Intel’s Site Selection Decision in Latin America Essay

In a growing technological society, the demand for Intel Corporations products is rising at a fast pace. Intel must open a new plant at a rate of one every(prenominal) nine months to supply this demand. In order to diversify assets and decrease risk, Intel must invest in a new field of view. This atomic number 18a must consist of a stable and bluff government, an export-based economy, a well-educated population, a non-union mentality and lower operating costs than the United States.Intel aims to invest in Latin America because the area currently does not have any plants and accommodates all of the necessary criteria. After selecting a continent, Intel was more concern about availability of technical personnel and engineers to staff the plant excavate unions and labor relations exaltation floor and costs the availability and reliability of the electrical power supply and the governments corporal imposeation rates and incentives. Therefore, the four countries in Latin Americ a that were most appropriate are rib Rica, brazil, Chile and Mexico.Costa Rica seemed like a valid alternative. The advantages to invest in Costa Rica include a reputation for stability and democratic government, a collaborative government willing to adapt and change laws in a transparent manner, comparatively lower wages, rare and non-combative unions, strict strike laws, excellent transportation methods, and tax exemptions. Disadvantages are that the investment could overwhelm the small economy (pop. 3.5 million) finding enough people with the right culture would be difficult there are not enough daily flights from San Joses airport and relatively high gear electricity costs.Brazil seemed even more valid than Costa Rica. The benefits of place in Brazil include a huge local securities industry (not important due to 100% exports from plant) coarse populations to drive staff from collaborative state governments reliability (numerous high technology firms already located in Bra zil) fit airports adequate infrastructure and available and reasonably priced electrical power. Drawbacks include security higher overall labor costs government indifferent about concerns non-favorable government policies and a high rate of taxation.Chile unfeignedly impressed the Intel team upon initial inspection. Investing in Chile is beneficial due to the modern infrastructure and technical training programs. However, shortcomings include travel distance for expatriate executives salaries for technically trained personnel are relatively high engineer salaries were similar to those in the United States absurd capital restrainers site design far away from airport (Santiago) and no significant government incentives.Mexico has been a great area of overseas direct investment by many high technology firms. Intel hoped it could join the Mexican Silicon Valley. The advantages to investing in Mexico are reliability (prominent Guadalajara area) sufficient travel flights and capacity low labor costs large supply of skilled engineers and technicians lowest electrical power costs and free land for plants site and subsidized training for an extended period. Weaknesses of this site include lack of governmental incentives at the federal official level a high rate of unionization and exceptions would be made creating an unpredictable environment.Given the advantages and disadvantages of severally country, Intel should invest in Costa Rica. Costa Rica should be selected due to its export-oriented infrastructure, reliable power and advanced telecommunications, as well as its talented and educated workforce, highly educated population and supportive business environment. If a president of a country is willing to personally take a group of Intel managers on a helicopter tour of Costa Rica, then this demonstrates the governments willingness to collaborate with further details and issues that whitethorn arise. Intel was not too big an investor for Costa Rica.The country de sired a new competitive market to cater to and Intel provided a solid stepping stone in to a newly developed Costa Rican high technology industry. The vital factor was that for every disadvantage listed by the Intel team, the Costa Rican government had a non-preferential and transparent alternative to each one. The deciding factors for the other countries were Brazil had insecure and unreliable taxation laws that had actually drive some states to the point of bankruptcy Although Intel was a direct foreign investor, Chiles capital control methods would prove unstable and questionable if they forced hidden costs on to similar portfolio capital investors Mexicos made a crucial mistake of granting exceptions for Intel entailing an uncertain future if there was a change in government.