Economic Environment Analysis for a Essay

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00). This is below the EU, where they have a rating of 42 or a PPP of $32,500.00. (Czech Republic 2010) 1 When you compare the two numbers, the purchasing power is lower in the Czech Republic in comparison with the EU. This means, that labor costs are much lower in relation to the rest of Europe. When you put this together with the increases in the GDP over the last two quarters and the fact that the banking sector, was undamaged from the financial crisis; means the Czech Republic has outstanding opportunities for addressing the needs of the company. As the country's costs, the business friendly atmosphere and prudent practices of government policies are creating the ideal environment for a European call center to flourish.

Risks

Despite the obvious advantages, there are risks of relocating to the Czech Republic the most notable would include: the underlying cost structure. While labor costs are lower in comparison with other EU countries, the Czech Republic is in the middle of the range in comparison with other EU member such as: Latvia or Georgia. Where, Latvia ranks 78 (with a PPP of $15,500.00), while Georgia ranks 151 (with a PPP of $4,400.00). (Czech Republic 2010) 1 This is problematic, because the lower labor costs in other EU countries could be more advantageous than Czech Republic. Then, when you consider the fact that 7% of the domestic manufacturers have relocated to other countries because of this reason, highlights how the overall cost structure must be continually monitored. That being said, the total number of business continuing to relocate to the Czech Republic, far outweighs the domestic manufacturers seeking lower labor costs in other countries. (One if Five Companies Consider Moving 2010) 4

Conclusion

Clearly, establishing a call center in the Czech Republic will help to effectively address the issues that company is facing for its European operations.

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Where, the organization needs to have a call center in an area that labor costs are low and there is great poet entail for long-term growth. This can be seen by looking at: the PPP, the report on the financial sector (from Price Waterhouse Coopers) and the GDP; which are all confirming how the country has lower costs, with the above average economic growth. The biggest risk that is faced from engaging in such actions is that labor costs are not the absolute lowest, in comparison with other EU members. This can cause some executives to believe that the same results could be obtained, by relocating to one of these countries. The problem is that the low PPP has not been confirmed with consistent amounts of above average growth and the government policies, this could allow various businesses to engage in undue amounts of risk (such as bankers having liberal lending standards). In the case of the Czech Republic, they have consistent above average growth and the government polices have protected the economy against the uncertainty. When you combine this with the lower PPP rate in comparison with the EU average, it is clear that the opportunities outweigh any kind of potential risks. Therefore, it is recommended that the company begins implementing a strategy to open a call center in the country.

Reference List

1. Czech Republic, 2010, CIA World Factbooks. Available from

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