Huxley Maquiladora

Topics: Economics, Cost, Subsidiary Pages: 2 (694 words) Published: April 17, 2013
Internationalization of a firm is often defined as its cross border business activities, which include trading resources and final products or services, capital transactions, and widening human resources. By adopting internationalization, a firm can expand its market size, minimize operation cost, and enhance competitiveness. Relocating production plant to Mexico from Texas, Huxley sets the first step into internationalization. The movement of the manufacturing site can save a significant amount of production costs like transport tariffs, labor payments and taxations. Huxley should utilize the benefits offered by the new location and NAFTA, and hence focus on research & development in order to improve innovation aspect. Since we enter into technology-bombard world, hi-tech is the next step to internationalize. Only by upgrading effective know-how is the solution of long-term growth and market power maintenance. There are three ways to internationalize in Mexico: subcontracting, shelter operation and wholly owned subsidiary (WOS); however in term of Huxley’s domination power, it should mainly consider shelter operation and WOS for bigger profits and larger sustainable plans with the option of locating either in Ciudad Acuna or Saltillo.

Both shelter and WOS provides the company complete control over the quality and production management, but the costs and the set-up procedures are completely different. In this case, I would suggest applying shelter operation in Saltillo. First, shelter offers a faster, simpler, and cheaper start up than WOS; it only takes about 45-120 days to turn from authorization to actual production rather than six months to a year as WOS. Also, with shelter, the company does not have to worry about choosing appropriate plant site, recruiting and training new employees, cultural practice differences, complicated taxations, getting official legalized permits and licenses, and developing a close and healthy relationships with all...
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