Intel Case Study Summary

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Background: Intel, was the world’s largest semiconductor manufacturer. In 1990s, it was looking to set up a new assembly and testing plant. This was under the global strategy of Intel. Intel did not want to cluster in one region of the globe but it wanted to diversify, so it considered Latin America. After considering several factors, Intel narrowed down to few countries of Latin America- Costa Rica, Brazil, Chile and Mexico. To understand various factors that could be a barrier in setting up its plant in these countries, Intel needed to study the micro-level data on plants, economy and social environment of individual countries. They were to export 100 % of the entire manufactured semi conductor; therefore they did not want to grow their market…show more content…
Low cost of labour 6. Logistics and infrastructure cost 7. Electricity or Power supply cost 8. Ease of availability of skilled workers and staffs. 9. Language skills of the country The advantage of Intel’s investment in the location of Host country: 1. It will lead to capability development as it will lead to assisting MNE’s suppliers and customers. 2. Intel would contribute to skilled employees and growth in countries GDP. 3. Intel will change the education system a) Intel’s requirement for skilled labours will make government and public invest more in education. b) Human resource of the country will not migrate to other country in search of better job. 4. If required, Intel may invest in education by funding scholarships or other educational service. 5. Intel would use some local manufactured parts or component leading to some economic development. COUNTRIES COMPARISON COSTA RICA BRAZIL CHILE MEXICO Political And Economic Stability PROS -Political stability since 1948 -Military system stood long abolished -Increase in focus on social welfare system with inclination towards education and health -CINDE, an impressive agency encouraging investment in the…show more content…
- Chile cannot be considered because labour cost is high, government incentives are not favourable, infrastructural and skilled labours are not good. -Mexico cannot be accepted as economic and political conditions are unpredictable, labour laws are against Intel’s policy and no government support. Suggestion to locate the SITE in COSTA RICA Costa Rica: After independence from Spain (1821), the economy moved towards agriculture. In 1940’s, maximum % of all exports were from banana and coffee. Slowly, the economy was moving towards service sector where a large part of the GDP was now coming from service sector. It ranked 3rd in Latin America in terms of countries competitiveness (behind Brazil and Chile). Reasons for such a change: a) The small size of the country b) Geographical location of the country c) Commitment to development d) Strong and favorable

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