Free Intel's Site Selection Decision In Latin America Case Study Solution | Assignment Help

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Written by Gary F. Smith
Publish Date: 2024-10-04

Harvard Case - Intel's Site Selection Decision In Latin America

"Intel's Site Selection Decision In Latin America" Harvard business case study is written by Roy C. Nelson. It deals with the challenges in the field of Negotiation. The case study is 16 page(s) long and it was first published on : Oct 5, 1999

The case study provides a detailed analysis of each of the three countries. The analysis considers a number of factors, including political stability, economic growth, workforce skills, and infrastructure.

3. Analysis of the Case Study

**Strategic fit:** Costa Rica is a politically stable country with a strong economy. The country has a long history of democracy and has never experienced a military coup. Costa Rica is also a member of the Central American Common Market (CACM), which gives it access to a market of over 40 million people.

Mexico is also a politically stable country, but it has a higher crime rate than Costa Rica. Mexico is also a member of the North American Free Trade Agreement (NAFTA), which gives it access to a market of over 450 million people.

Brazil is the largest country in Latin America, but it is also the most politically unstable. Brazil has a history of military coups and corruption. Brazil is also a member of the Mercosur trade bloc, which gives it access to a market of over 250 million people.

Financial attractiveness: Costa Rica offers a number of financial incentives to businesses, including tax breaks and low labor costs. The country has a corporate tax rate of 30%, which is lower than the corporate tax rates in Mexico (35%) and Brazil (34%). Costa Rica also has a number of free trade zones, which offer businesses even lower tax rates.

Mexico also offers a number of financial incentives to businesses, including tax breaks and low labor costs. The country has a corporate tax rate of 30%, which is the same as the corporate tax rate in Costa Rica. However, Mexico has a higher value-added tax (VAT) rate than Costa Rica (16% vs. 13%).

Brazil offers a number of financial incentives to businesses, including tax breaks and low labor costs. The country has a corporate tax rate of 34%, which is higher than the corporate tax rates in Costa Rica and Mexico. However, Brazil has a lower VAT rate than Mexico (10% vs. 16%).

Operational efficiency: Costa Rica has a well-developed infrastructure and a strong supply chain. The country has a number of ports and airports, and it is connected to the rest of the world by a network of highways and railways. Costa Rica also has a strong telecommunications infrastructure, which makes it easy for businesses to communicate with their customers and suppliers.

Mexico also has a well-developed infrastructure and a strong supply chain. The country has a number of ports and airports, and it is connected to the rest of the world by a network of highways and railways. Mexico also has a strong telecommunications infrastructure.

Brazil has a less developed infrastructure than Costa Rica and Mexico. The country has a number of ports and airports, but its highways and railways are not as well-developed. Brazil also has a less developed telecommunications infrastructure.

4. Recommendaations

Based on the analysis of the case study, we recommend that Intel select Costa Rica as the site for its new manufacturing facility in Latin America. Costa Rica is a politically stable country with a strong economy and a skilled workforce. It is also located in a strategic location, with easy access to both the United States and South America. Costa Rica offers a number of financial incentives to businesses, including tax breaks and low labor costs. This makes it an attractive location for Intel to invest in. Costa Rica has a well-developed infrastructure and a strong supply chain. This will allow Intel to operate its new facility efficiently and cost-effectively.

5. Basis of Recommendaations

Our recommendation is based on the following factors:
  • Core competencies and consistency with mission: Intel is a global leader in the semiconductor industry. The company's mission is to 'connect and enrich the lives of every person on Earth.' Intel's decision to invest in Costa Rica is consistent with this mission, as it will allow the company to expand its reach into Latin America.
  • External customers and internal clients: Intel's customers are located all over the world. The company's decision to invest in Costa Rica will allow it to better serve its customers in Latin America. Intel's internal clients are its employees. The company's decision to invest in Costa Rica will create new jobs and opportunities for employees.
  • Competitors: Intel's competitors are also investing in Latin America. The company's decision to invest in Costa Rica will allow it to stay competitive in this important market.
  • Attractiveness ' quantitative measures if applicable (e.g., NPV, ROI, break-even, payback): The financial attractiveness of Costa Rica is a key factor in our recommendation. The country offers a number of financial incentives to businesses, including tax breaks and low labor costs. This makes it an attractive location for Intel to invest in.
  • Are all assumptions explicitly stated (e.g., needs, technology trends): The assumptions that we have made in our analysis are explicitly stated in the case study. These assumptions include the following:
    • The political stability of Costa Rica will continue.
    • The economic growth of Costa Rica will continue.
    • The workforce skills in Costa Rica will continue to develop.
    • The infrastructure in Costa Rica will continue to improve.

6. Conclusion

We believe that Intel's decision to invest in Costa Rica is a sound one. The country offers a number of advantages, including political stability, economic growth, a skilled workforce, and a well-developed infrastructure. We believe that Intel will be able to operate its new manufacturing facility in Costa Rica efficiently and cost-effectively.

7. Discussion

**Other alternatives not selected:** Intel considered two other countries, Mexico and Brazil, for its new manufacturing facility. However, we believe that Costa Rica is the best choice for Intel. Mexico has a higher crime rate than Costa Rica, and Brazil is less politically stable.

Risks and key assumptions: The main risks associated with Intel's decision to invest in Costa Rica are the following:

  • The political stability of Costa Rica could deteriorate.
  • The economic growth of Costa Rica could slow down.
  • The workforce skills in Costa Rica could not develop as quickly as expected.
  • The infrastructure in Costa Rica could not improve as quickly as expected.

We believe that these risks are manageable. The political stability of Costa Rica is strong, and the country has a history of economic growth. The workforce skills in Costa Rica are also developing rapidly. The government of Costa Rica is also committed to improving the country's infrastructure.

8. Next Steps

If Intel decides to invest in Costa Rica, the company should take the following steps:* Conduct a detailed due diligence study of Costa Rica.* Negotiate a favorable investment agreement with the government of Costa Rica.* Develop a detailed plan for the construction and operation of the new manufacturing facility.* Hire a qualified workforce in Costa Rica.* Begin production at the new manufacturing facility.

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Case Description

Intel has decided to locate its next assembly and testing plant in Latin America. Four countries have made the short list: Brazil, Chile, Mexico, and Costa Rica. The Telford, International Site Selection Analyst for Intel, needs to recommend a final site. There are two key issues that must be resolved first: 1) what kind of business environment is most suitable to Intel's needs; and 2) how can Intel leverage its bargaining advantages most effectively. The case illustrates the advantages for a high-technology company such as Intel, with its strong need to operate in a country with stable, predictable rules of business, and to invest in a fully consolidated democracy.

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