Mexico and Supply Chain

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Sustaining Supply Chain Management

Acme MexicoCity Case Study

Acme Home Improvements, Inc. was founded in 1982 in Raleigh, North Carolina, and has 125 stores, about 100,000 square feet each, along the U.S. East Coast from Florida to Maine. The stores major competitors include big box home improvement retailers such as Ace, Home Depot, Lowe's, and TruValue, all of which are already in Mexico. The company has decided that it is in their strategic best interest, for a variety of reasons, to establish itself in the Mexican market. The market entry mode will be through a joint-venture with local leadership present who can hopefully help the company converse the local environment and business culture. Though the company is a relatively late entrant in its relative to the other firms who have already establish Mexico.

There are five major product groups within each Acme store: plumbing and electrical supplies, building materials, hardware and tools, seasonal and garden/yard items, and paint, flooring and wall coverings. Furthermore, human resources will consist of a variety of professional positions within the store that will be filled by either local individuals or expats from the parent company depending on the position. Using this strategy, the company will leverage knowledge of the local market as well as knowledge about company operations from experienced members. This analysis will provide a brief introduction to what type of strategy might be best fit for the company's international expansion as well as some mention of challenges they might find within their supply chain.

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Supply Chain Management

Many developing countries have worked assiduously to acquire the resources needed to be competitive in today's international market. Mexico, for example, ranks as one of the top destinations for doing business according to the "Doing Business Report" produced by the World Bank (Martinez, 2013). Not only are Mexico's capabilities growing quickly, but also trade agreements are also a factor in creating a pro-business environment for foreign capital. Furthermore, the country also shares more cultural similarities to the United States when compared to other developing countries such as China and India.

The tendency for U.S. firms to enter the Mexican market for manufacturing or production processes has been ongoing for many years now and this trend has been referred to as "near-sourcing." Furthermore, near sourcing is often considered a feasible alternative to global expansion because the location and proximity to the U.S. creates supply chain (SC) efficiencies when compared to more distant locations, yet the dynamics of this relationship are still being researched (Cagliano, Marco, & Rafele, 2013). It is reasonable to suspect that many of Acme's supply chain operations in Mexico will be able to be performed more inexpensively than in….....

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