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Reason for locating value chain activities for competitive advantages is lower wage rates, higher worker productivity, lower energy costs, fewer environmental regulations, lower tax rates, lower inflation rates, proximity to suppliers and technologically related industries, proximity to customers, lower distribution cost and available or unique natural resources.The impact of government policies and economic conditions in host countries has positive impact which is tax incentives, low tax rates, low-cost loans, site location and development and worker training while the negative impact is environmental regulations, subsidies and loans to domestic competitors, import restriction, tariff and quotas, local-content requirements, regulatory approvals, profit repatriation limits and minority ownership limits. Political risks stem from instability or weakness in national government and hostility to foreign business.

Economic risks stems from the stability of a country’s monetary system, economic and regulatory policies, lack of property right protection, and risks due to exchange rate fluctuation actuating exchange rates pose significant economic risks to a company’s competitiveness in foreign markets. Exporters are disadvantages when the currency of the country where goods are being manufactured grows stronger relative to the currency of the importing country.The strategies of firms that expand internationally are usually grounded in h encounter advantages concerning demand conditions, factor conditions, related and supporting industries, and firm strategy, structure, and rivalry, as described by the Diamond of National Advantage framework. Two key strategic consideration for cross country differences in demographic, cultural and market conditions is to customize offerings in each country arrests to match the taste and preferences of local buyers and to pursue a strategy of offering a mostly standardized product worldwide.

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