 RATIONALIZATION IS THE ATTEMPT BY HOME COUNTRY COMPANIES TO BE MORE EFFICIENT IN ORDER TO COMPETE WITH FORIEGN COMPANY IMPORTS.  IN THE PAST, HOME.

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Presentation transcript:

 RATIONALIZATION IS THE ATTEMPT BY HOME COUNTRY COMPANIES TO BE MORE EFFICIENT IN ORDER TO COMPETE WITH FORIEGN COMPANY IMPORTS.  IN THE PAST, HOME COUNTRY COMPANIES WERE PROTECTED BY “BARRIERS” ESTABLISHED BY THE GOVERNMENT.  COUNTRIES ARE NOW CONTINUING TO ENCOURAGE FREER TRADE WITH ONE ANOTHER.

 THE PROTECTIVE BARRIERS ARE BEING ELIMINATED EXPOSING HOME COUNTRY BUSINESSES TO CHEAPER IMPORTED PRODUCT COMPETITION.

 THE PRICE OF THE GOOD;  QUALITY OF GOOD/SERVICE;  OR PROVIDING A UNIQUE OR DIFFERENTIATED PRODUCT OR SERVICE.  HOWEVER, THE MAIN COMPETING FACTOR IS PRICE!

 REALIZE IT CAN’T COMPETE AND GETS OUT OF THE INDUSTRY.  FOCUSSES ON RESEACH AND DEVELOPMENT FOR NEW PRODUCTS;  USE NEW TECHNOLOGIES FOR GREATER EFFICIENCES AND PASS SAVINGS ONTO CONSUMER;  MERGE WITH OTHER COMPANIES IN ORDER TO ACHIEVE EFFICIENCE AND ECONOMIES OF SCALE;  DUE TO MERGERS, THERE WILL BE CONSIDERABLE DUPLICATION OF SERVICES, POSITIONS STAFF, BUILDING, OFFICES, ETC WHICH WILL BE ELIMINATED.

 DOWN-SIZING AND DE-LAYERING AND OUTSOURCING:  A) DOWNSIZING (GETTING OUT OF CERTAIN BUSINESSES OR ACTIVITIES);  B) DE-LAYERING: REMOVING LAYERS OF MANAGEMENT RESULTING IN WIDER “SPANS OF CONTROL;  C) OUTSOURCING: HAVING OTHER COMPANIES CARRY OUT ACTIVITIES THAT THE COMPANY DID IN THE PAST;  D) OFF SHORE OUTSOURCING:  HAVING BUSINESSES IN FORIEGN COUNTRIES PRODUCE THE PARTS TO BE SHIPPED BACK TO THE PARENT COMPANY;  HAVING A BUSINESS IN A FORIEGN COUNTRY MANUFACTURE YOUR ENTIRE PRODUCT MAKING USE OF CHEAPER (HUMAN RESOURCES IN THE FORIEGN COUNTRY (E.G., MEXICO).

 SPECIFIC CASE OF THE FREE TRADE ZONES IN MEXICO.  THESE ARE DESIGNATED AREAS ALONG THE BORDER BETWEEN MEXICO AND THE U.S.A.  FORIEGN COMPANIES (EUROPEAN, AMERICAN, CANADIAN) ARE ENCOURAGES TO SET UP ASSEMBLY (BRANCH) PLANTS.

 1)ACCESS TO CHEAP LABOUR ($5.00 PER DAY);  2)PAY MINIMAL TAXES;  3)HAVE EASY ASSESS TO NORTH AMERICA, PACIFIC AND ATLANTIC OCEANS.  NUMEROUS FORIEGN COMPANIES HAVE ESTABLISHED BRANCH PLANTS;

 E.G., OVER 300 FORIEGN PLANTS ARE LOCATED IN JUST ONE CITY’S FREE TRADE ZONE.

 -DUPONT;  -CHRYSLER  -GENERAL ELECTRIC  -FORD  -KENWOOD  -PHILIPS  -MAGNA INTERNATIONAL.