Suppose you get a job at MobileTV, a small manufacturer of TV sets installed in cars and boats. The business has declined recently; foreign rivals from emerging markets have increased competition and management has concerns. Because MobileTV does all its manufacturing in Canada and the United Kingdom, it lacks cost advantages and sells at relatively high prices. After studying the problem, you conclude that MobileTV should move much of its production to Mexico, but senior management knows little about FDI.
Respond to management detailing the advantages of establishing a production base in Mexico (separate paragraphs):
Why should the firm be interested in foreign manufacturing?
Recommend which type of FDI MobileTV should use in Mexico. (Justify your selection.)
Finally, what advantages and disadvantages should the venture expect from manufacturing in Mexico?
