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Acme - France and Mexico

Essay by   •  August 28, 2011  •  Essay  •  291 Words (2 Pages)  •  1,147 Views

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Suppose the two countries chosen for Acme are France and Mexico. There are various factors that helps the companies to decide there venue for business. One among the various factors is the cost effectiveness. It has been found out that France ranked to do business in the European country for any US company. Whereas Mexico is a non European country where the US companies can achieve economy of scale.

Apart from this opening of labor market, low tax rate and a well infrastructure has made France (Paris) the most favored European country for Acme to do its business. Due to this reason France is ranked higher among the most favored nations to do business for any US company. Also non cost benefits like Frances strong environmental performance record had made the country lucrative for the US Company Acme to do its business in France. Along with this low crime rate and a better health facility helps Acme to chose France. Also the franc is less volatile as compared to the other European currency and this reduces the exchange rate risk at some extent.

If we look at the non- European country Mexico is ranked higher for any company in the US. It has been found in a study that Mexico cost approximately 20.5% lower below the US baseline. Some cities like Puebla, Monterrey and Guadalajara has the lowest business cost. Acme enjoys doing business here because of low corporate tax rate, cheap labor and a better business environment. Also appreciated US dollar against the Mexican currency helps Acme to increase its profitability.

So doing business in this country will help Acme to increase its profitability with low cost of production and then selling these product across the glob to earn extra revenue.

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