International Business: Competing In The Global Marketplace, 11th Edition
International Business: Competing In The Global Marketplace, 11th Edition
11th Edition
ISBN: 9781259706776
Author: Hill
Publisher: MCG
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Chapter 17, Problem 1CTD
Summary Introduction

To explain: The possible locations that must be selected by the firm for its plants.

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Explanation of Solution

The possible locations that must be selected by the firm for its plants:

The firm must be looking at a concentrated manufacturing strategy because of the following reasons:

  • The tariffs for the industry are very low.
  • The cost required to build a plant to produce the microprocessors are very high.
  • The value to weight ratio of the product is very high.

The firm should look at the following factors before determining the appropriate location. They are:

  • Country factors.
  • Technological factors and
  • Product factors.

These factors will probably limit the new locations to any one of the developed nations. They have to select a country with a pool of skilled workers. The firm will be forced to select a technically strong country as it would like to reduce the costs involved in constructing a plant. The product will be developed keeping in mind the value to weight ratio and the universal appeal for the product.

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Students have asked these similar questions
An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial electronic products. A manufacturing plant costs about $500 million to construct and requires a highly skilled workforce. The total value of the world market for this product over the next 10 years is estimated to be between $10 billion and $15 billion. The tariffs prevailing in this industry are currently low. Should the firm adopt a concentrated or decentralized manufacturing strategy? What kind of location(s) should the firm favor for its plant(s)?
A company that is developing a strategy that entails obtaining location advantages for several of its different inputs A) would have each value chain activity replicated in each of its host country locations. B) would be pursuing a low cost strategy with economies of scale. C) would concentrate each value chain activity in the country in which can be performed most efficiently or effectively. D) would concentrate most of its value chain activities in its home country, where it is most familiar with the location. E) would implement a multi-domestic or multinational strategy.
Under the main criteria and procedures for determining a country's attractiveness and choosing the best investment locationb, Social and Cultural Factors are outlined. Write short notes on the following: Cultural Compatibility: Language: Social Infrastructure:
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