Global Economic Cost Essay

Acme Motors- is currently one of the primary US automobile producers in Mexico, aiming to become one of the world’s largest automobile producers in the international market. Aside from the said goal, Acme is also striving to provide their customers with more and better vehicles not to mention the eagerness of the management of Acme to experience high profitability and greater market share. In order to fulfil the said goals, one possible avenue would be to have a comparative advantage over their competitors through investing to developing countries which could supply the company with needed resources. Currently, the company has a manufacturing plant in Nuevo Laredo, Tamaulipas in Mexico that produces the â€Å"Quattro engine†- known for its lightness and high efficiency performance (Associatedcontent. com, 2007). Acme Motors uses one process to develop cars instead of having each engineering center operate under different process. The reason why Acme established the manufacturing plant of automobile engine in Mexico would be for them to utilize the cheap cost of labor of the said country not to mention the lax policies of the Mexican government in terms of workers’ security. With the cheap labourers available in the economy of Mexico, Acme was able to minimize their operational cost, thus, improving their profitability or the level of potential production that they could execute. At the end of the day, Acme will have a comparative advantage over their competitors in the domestic and international market since they could either lower down the prices of their automobiles to attract more customers or offer incentives to loyal customers as well as further expand the operation of the business with the aid of the capital that the management saved from the cheap costs of labor in Mexico. In this regard, the operation of Acme in Mexico has been of great help for the company to enjoy impressive growth for the past years of its operation in the market. Globalization made a great avenue for multinational firms to acquire comparative advantage that later on benefits their consumers and stakeholders in a general sense (The Globalization Website, 2001) But the big question would be; did the company consider the welfare of their workers in Mexico in terms of salary and working hours? How about the benefits of the workers, did they receive any benefits from the management? These are the questions that are currently being thrown over the management of Acme. Are they true? Let us find out. Acme belongs to the so-called Maquiladora which means Mexican industrial plants that assembled imported components into finished products for export. Maquiladora has been known for abusing their workers through paying a very low wage on the latter not to mention the long hours that they have to work which is equivalent to 14 hours a day (Bacon, 2000). This kind of practice already abuses the human rights of their workers as well as violates the Mexican labor law for not allowing workers to establish unions. With the said above issue, Acme has a different case for, even if they are one of the Maquiladora, they value the relationship of the management and their workers. Acme do not allow the workers to work 14 hours a day just like any other ordinary members of Maquiladora do to their employees in order to give way for those who are working student and/or to give ample rest for their workers. Moreover, Acme pays their workers right based on what is dictated by the law as well as based on the company policy which is also being implemented to other branches of Acme around the globe. At this point, the management of Acme ensures to every constituents of the company that they put premium on the welfare of their workers and employees for they believe that the latter is not a tool of the company in reaching their goal, rather, a partner in every step of the way to achieve the goals and objectives of the management. With regards to the formation of labor union, based from what I have observed from the given situation, it would be beneficial on the part of the management to allow our workers there in Mexico to establish a labor union in order to put back their morale and productivity. If the management will not consider this alternative, then, there is a great possibility that the productivity of the entire production area will significantly down. Furthermore, there is no room for the management to get afraid of the formation of the said labor union since we are all confident that we abide on any government policies of our host country as well as we put value on our relationship with our workers. By the time the productivity of our workers improves, the adverse effect of the policy of the Mexican government regarding the purchasing of the majority of our raw materials should come from Mexican suppliers on our profitability level will be neutralized. With the aid of NAFTA, multinational companies like Acme could now select the location of their production area based on the influence of various business factors. This only tells us that NAFTA made it easier for us to find strategic locations for productions that would give the company competitive advantage over our competitors as well as to meet the market demand of our target market. In the short run, operational cost of the company will surpass the revenue level since the company has to invest on fixed asset in order to establish a manufacturing plant in Mexico. But in the long run, this investment of Acme in Mexico will surely give them an avenue to increase their sales, profitability and market share. With the few months of hands on observation regarding the degrading performance of our workers, I have realized that it would be detrimental on the part of the company to ignore the voices of the workers and deprive them of expressing what they feel regarding the current policies that the management implements. Meeting halfway would be the best solution to boost again the morale of the workers as well as their productivity. It would also be beneficial for the company to give them the intended wage rate to inspire them to work hard and have the feeling of being part with the progress of the company. Through this, workers and the management itself will surely have a harmonious working relationship that later on contributes to the attainment of goals and objectives of the company. At this point, let me stress out that at the end of the day, the safest and effective way of having a profitable, efficient and effective business operation would be to hear the voices of workers and consider their welfare so as to give them the message that the management treasures their workers. References Associatedcontent. com (2007). Acme Automotives: The Objectives and Interest. Retrieved January 28, 2008, from http://www. associatedcontent. com/article/507171/acme_automotives_the_objectives_interests. html Bacon, D. (2000). The Story of a Maquiladora Worker. Retrieved January 20, 2004, from http://detagreens. tripod. com/maquiladora. htm The Globalization Website (2001). Globalization Debates. Retrieved January 7, 2004, from http://www. sociology. emory. edu/globalization/debates. html#cultural