The Baltex Corporation manufactures corn combines and has been a major supplier of these machines to the Mexican agricultural industrial. However, Tumminia Inc., a Mexican firm, has begun to manufacture the machines. Baltex's local distributor has informed R. Banks, its president, that it will have to manufacture locally if it expects to maintain its market share. Banks realizes that the market is too valuable to lose and he must make a decision. However, he has no experience with foreign manufacturing operations. All of the Mexican sales and repairs have been handled by the distributor, with no one at Baltex having any firsthand knowledge in Mexico.
Banks, based on his rough calculations, believes Baltex can make money manufacturing the combines in Mexico, but their lack of marketing expertise in the country is troubling to him.
He calls you, the export manager, in and asks you to prepare a list of all the options open to Baltex, with their advantages and disadvantages.
He also ask you to indicate your preference. Respond to the following:
What are Baltex's options, and what are the advantages and disadvantages of each?
Which of the options would you recommend? Why?
Assuming that the president's calculations are correct, and that a factory to produce locally the number of machines that Baltex now exports to Mexico will offer a satisfactory return on investment, what special information about Mexico will you want to gather?