Question

In 2015, the minimum wage in Mexico is $7.00 per day. Minimum wage in the US is $60.00 per day at the same time. US workers must be paid overtime for more than 40 hours in a week, whereas Mexican workers may work 48 hours in a week before overtime must be paid. The United States, Canada and Mexico have a trade agreement (the North American Fair Trade Agreement, or NAFTA), that allows companies from the three countries to import and export agricultural (grown) products without tariffs. Tariffs are taxes paid on imports and exports. NAFTA also guarantees that companies from the member countries must honor each other's patents. You are a finance consultant for Bennie's company. Write a memo recommending that Bennie move the company to Mexico. Include the following information: ✓ How re-location of the business will reduce all three of the company's biggest expenses. (Write one paragraph for each of the biggest expenses explaining the benefits of re- location for each). supply ✓ How the re-location will make Bennie more competitive. ✓ Anticipate some of the concerns that Bennie might have about operating a business abroad. Address these concerns in the memo and convince him that the benefits outweigh the potential problems. Use these words in the memo: competition mit 2 NAFTA demand price quantity Section 4 supply chain off-shoring incentive quality manufacturing consumer​

Answer 1

Step-by-step explanation:

MEMORANDUM

To: Bennie

From: Finance Consultant

Subject: Recommendation to Move the Company to Mexico

I am writing to recommend that we move our company to Mexico. The move will reduce our expenses, make us more competitive, and provide several other benefits. In this memo, I will discuss the three biggest expenses and how the move will help reduce them.

Firstly, labor is one of the biggest expenses for our company. The minimum wage in Mexico is only $7.00 per day, which is significantly lower than the $60.00 per day in the US. Furthermore, Mexican workers may work 48 hours in a week before overtime must be paid, whereas US workers must be paid overtime for more than 40 hours in a week. This means that we can save a lot of money on labor costs by relocating to Mexico.

Secondly, transportation is another major expense for our company. Mexico is closer to many of our suppliers, which means that we can reduce transportation costs by sourcing our materials locally. This will also help us to reduce our carbon footprint by decreasing the amount of fuel we use for transportation.

Thirdly, the cost of doing business in Mexico is generally lower than in the US. Mexico has lower taxes and fewer regulations, which means that we can save money on compliance and other administrative costs. Additionally, the North American Fair Trade Agreement (NAFTA) allows companies from the member countries to import and export agricultural products without tariffs, which will help us to reduce our costs further.

The re-location will make us more competitive by allowing us to offer lower prices to our customers. Lower labor and transportation costs will enable us to produce our products at a lower cost, which means that we can sell them at a lower price. This will help us to increase our market share and attract more customers.

I anticipate that Bennie may have concerns about operating a business abroad. However, the benefits of the move far outweigh the potential problems. By off-shoring to Mexico, we can take advantage of the incentives provided by the Mexican government and create a better supply chain for our manufacturing processes. We can also maintain the quality of our products and ensure that they meet the demand and quantity required by our consumers.

In conclusion, I strongly recommend that we move our company to Mexico. The move will reduce our expenses, make us more competitive, and provide several other benefits. Thank you for your consideration, and please do not hesitate to contact me if you have any questions.

Sincerely,

[Your Name]