Author Question: Briefly describe off-shore financial services. What will be an ideal ... (Read 21 times)

KWilfred · **on:** Jul 14, 2018

Briefly describe off-shore financial services.

What will be an ideal response?

Question 2

How does the concept of threshold help a business to decide on the right location?

What will be an ideal response?

ndhahbi · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

Answer: Developing countries specialize in two distinctive types of business services. These are offshore financial services and back office functions. Small countries, usually islands and microstates, exploit niches in the circulation of global capital by offering offshore financial services. Offshore centers provide two important functions in the global circulation of capital:

Taxes: Taxes on income, profits, and capital gains are typically low or non-existent. Companies incorporated in an offshore center also have tax-free status regardless of the nationality of the owners.

Privacy: Bank secrecy laws help individuals and businesses evade disclosure in their home countries. People and corporations can protect their assets from lawsuits by depositing their money in offshore banks. Creditors cannot reach such assets in bankruptcy hearings. The privacy laws and low tax rates in offshore centers can also provide havens to tax. Offshore centers include Dependencies of the United Kingdom and other developed countries, as well as independent countries. A prominent example is the Cayman Islands, a British Crown Colony in the Caribbean near Cuba. The Caymans, with only 40,000 inhabitants, has 70,000 companies, including several hundred banks and the world's four largest legal and accounting firms. In the Caymans, it is a crime to discuss confidential business, defined as matters learned on the job, in public.

Assets placed in an offshore center by an individual or corporation in a trust are not covered by lawsuits originating in other countries. To get at those assets, additional lawsuits would have to be filed in the offshore centers, where privacy laws would shield the individual or corporation from undesired disclosures.

Answer to Question 2

Answer: To determine the extent of a market area, geographers need two pieces of information about a service: its range and its threshold. The range is the maximum distance people are willing to travel to use a service. The second piece of information needed is the threshold, or the minimum number of people needed to support the service.

Every enterprise has a minimum number of customers it needs to generate enough sales to make a profit. Determining the range, a service provider must also determine whether a location is suitable by counting the potential customers inside the irregularly shaped circle. How potential consumers inside the range are counted depends on the product. Convenience stores and fast-food restaurants appeal to nearly everyone, whereas other goods and services appeal primarily to certain consumer groups. For example, less affluent people may be drawn to thrift stores whereas wealthy consumers might frequent upscale department stores. If a service appeals to certain customers, then only the type of service that appeals to them should be counted inside the range.