As the CEO of SunPower Inc., researching the New Mexico market is very important. Before moving the business to Mexico, there are a few things that need to be done, like assessing the potential effects of the change. Due to its consumer base and other advantageous elements like government legislation, Mexico City is an expanding market potential that is highly alluring to private businesses. The choice to bring SunPower to the city is highly appropriate because it is a desirable market place for enterprises interested in locating their initiatives outside of their home countries. According to a study by the US State Department in 2013, Mexico has macroeconomic stability and its proximity makes it one of the countries suitable for investments (Hoag, 2015). In addition, 50 percent of foreign direct investments in the country are from the United States. Relocating SunPower operations in the country will be of great benefit to the company because of the prevailing market conditions.
How the Decision to relocate will affect the Business
The company benefit by having new suppliers, customers, and shareholders from Mexico increasing profits. Since Mexico is the third largest United State's trading partner and its second largest export market it can be a good place for the company. SunPower will be one of the numerous investments in Mexico owned by US investors, thus its operations may be less challenging. In 2011, $500 billion was traded between the two countries and according to the World Bank reports; Mexico occupies position 12 in terms of gross domestic product New (Mexico, 2013). This is good news to SunPower since establishing itself in the country will not be difficult due to high purchasing power of the customers. However, some challenges may arise such as high cost of relocating equipment and other materials relocation of customers, disagreements with suppliers, and loss of some employees among others. For the company to relocate to Mexico City understanding the country's labor laws, business customs, and tax structures thus some considerations are important. This may take some time and huge costs affecting its activities and ability to achieve its goals. The company may need to hire experts in the fields to explain the problems likely to be encountered and advise on the best solutions possible to enable the business to move forward with much ease.
New Mexico has a large population of about 20 million thus the company will benefit from a huge customer base (Cacoullos & Travis, 2015). Also New Mexico City alone boasts of over 21 million residents, which is advantageous to businesses and SunPower Company is likely to sell more to the population. The government is one of the major stakeholders and since it has accepted to offer tax reduction to the company and the employees, SunPower is likely to have positive returns by operating business in New Mexico City. The government has also put measures to reduce inflation rates and according to 2014 and 2015 statistics, it stood at2.13 and 4.08 percent respectively (New Mexico, 2013). Both companies and branches of foreign investors are common in addition to partnership through incorporation or registration under the Mexico articles of incorporation enabling companies from outside the country to do business with ease. There are adequate employee legislation which helps in providing and safeguarding the workers' in terms of employment and working conditions. The employees can also join labor unions in Mexico such as the Mexican Revolutionary Workers Confederation. SunPower employees may decide to join such unions for collective bargaining.
Creating a Clear Picture of Success
SunPower has many of its suppliers in the United States and moving to a new locating will affect its operations and supply of materials. For it to be successful, it must take enough time to explain to the stakeholders such as the stakeholders, suppliers, and, partners the reason for relocating. Some of these stakeholders value local presence and rushing to relocate the business may ruin the good relationship existing between them. Relocating to Mexico entails moving away from its customers and increasing the risk of losing them to its competitors. To build more confidence, assuring clients that services will not be interrupted is a good idea. If the results are positive, everyone will agree with the relocating plans and avoid losing confidence with important stakeholders.
Developing a funding plan
The other important action the company should take is to develop a working plan for the funding of the global expansion. Relocation of a big company involves high financial costs and the company can manage by setting aside enough funds for the process. Some of the requirements in the working plan include capital sources as well as the investment time required. The management should seek ways of funding to cover the required costs. Allowing some of the stakeholders to make some investment in the company by buying shares will help in increasing the amount of capital. Outside stakeholders such as joint ventures and suppliers may help a lot in increasing the amount of capital raised and ensuring prosperity of SunPower Company.
Choosing a local leadership team
Another important consideration for the company while relocating is choosing local leadership team once in Mexico. Local representation is very important for foreign businesses and should be given great consideration. Although the company expects many employees and leaders to continue working with it, it is a wise decision to include Mexicans to be part of the business. The local leadership team will have more information about the market and help in expanding the activities of the venture such as increasing sales. The locals can give the company management some guidance on important differences in the manner of doing business in Mexico. Language difference may arise since Spanish is the most spoken language in Mexico, which may pose some challenges to the company (Cacoullos & Travis, 2015). In addition, cultural differences such as the importance attached to time may bring some problems. Mexico is known to care more on creating quality relationships than to sense of urgency unlike the United States, which is keen to promptly communicate with their customers such as replying mails or texts within the shortest time possible. Ensuring a consistent experience is very important to ensure they do not suffer frustration. However, local management plays a big role in Mexico and can help in integrating company values with local ones.
Keeping an Eye on operations
Misleading information can be dangerous to a business especially if it is venturing in a foreign land since it can lead to losses. It can also lead to mistrust, misconceptions, and misunderstandings within the company and ruin relationships among various stakeholders. The best thing for the company will be to come up with own board of advisors in addition to hiring own advisors to review the reports from other non-domestic enterprises. The independent advisors should be interested in the shareholders and not favor the local management since they will help in determining whether the company receives accurate, complete, and timely information. This may reduce the possibility of encountering communication barriers and help in ensuring quality performance.
In conclusion, companies that aim to have reliable and non-transient workforce may need to ensure provision of improved roads, healthcare, schools, childcare, and housing facilities for their employee. Other issues such as handling of toxic waste also need to be addressed and this may increase cost of operations of local and foreign investments. SunPower has to ensure that it sets aside enough funds to enable it achieve the target. Other considerations that can be of great concern for the company include corporate social responsibility requirements in Mexico, which the management should be prepared to adhere to once relocation is complete. The proximity of Mexico to the United States will enable convenient movement of the company asset minimizing on costs. The incentives offered by the government of New Mexico state to the company such as tax reduction of 20 percent, and 5 to 3 percent employee cut will minimize the movement cost. In addition, many of the employees will move to the new location thus the company will not need to replace many of them and affect its operations.
References
Hanson, G. H., & Harrison, A. (1999). Trade Liberalization and Wage Inequality in Mexico. ILR Review, 52(2), 271-288.
Hoag. C. (2015) Doing Business in Mexico - SAGE Business Researcher. Businessresearcher.sagepub.com. Retrieved 30 April 2017, from http://businessresearcher.sagepub.com/sbr-1645-96878-2693503/20150914/doing-business-in-mexico
New Mexico. (2013). New Mexico (Vol. 87131). USA.
Torres Cacoullos, R., & Travis, C. E. (2015). New Mexico Spanish-English Bilingual (NMSEB) corpus, National Science Foundation 1019112/1019122.
