21 percent in 2020, according to econometric models
("Cambodia Unemployment Rate," 2016). Currently, the
unemployment rate in Cambodia showed an increased of 0.50
percent in 2015 from 0.10 percent in 2014. Unemployment Rate

5. in Cambodia averaged 1.14 percent from 1994 until 2015,
exceeding an all time high of 5.30 percent in 1998 and a record
low of 0.10 percent in 2009. Unemployment Rate in Cambodia
is reported by the National Institute of Statistics, Cambodia
("Cambodia Unemployment Rate," 2016). In Cambodia, the
unemployment rate measures the number of people actively
looking for a job as a percentage of the labor force. According
to the National Institute of Statistics, Cambodia there will be a
decrease in unemployment rate over the next five years.
Conclusion
References
Altman, Y. (1991). Relocation of Companies: The Human
Resource Perspective. Journal of
Managerial Psychology Vol 6 Iss: 1, 12-16.
Asian Development Bank. (2012). Retrieved from
http://adb.org/sites/default/files/pub/2012/financial-sector-
development-strategy-2011-2020.pdf
Cambodia Unemployment Rate. (2016). Retrieved from
http://www.tradingeconomics.com/cambodia/unemployment-
rate/forecast
Christersson, M., & Rothe, P. (2012). Impacts of organizational
relocation: A Conceptual
Framework. Journal of Corporate Real Estate Vol. 14 Iss: 4,
226-243.
Mankiw, N.G. (2012). Principles of Macroeconomics (7th ed.).
Stamford, CT: Cengage Learning.
Sieng Hong, C. (n.d.). APO: Asian Productivity Organization.
Retrieved August 14, 2016, from
http://www.apo-tokyo.org/productivity/110_prod.htm