If a value creation activity of a firm can take place in Mexico most effectively, then that activity of the firm must be based in Mexico. Firms that pursue such a strategy are most likely to realize:

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For a firm that is trying to survive in a competitive global market, the firm will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions-including relative factor costs-are most conducive to the performance of that activity. Firms that pursue such a strategy can realize location economies.

If a Value Creation Activity of a Firm Can Take