case 1 Essay

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Intel’s Site Selection Decision in Latin America
According to the reading Intel’s Site Selection Decision in Latin America, it is well-known that Intel had a dramatic rate of growth in computing market after the contract between Intel’s first microprocessor. In order to maintain this competitive advantage and the innovation, the founder of Intel, Gordon Moore created the strategy based on the Moore Law, which was the power of microprocessors would double every 18 months if it was driven by the competitive market forces. To make the strategy above successfully, Intel needed to open the new plan at a rate of almost one every nine months. Also, this new plant need to have costs, such as labor costs, lower than in the United States to continue the competitive advantage of Intel. With the criteria above, Latin America offered the low labor costs and the logistical advantages for exporting products to two of the most consuming markets, which were the United States and Europe. In additional, Intel wanted to expand its locations all over the world that they already had in Asia but none in Latin America, which encouraged the Intel manager to develop in this emerging market. In order to create a successful international business, understanding which needed conditions of the new plant would be the first thing that any company should consider to, and Intel was not an exception. Ted Telford, a full time employee in Intel’s selection team had listed some main elements of a potential country, which were political and economic stability, labor unions and labor regulations, infrastructure, and the government incentives. First of all, under the condition of political and economic stability, there were some concerns, such as the change of government or economic policy, regulations, and security, which Intel selection team should take a look to prevent some negative effects. Some easy aspects that the team can research were current political issues, the trend of government or the government incentives. For example, with Costa Rica, it had the well reputation for political stability and democratic government. However, in contrast to the country above, Brazil had unitary political system with centered power in the national legislature and the president, and complex federal system. These conditions above from Brazil made Intel difficultly chose which state to invest based on the different tax policy and individual government incentive. Security is another issue rising more and more with the development of technology, and Brazil was one of the examples that had the rise of hijacking of truck in Sao Paulo. In addition, Intel selection team could look at the economic index to realize the trend in each country. The second element that Intel should consider to is labor unions and labor regulations. There are four key concepts rising in this aspect, which are whether or not be being labor unions which Intel officially prohibits, labor costs, relationship and culture between labor and management, and related government regulations. An illustrated example is combative labor unions in Costa Rica. While one was the government’s establishment of a national collective bargaining system, using wage boards to establish wage levels, which eliminated an important role for such unions; another was that unions could call a strike only if 60% of affected members signed a petition in favor of doing so, and a judge decided that the reason for the strike was valid. And during the time waiting for the decision, the employers could fire any workers who were involved. Infrastructure is the next element that Intel selection team should concern about, which is specific on transportation, cost, and electrical supply. The main problem was Intel would need to export all of its chips by air, therefore, they need valuable flight price and distance, and also a good ground transportation to deliver material on time. However, In Costa Rica, the airport did not offer sufficient
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