Hatsi Report

Having studied all the possible combinations from diagrams coming from different research in both countries I can define whether your company is better to expand in UK or in Spain, by giving also some advantages and disadvantages.

To begin with, the economic forecasts estimate that till 2002 the exchange rates will be decreasing. In other words, one pound will be equal with 110.5 yens in 2000 but with 110 in 2002. This means that till then you must have changed your entire budget in pounds. After this period the rates will increase dramatically. As a result, you will not need so much money in 2002 than in 2003. In the same time in Spain the exchange rates will increase but in 2002 the will decrease a lot. This means that a big amount of money will be wasted in the exchanges. However, if one would like to invest in Spain he would need less money in yens. Additionally the labour costs in UK will be decreasing and in Spain they will be increasing. As we can imagine using the diagrams in the long run the costs will probably will be equal. In Appendix B of my research, we can see the probability of getting a grant and the estimated size of it. In UK it is more possible to get a grant (60%) than Spain (10%), but in Spain if you get a grant you receive 65 million pounds more than in UK. In Appendix C, it is illustrated that in all the very important factors such as flexibility of labour force or quality of infrastructure UK has a bigger rating. Spain in this appendix is more favored