Intel: Strategic Decisions in Locating a New Assembly and Test Plant

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Question 1: What criteria would you use to select the site for Intel’s plant in 2005? Why? From my point of view, one of the most important criteria which Intel should consider is the cost factor. Intel should choose a location with low cost of operations especially low labour cost. Thus, the company would decrease its costs and increase its profits and its free play when setting the price. Furthermore, Intel should look for a location which offers many opportunities to do business internationally. As a consequence, it will be easier for the company to expand its market and to gain many other business partners all over the world. Another important point is the supply of resources. If the supply of resources in the selected location is…show more content…
Why? I personally prefer China. The first and most obvious reason why to choose China are the low cost. Low labour costs in combination with an ambitious and well educated workforce provide huge cost saving potential. Moreover, Intel has already experience in doing business in China since the company has already built several plants in Shanghai and Chengdu. In addition, the rapidly expanding industrial complex offers many opportunities to fix advantageous contracts with suppliers and beneficial cooperation with other companies. In contrast to other locations in Asia, the infrastructure in China is good which ensures the supply of important items. Besides, China offers tax breaks which represents a huge cost saving potential as well. On the other hand, the restrictions and limits when doing business in China cannot be neglected. China imposes tariffs and restricts foreign countries to certain sale regions which limits the opportunities of Intel to expand. Furthermore, China required some companies to enter joint ventures with Chinese companies in the past. This might lead to unfavourable contracts with companies which do not fit in the general concept of Intel. But in my opinion, the advantages outweigh the disadvantages. From all the potential locations Dalian seems to be the most favourable one. India for example still has to deal with an unstable government and with slow progress on much-needed economic reforms. In addition, the infrastructure of India is
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