However, as only one country needs to be chosen, Intel should consider the benefits and risks associated with manufacturing and operating in either of these countries.
It should be noted that Intel's main concern in opening a microprocessor manufacturing plant in Latin America is to strengthen its position in the global market. The rationale of choosing a Latin American country is to distribute risk as it already has a number of production plants in Asia. Also, the preference of a Latin American country is its proximity in the US where the microprocessors will be shipped. Most importantly, Intel is also aware of the more intense rivalry between players in the global market which significantly drives down the price of microprocessors. The company is very concerned with finding a possible way of reducing the cost of production in order to offer the final products at a more competitive rate.
Aside from these considerations which were directly mentioned by Intel, the case also developed the idea that the company prefers a country where its expatriate employees who will be in operation and supervision of the manufacturing plant during the start-up stage will be comfortable in the selected site. Also, Intel also explicitly stated its preference for a deal which is done in a transparent and legal way. Intel strongly opposes "special deals" or "special incentives" as it will post problems for the company in the future.
As stated above, four countries which include Brazil, Chile, Costa Rica and Mexcico were short listed as the preferred locations. The appendix summarized the result of the research and on-site visit of the site selection team.
In terms of workforce availability, all the countries under consideration satisfy Intel's requirements except Costa Rica which still needs further training. It should be noted however, that labor cost in Chile is relatively higher. Costa Rica is the best choice in terms of labor unions and regulations as all the other countries mentioned are significantly unionized. Infrastructure and transportation are excellent and impressive in Chile, Brazil, and Mexico. Though Costa Rica's land transportation is fine, regular flights which are imperative in Intel's operations are lacking. Electricity is cheapest in Mexico at $0.02. As Costa Rica is very much eager to capture huge foreign investments, the government provides various exemptions in terms of tax holidays and discounts. All the other countries are hesitant in giving investment incentives. Expatriates are seen to be better off in Costa Rica and Mexico. Operating in Brazil will require huge taxes while the distance from US and Chile is a concern.
Based on the discussion above, this report recommends that Intel locate its microprocessor manufacturing plant in Costa Rica. This decision is based on the fact that the country has a stable political environment, low level of corruption, attractive investment incentives, and a government which is willing to comply with Intel's requireme
This report is a synthesis of the facts presented in the Intel's Site Decision in Latin America. Based on the conducted analysis, Costa Rica is chosen among the four countries considered (Chile, Brazil, and Mexico) as the most viable site for Intel's production of microprocessors.
However, many Latin American governments rejected to sign the treaty because they believed the free trade agreement to be detrimental for their national interests and economic developments. The countries which signed the treaty have followed their stagnant status in their economic growth.
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