International Business 9th Edition by Charles Hill

Exercise 2

An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial electronic products. A manufacturing plant costs approximately $500 million to construct and requires a highly skilled work force. The total value of the world market over the next ten years for this product is estimated to be between $10 billion and $15 billion. The tariffs prevailing in this industry are currently low. Should the firm favor concentrated manufacturing or decentralized manufacturing? What kind of location(s) should the firm favor for its plant(s)?