HUXLEY MAQUILADORA PDF

Huxley is considering three options. The simplest option is to negotiate a subcontracting arrangement in which a Mexican firm manufactures steering column components SCCs according to the specifications of Huxley. The subcontracting firm would then be paid by Huxley on a per-piece arrangement. A subcontracting arrangement would allow Huxley to decrease or possibly eliminate expenditures for capital items such as facilities and equipment, but would also entail the highest cost per labor hour.

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Huxley is considering three options. The simplest option is to negotiate a subcontracting arrangement in which a Mexican firm manufactures steering column components SCCs according to the specifications of Huxley. The subcontracting firm would then be paid by Huxley on a per-piece arrangement. A subcontracting arrangement would allow Huxley to decrease or possibly eliminate expenditures for capital items such as facilities and equipment, but would also entail the highest cost per labor hour.

A second option was the shelter operation. Under a shelter arrangement, the Mexican firm would allow Huxley to maintain control over production. A shelter arrangement would allow Huxley to enjoy a fast startup with while affording the client firm complete control over production. The shelter operation would entail more fixed costs than the subcontracting arrangement, but would also incur lower hourly labor expenses.

The final possibility was to set up a wholly-owned subsidiary. This option would require Huxley to select a plant site, staff its own employees, implement its own procedures and policies, and obtain the appropriate permits and licenses to operate. Over the long run, the wholly-owned subsidiary offered the greatest potential for cost savings. Although the wholly-owned subsidiary would exhibit the highest level of fixed costs, it also promised the lowest hourly costs of the three options.

In this case, the firm would continue to produce out of its San Diego facility. Cost Behavior Profit-maximizing decisions require the manager to be able to determine relevant cost. Relevant costs consist exclusively of those costs that will change if the decision is implemented. Our goal in this chapter is to derive a general theory on cost behavior that should apply to most firms.

Having done so, we can closely examine how managers can determine unit costs and make effective decisions.

In determining relevant costs, we must distinguish between fixed and variable costs. Fixed costs do not vary with production whereas variable costs rise as output increases. In the Huxley case, no fixed costs are associated with the subcontracting arrangement. Variable costs include the hourly wage, materials, and transportation costs. The wholly-owned subsidiary includes most of the same fixed costs as the shelter operation, but adds the consulting fee and Mexican legal fees.

Sometimes the distinction between fixed and variable costs can become blurred. For example, is the salary of an economics professor a fixed cost or a variable cost?

Presumably, your professor will be paid the same salary regardless of how many students enroll in the course. However, your college probably has a pre-determined maximum enrollment for a specific section.

If demand for a particular course exceeds the maximum capacity a common problem in economics classes , the department may have to add one or more sections. If the instructor is already teaching a full load, the excess demand may have to be accommodated by adding another instructor to the teaching staff.

When enrollment surpasses the maximum for Tens of thousands of Mexicans were returning from the United States upon the termination of the Bracero program that allowed Mexican agricultural workers to work legally in the United States. It was also hoped that this program would help develop the Mexican manufacturing base and lead the transfer of technology to Mexico.

Over time the Maquiladora concept evolved into nearly tax-free zones tapping into seemingly limitless foreign investment of multinational companies looking for low labour costs, and the Mexican government finally permitted that they could be established anywhere in Mexico. Maquiladora means "apparel for export," reflecting the early assumption that most factories would produce textiles.

The Maquiladora program offers a great opportunity to recruit or contract a varied workforce at very

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Huxley Maquiladora Harvard Case Solution & Analysis

Submit Task and Start Chatting Huxley Maquiladora Internationalization of a firm is often defined as its cross border business activities, which include trading resources and final products or services, capital transactions, and widening human resources. By adopting internationalization, a firm can expand its market size, minimize operation cost, and enhance competitiveness. Relocating production plant to Mexico from Texas, Huxley sets the first step into internationalization. The movement of the manufacturing site can save a significant amount of production costs like transport tariffs, labor payments and taxations.

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Huxley Maquiladora

His job now was to give some recommendation to board of directors about whether to establish the manufacturing plant in Mexico and if so, where and how. In other words, these rising costs are results of advanced technological complexity of almost all types of military system, and to the rapid pace of technological innovation. Implications: From above analysis, it can be clearly inferred that Huxley has a lot of opportunities in future to work with which will later become their strengths. This opportunity will help Huxley to produce advanced weapons for their military and because economy is growing, this will increase their revenues. Moreover, setting up a plant in Mexico will give access to cheap labour, an opportunity to reduce their salary and other expenses.

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