The manufacturing in mexico has several advantages. This is due to the following reasons:
- Due to proximity of distance between US and Mexico, aids to provide technical support and manpower for production activities.
- For any company planning to start a new business for short or a medium-term, then Mexico is best landing place, due to cheaper costs in comparison to the rest of the developing countries.
- The gap between the end-users and the market place best suits the just in time requirements.
- Apart from mexico manufacturing process, it stresses more importance in patenting laws. Hence Mexico has highly defined and advance intellectual property laws.
- No political interference, hence risks are minimal.
Apart from several advantages, certain disadvantages stated here pose threats for the mexico manufacturers:
- Mexican workforces are highly skilled and well educated engineers. Hence the average earnings rates for them are higher than the other developing Asian countries, especially China.
- Due to strict laws any company which lays-off its employees have to pay a huge penalty. This problem can be dealt through any type of joint-ventures, co-arrangements and partnering with the global multinational companies
- The level of corruption is very high in Mexico. This problem can be dealt through receiving qualified seeking professional advice and by securing the product through intellectual property rights.
Now the five common types of operations are enlisted below through which any foreign country can setup their operation: They are,
- Subcontracting/ Contract Manufacturing
- Joint Venture
- Shelter
- Wholly owned ancillary
- Outsourced manufacturing
Contract manufacturing is preferred if a company requires a minimum of 25 individuals/less. Joint-venturing is the secondary means of this type, wherein an agreement is made with a local party. This local party provides information about prevailing market conditions, is really effectual. Cultural interferences are there, overcoming these biases will surely help to gain more profits.