Sky Essay Example | Topics and Well Written Essays - 2750 words

Sky - Essay Example Ltd, a Chinese car manufacturer that wishes to expand its business internationally with the help of mergers and acquisitions with existing company in host country. For the company, I suggest a business expansion in Mexico country through merger with Mastretta, a Mexican car manufacturer. This company established in 1987 and produced self-developed cars and sports cars with the help of experienced engineers and designers of Mexico. On the other hand, Chery is founded in 1997 and it produced passenger cars, minivans and SUVs (Chery International, 2010). On the basis of output, it is the ninth largest automaker in China. It exports around 25% of total production around the world. The company has various factories in different countries such as Iran, Malaysia, Indonesia, Middle East, Russia, Pakistan, Taiwan, Thailand and many more that produces Chery vehicles (Chery International, 2010). Now, the company wants to expand its business in Mexico. In this, various reasons to expand business in this country, factors that influence the transfer of business and marketing mix for Mexican market will be discussed. Along with this, environmental analysis of Mexico country will be done with the help of evidence and examples. Analysis In the overseas business expansion, companies has faced various issues regarding different political and economic conditions, cyber risks, corruption, different culture, labor laws, education system, infrastructure and ethics. In order to select a country or location for business expansion, various factors are considered such as commute patterns, infrastructure, land availability and labor availability (Russell and Cohn, 2012). According to these factors, US is best choice but in other countries, company can face issues of changes in government and laws, tax systems, labor cost and labor laws. Along with this, timeline, rights and preservation of workers, incentives, working hours organizational and culture management techniques are different in overseas business expansion. Reasoning Chery, a Chinese car manufacturer company wants to expand its business in Mexico. The company selects this country for business expansion because the automotive industry of Mexico is growing industry. It is attractive for automotive manufacturing companies due to proximity to the US and it is the world’s largest automotive market (Contreras, 2008). Along with this, various automobile companies from US, Japan and Europe shifted their plants in this country to get the benefits of strategic location, low labor cost and NAFTA (Moreno and Kellogg, 1996). The automotive industry in Mexico contributes 18% in manufacturing GDP and creates around 56,000 jobs (ProMexico, 2013). Apart from this, there are various reasons to select this country for business expansion such as: Free trade: This country has more free trade agreements as compared to other countries and USA. For example, Mexico has free trade agreements with EU that is helpful to save 1 0% tariff. Along with this, Central Mexico is the highest growth area for the production of vehicles and it is not only for US and Canadian market but also for global production (Russell and Cohn, 2012). Apart from this, due to suitable business conditions, various automakers announced $7.8 billion of investment in Mexico within two years (See: appendix 1). So, this country is good for the business expansion