Global Business Plan the Study

Global Business Plan

The study has shown so far that there is a strong potential demand on the Canadian market for a General Motor's SUV referred to as Surpass. The Canadian terrain and landscape favors such a demand, with many Canadians leaving at some distance from the main cities of the country and needing a vehicle with which to reliably move across the land. On the other hand, Canada's environmental concerns will limit the broadness of the types of Surpass vehicles that can be sold on the Canadian market to only unleaded fuel consumers. This will make it a more expensive venture and perhaps less profitable if GM could actually produce and sell the entirety of fuel type vehicles in Canada.

The company will also be able to benefit from the trade facilities created by the NAFTA treaty, a free trade agreement that minimizes import taxes between Mexico, Canada and the U.S. This means that the company will be able to transport the parts produced in Mexico and the U.S. To Canada without needing to pay additional trade taxes when crossing the country borders.

In terms of country risk, the only real risk that has to be taken into consideration is the currency risk. However, at this point, this risk seems to be in favor of the company, because everything that will be produced in the U.S. will imply relatively lower costs, due to currency differences. On the other hand, these products will be sold in Canada, benefiting at this point from an increased currency exchange rate with the U.S. dollar.

The idea to finish the assembly process in Canada is, however, the right decision, despite potentially lower costs in Mexico and the U.S. The first reason for this is that the company will be able to finish production much closer to the actual market and customer base and can begin immediate distribution on the completion of the vehicles, without having to move them around. Further more, the costs associated with transporting the incomplete vehicles are significantly lower than needing to transform the vehicles in limited batches on trailers. Besides this, it will also take less time in the entire planning structure and the vehicles can reach the final consumers much faster. A strong recommendation resides thus in a 3-country production scheme, where the company can benefit both from lower costs in some of the countries and from increased proximity to the targeted market.

Given the uncertainty of the business venture, it is recommended that the company starts off with a limited number of vehicles, a first test batch and, following the potential results obtained, can then continue the expansion and follow up even with different brands and types of vehicles.