What are the risks involved in directly investing in foreign

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Reference no: EM131461784

Question: DEVELOPING CRITICAL-THINKING SKILLS

Suppose that you own and operate an electronics firm that manufactures transistors and integrated circuits. As foreign competitors enter the market and undercut your prices, you realize that your high labor costs are hindering your ability to compete. You are concerned about what to do and are open for suggestions. Recently, you have been trying to decide whether to move your plant to Mexico, where labor is cheaper.

Assignment: 1. Questions you should consider in making this decision include the following:

a. Would you be better off to build a new plant in Mexico or to buy an existing building?

b. If you could find a Mexican electronics firm similar to yours, would it be wiser to try to buy it than to start your own operation?

c. What are the risks involved in directly investing in your own facility in a foreign country?

d. If you did decide to move your plant to Mexico, how would you go about it? Are there any government agencies that might offer you advice?

2. Prepare a two-page summary of your answers to these questions.

Reference no: EM131461784

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