MACI and Foreign Direct Investment

Paper Summary:

This paper examines the competitive advantage of a foreign direct investment (FDI) in Mexico for the Michigan Automotive Compressor, Inc. (MACI) company. Mexico's economic, social, cultural and political factors are examined as well as the entry mode that will be used. The paper comes to the conclusion that the company should not take this risk, but suggests that it should follow competitors in the same industry closely to determine if a future joint venture is a possibility.

Outline:
Introduction
Specific Competitive Advantages of Enterprise
Developing Foreign Country
Analysis of Entry Mode to Be Used
Other Factors Affecting Decision
Conclusion

From the Paper:

"Michigan Automotive Compressor, Inc. (MACI) is a manufacturer of air compressors for automobiles. The air compressor allows for the air conditioning unit to function properly. Toyota has ownership in the company, making for a large portion of their clientele. United States automotive companies are also customers as well (2008). The company is considering a Foreign Direct Investment (FDI) in Mexico to cut costs and increase profits. Mexico offers lower labor costs than does the United States as well as lower cost of living expenses such as real estate and utilities. The purpose of this report is to determine if this FDI is a positive strategic move for MACI and, if so, how the company will enter into the Mexican market. For example, will they enter into a joint venture or begin their own operation."

Sample of Sources Used:

• (2007, May). Cost of Living and Prices in Mexico. Retrieved on August 4, 2008 from, http://www.mexperience.com/guide/essentials/priceindex.html
• Gutierrez, S. (1993). Can You Make It In Mexico? Allbusiness.com. Retrieved August 4, 2008, from http://www.allbusiness.com/finance-insurance/374933-1.html
• (2008). Mexicali Industrial Park. Retrieved on August 7, 2008 from, http://www.mexicaliindustrialpark.com/invest.php#subGeneral
• (2008). Michigan Automotive Compressor, Inc. Retrieved August 1, 2008, from, www.michauto.com.
• Morrissy , J. (2008, March 25). Mexican Economy to Surpass Canada in 16 Years. Retrieved on August 4, 2008, from http://tropicasa.com/blog/2008/03/31/mexican-economy-to-surpass-canadas-in-16-years-report/.

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