3 Implementation of Clusters in Latin America
From the 30s to the present, Latin America changed its developing strategy; in order to place its products in the international market it switched from the inward oriented strategy to the outward oriented strategy. Currently Latin American markets differ from country to country, but in all of them the main actor of this outward oriented strategy are the private companies. Local firms are now competing with foreign companies which are more specialized and own high tech equipment that allow them to provide high quality, highly value added products. Thus, the Latin industries need to innovate in order to create differentiators that will endorse them with the necessary competitive advantages to participate in the international market.
Switching the strategy is becoming harder for firms, the necessity of change and adaptation has to be quicker every day. Companies need to adapt themselves to a changing productivity, technological, commercial and business reality, which at the same time is much more globalized. It is necessary for them to change their model of obsolete habits and slow processes to value adding processes to provide themselves with differentiation and competiveness. Like foreign companies, Latin American companies need to specialize their production and improve their overall quality, starting from selecting and fostering adequate suppliers, optimizing their processes which is the base of the improvement and improving and innovating their final products.
Latin American Countries share a common goal; participate in the global economy to achieve economic development which becomes clearer with the progress of globalization. Therefore, clustering can be one of the strategies to imp...
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...s, including the private sector. Currently the University of Puebla and The Technological of Monterrey are the most known universities of Mexico. Automotive companies recruit most of their employees from these two universities.
It is worth to mention that Mexico’s differentiator is the geographical proximity to the USA and lately the implementation of trade agreements between these two countries. With the execution of the NAFTA agreement, exports from Mexico to USA turned out to be easier than from another VW plants around the world. In addition, the NAFTA agreement set up regional rules between Mexico, Canada and the USA. It is specified that at least 62,5% of the production must be originated in the NAFTA sector, which has promote local government to open industrial parks that have fostered the creation of new work groups and maturation of the existing clusters.
On January 1st, 1994, a treaty that created the largest free trade area were signed into place by the trilateral of United States, Canada, and Mexico. NAFTA is a promise made by world’s most significant corporations claiming to create many high paying jobs and raise the standard of living in the US, Canada and Mexico. As we approach its 21st birthday, NAFTA now links 450 million people producing trillion dollars’ worth of goods and services each year. However, behind this seemingly good deal, it also created many underlying issues. Beginning with NAFTA giving corporation opportunities to move factories aboard to the lower-cost Mexico. Manufacturing aboard did not only outsourced American jobs, it also caused manufacturers that remained to lower
Very high population rates do not correspond with working labor force, in that (Polaski 2004) the Mexican labor force grew from 32.3 million immediately before NAFTA to 40.2 million in 2002, meaning that Mexico needed almost a million jobs a year simply to absorb the growth in labor supply. Many theorists suggest that a free trade zone will increase employment, by the increase demand for labor therefore creating a vast rapid workforce. However, NAFTA has greatly impacted manufacturing employment, by producing a low small net gain in hobs in Mexico, in that jobs created in export manufacturing have barely kept pace with jobs lost in agriculture due to imports (Polaski 2004). There has been a visible weakening in domestic manufacturing employment, related in part to increase import competition. In addition, the cause of a decline in domestic manufacturing employment is caused due to the relocation of the maquiladora factory workforce, which the United States has relocated the maquiladora assembly plants to China and Indonesia, because of low wage, cheaper labor workforce, skilled workforce, and less environmental protection laws. The maquiladora assembly plants in the late 20th century have disappeared
...ca (Mexico Background Information, 2014). Mexicо thrоugh austerity tо cоntrоl inflatiоn, adjust the structure оf impоrt and expоrt cоmmоdities, and stimulate private investment, expanding оpening tо the оutside wоrld and a series оf pоlicies and measures tо imprоve the ecоnоmic efficiency and the implementatiоn оf the variоus ecоnоmic and sоcial develоpment plans, sо Mexicо's ecоnоmy gradually stabilized, it began tо cоme оut оf recessiоn and the plight оf the crisis, trend tо recоvery and grоwth (Central Intellegence Agency , 2014). Adоpted a pоlicy оf оpenness tо trade, they encоurage dоmestic prоduct expоrt, relax restrictiоns оn impоrts, make fоreign trade grоwth significantly (Central Intellegence Agency , 2014). Hоwever, cultures alsо have certain influence tо the ecоnоmy (BBC, 2012). Dоing business in Mexicо is a gооd chоice (Doing Business in Mexico , 2011).
... consist with the success of Mexico’s growing “GDP” thanks to NAFTA. By creating NAFTA, North America is able to not just compete in the global market but also be the supreme leader. NAFTA rules the trade of good’s and services in an international scale, with over 1.1 trillion in goods and services being traded in North America alone. NAFTA has made world markets compete at a higher level to eventually eliminate all Tariffs on a global scale for all Corporations to trade freely. The creator’s of NAFTA understood the fundamental realities, that Corporations do not have borders or belong to a single country. Corporations live and breathe without the common knowledge of patriotism. Corporations live in a “New Economic World Order”. Thanks to NAFTA the blueprint has been drawn to begin a massive change in the way the world will conduct business in the near future.
The South American Community of Nations (CSN) is another important region to target for SCJ. Currently SCJ operates in Brazil, Argentina, and Venezuela. But SCJ’s market share in those and other South American countries is low and the opportunities are endless. Since SCJ has operations already in the region, incremental growth is a cost effective way to grow profits. New products and new channels of distribution need to be developed building off of current product lines and trends. This can lead to large incremental growth in the region at little cost to the company. Perusing other regions where SCJ is not currently present could be more costly than building brands already in the marketplace.
All employees within the organization abide by the company 's beliefs and values. This creates a corporate culture that is the driving force in how the company does business. When culture is shared by people within an organization, a company can create a business strategy knowing that the entire organization will apply the guidelines in a uniform manner and improve the chances that a strategy will succeed. Values and culture have a direct impact on developing business strategy. If an organization’s culture is to resist change, a strategy plan that’s too far afield would not succeed. However, in this case, the culture of the Siemon Company is aligned with the strategic plan outlined in this paper. The company 's culture is acceptable to change and is in position to become a high quality comprehensive manufacturer of both
After only seven years under NAFTA, the outcome has not lived up to the expectations of the agreement to all three nations. The U.S. has experienced steadily growing global trade deficits for nearly three decades, and these deficits have accelerated rapidly since NAFTA took affect. Although U.S. exports to NAFTA partners had increased. The export deficit with these had also increased by 378% to $62.8 billion by 2000 (Salas, Carlos, & Scott, 2006). As a result, according to economist Robert Scott, NAFTA has led to over 766,000 job losses in all 50 states of the United States (Faux 2000). Both nations' exports to the U.S. have become cheaper while imports from the U.S. have become more expensive. This has caused investors in Canada and Mexico to build new and expanded production capacity to export even more goods to the U.S. market. Mexico spent virtually nothing on environmental law enforcement, which allowed corporations to get away with almost anything. Now, with the increasing industrialization as a result of NAFTA, the Mexican government struggles to even assess or understand the environmental impact these corporations are having. Every day for example, untracked, unmonitored hazardous waste from Maquiladora' (an assembly plant in Mexico ran by U.
Globalization is a series of social, economical, technological, cultural, and political changes that promote interdependence and growth. Globalization raises the standard of living in developing countries, spreads technological knowledge, and increases political liberation. (Harris 5-23) The main cause of globalization is influence from other, more developed, countries. Globalization is a historical process that results from human innovation and technological progress. The social effects of globalization are clearly illustrated in Peru. Once a third-world country filled with poverty and oppression, Peru is now transitioning into a developed nation. In Peru, globalization has raised the human development index, empowered women, and created a stronger country. (Leon 90-91)
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
Spatz, J., & Nennenkamp, P. (2002, January). Globalization of the automotive industry-traditional locations under pressure. Retrieved January 14, 2012, from http://www.uni-kiel.de/ifw/pub/kap/2002/kap1093.pdf
It has elapsed decades since economic cooperation and grouping among countries got paramount attention. We can observe different experience of economic integration in every corner of the world. Africa, Latin America, the Caribbean, Europe and Asia all have tasted either the pains or the pleasures of economic integration. The globe has experienced a large number of economic groupings among nations. Mostly the objective of such groupings is either political or economic motives. It is this practice of regional cooperation to day shifting towards globalization.
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
The market is not ready yet for more product lines even though the economy is growing because the purchasing power is not that strong compared with the ones in South America. Therefore there is not yet profit to gain by di...
Currently in the global environment, there is a strong sense of competition that must be achieved through better performance, almost all firms are competing in international markets due to the reduction in barriers for capital and tariffs. With the new changes in both communication and technology, the consequences faced are that production processes are no longer within national boundaries but spread across (Debrah & Smith, 2002).
In manufacturing industry bringing in a new technology or changing the product design etc., will cost more to the company. In this industrial segment procuring appropriate resources for the implementation of continuous TQM through any change is great challenge even change in the composition is difficult in some companies especially for metallurgic companies. Change in the resource status has great impact on the service industry (ARAUJO, JOSÉ AUGUSTO DA ROCHA DE; Costa, Reinaldo Pacheco da, 2004, p. 4).