Dispersing operations in foreign countries is not a development in only recent years
and we can face it almost daily in the newspapers and on TV. Not only by the takeover
waves among big multinational companies in the late nineties (for instance the lastly
loosed merger of Daimler and Chrysler) but also by the riots in the run-up to the 33rd
G8 Summit 2007 in Germany the issue of globalisation was spotlighted to the general
public.
Based on the economic research this diploma thesis addresses the topic of dispersed
operations and should give advice and instructions how to reach a successful access to
markets in foreign countries in practice. Since the international orientation of enterprises
cannot be generalised and is different (among other things) from branch to
branch the establishment of dispersed operations is examined for the example of an
automotive supplier starting business activities in Mexico. The automotive supply industry
seams to be very applicable for such an analysis as the traditionally very internationally
oriented automotive manufacturers, i.e. the customers of the suppliers, were
notably influenced by the consolidation processes in the last years and decades. Considering
this the question needs to be posed if this alteration of business conditions has
impacts on the suppliers as well.
The United Mexican States as one of the biggest economies in Latin America are a
quite popular location especially among the North American investors for a long time.
Mexico connects (not only physically) the huge markets of Canada and the United
States of America with the BRIC state of Brazil which is considered by many experts
to be the growth market of South America in the next years. Since all well-known
vehicle manufacturers run representations on the Mexican market it suggests examining
the international orientation of automotive suppliers in respect of especially this
market.
Table of Contents
0. Preface
1. The understanding of dispersed operations
2. The automotive supply industry: Status quo and global developments
2.1 The German automotive supply industry – Facts and figures
2.2 Abstract of trends in the global automotive supply industry
2.2.1 Development of the global automotive production
2.2.2 Increase of the automotive value
2.2.3 Value percentage of the automotive systems suppliers
2.3 The automotive supply industry in the flux: From components to systems supplier
3. Description and critical view on the forms of dispersed operations for an automotive systems supplier in Mexico
3.1 Export
3.2 Sales office
3.3 Production settlement – Maquiladora
3.4 Acquisition vs. formation of a company
3.5 Foreign Direct Investment
3.5.1 Wholly owned subsidiary
3.5.2 Joint Venture
4. Influencing factors for the prosperous exposure of an automotive systems supplier in Mexico
4.1 State and development of the Mexican economy and politics
4.1.1 Mexico – Facts and figures
4.1.2 The political situation in Mexico
4.2 The Mexican market for automotive systems
4.3 The choice of location
4.3.1 Sales potentials
4.3.2 Resource acquisition pool
4.3.3 Available skills pool
4.3.3.1 The personnel policy and expatriates management
4.3.3.2 Labour unions
4.3.3.3 Labour costs
4.4 Financials
4.5 Cross-cultural aspects of business activities in Mexico
5. Conclusion
Objectives and Topics
This thesis examines the strategic establishment of dispersed operations in Mexico for a German automotive systems supplier, providing a diagnostic approach to navigate international market entry. It investigates the structural changes in the global automotive supply industry and evaluates specific economic, political, and cultural factors in Mexico that influence the success of such foreign investments.
- The evolution of the automotive supply industry and global production trends.
- Methods and forms of international dispersed operations (e.g., Export, Maquiladora, FDI).
- The economic and political environment of Mexico as a business location.
- Strategic location planning, including sales potentials and human resource management.
- Challenges related to cross-cultural business activities and financial integration.
Excerpt from the Book
3.1 Export
Reconsidering the export a distinction between direct and indirect export is necessary. Direct export means that the goods are straight sold to a customer in the foreign country whereas with the indirect export the foreign business is effected by an intermediary working for his own account and at his own risk. Direct export is not only advantageous because of the multiplicity of contractual scopes of design but also because of the relatively low transaction costs since you abandon one trade level between the counterparties. So you create flexibility and lower the capital spending from the exporting company’s point of view.
Indirect export on the contrary is beneficial for those companies that would like to profit from the experience of the intermediary in case he has a good market knowledge of the regarding country. In addition the intermediary usually handles the export transactions technically, e.g. by assigning agents or authorised dealers. In consequence the risk of remoteness from the market is reduced so that the export business can be carried out almost without international experience of the exporting company.
Summary of Chapters
0. Preface: Outlines the rise of globalization in the automotive sector and introduces the thesis's goal of providing practical guidance for German suppliers entering the Mexican market.
1. The understanding of dispersed operations: Defines dispersed operations as a collective term for sustainable foreign business activities and discusses their role in international market entry strategies.
2. The automotive supply industry: Status quo and global developments: Analyzes global trends in the automotive sector, focusing on the shift from single-component manufacturing to the production of complex, pre-assembled modules.
3. Description and critical view on the forms of dispersed operations for an automotive systems supplier in Mexico: Evaluates various market entry modes for Mexico, including export, sales offices, Maquiladora assembly plants, and Foreign Direct Investment options like subsidiaries and joint ventures.
4. Influencing factors for the prosperous exposure of an automotive systems supplier in Mexico: Provides a detailed analysis of Mexico as a business location, covering economic indicators, political stability, logistical infrastructure, HR management, and cultural integration.
5. Conclusion: Synthesizes the main findings, asserting that while Mexico offers significant opportunities for automotive suppliers, successful entry requires careful strategic planning and mitigation of country-specific risks.
Keywords
Automotive supply industry, Dispersed operations, Mexico, Internationalization, Market entry, Maquiladora, Foreign Direct Investment, Global sourcing, Automotive production, Human Resource Management, Labour unions, Labour costs, Financials, Cross-cultural management, Single-sourcing.
Frequently Asked Questions
What is the core focus of this diploma thesis?
The work focuses on the strategic establishment of dispersed operations in Mexico specifically for a German automotive systems supplier, offering a diagnostic approach to evaluate market entry options.
What are the central thematic fields addressed?
The study covers global automotive industry trends, the Mexican economic and political landscape, organizational structures for foreign subsidiaries, human resource challenges, and logistical considerations.
What is the primary research objective?
The objective is to provide advice and instructions on how to successfully access foreign markets in practice, using the Mexican automotive sector as a specific, highly relevant case study.
Which scientific methodology is used?
The author employs an economic research-based approach, combining industry analysis, evaluation of organizational forms, and an examination of macro-economic and social factors specific to Mexico.
What topics are covered in the main section?
The main section details the forms of dispersed operations, evaluates Mexico's economy, politics, and market potential, and explores location choices based on skills availability, labor costs, and financial requirements.
Which keywords best characterize the work?
The most relevant keywords include automotive supply industry, dispersed operations, internationalization, Mexico, Maquiladora, Foreign Direct Investment, and cross-cultural management.
Why is the shift toward "systems suppliers" significant for the automotive industry?
The industry is moving toward "single-sourcing," where manufacturers demand pre-assembled modules (e.g., cockpits, steering systems) rather than individual parts to reduce complexity and time-to-market.
What role do Maquiladoras play in the Mexican automotive market?
Maquiladoras serve as assembly plants that allow duty-free import of materials for assembly and subsequent re-export, acting as a crucial component for cost-effective production in Mexico.
How does corruption impact the business environment in Mexico?
The work notes that corruption is a significant societal issue in Mexico, affecting transparency and creating challenges for foreign investors, particularly concerning political interactions and institutional bureaucracy.
- Quote paper
- Christian Richter (Author), 2007, Establishing dispersed operations in Mexico for an automotive systems supplier - A diagnostic approach, Munich, GRIN Verlag, https://www.grin.com/document/80707
