Business Situation if You Were John Martin?

¶ … business situation if you were John Martin?

Mexico is the third largest trading partner of the United States. This partnership has thrived courtesy of NAFTA agreement between the U.S. And Mexico. The two countries have become more than siblings since the implementation of the agreement. U.S. firms investing in Mexico have historically gained an increase in profits and economic viability. I would advise John Martin to invest in Mexico as it has proven to reduce costs involved in the production. This will help boost the company's manufacturing output because it has never experienced before the enactment of NAFTA (Keesing and Martin 34).

Currently, the survival of the company is uncertain since NAFTA does not eliminate tariffs as it only allows its companies to chip products to foreign nations by providing an increase in quotas. If Martin's Textiles fails to shift its operations to Mexico, it risks losing major customers because it has recorded losses for the past several years (Hiemstra-Kuperus and Meerkerk 40). As the CEO of Martin's Textiles, I would move the productions to Mexico as this would lower costs while marinating relationships with the United States where we enjoy good labor relations.

Regarding the company's dilemma, I suggest shifting the production to Mexico to enjoy the reduction in costs and remain competitive in both Mexico and the U.S. This responds to the firms that shifted to Mexico because of the rising cost-competition in the textile industry. The textile sector is based on a labor intensive and low skilled workforce. In order to cut costs, I would lower my labor costs and the best approach to achieve this will be to shift my production base to Mexico (Keesing and Martin 67).

Mexico is among the leading manufacturers of textile and the commanding textile supplier to the United States. However, despite the increasing costs of textile, Martin's Textiles is entangled in a dire financial condition as its production is poised to decline. Without significant foreign investment in Mexico, the company will be unable to grip vast reserves beneath the industry. Turning Martin's Textiles in the right direction will be quite challenging. The Mexican people have historically feared that foreign control and ownership of their natural resources might orchestrate loss of sovereignty (Hiemstra-Kuperus and Meerkerk 81). However, Martin's Textiles needs to be autonomous to use Mexico's private investment for it to remain efficient. Although it will be politically challenging to attain this objective, it remains economically critical if Martin's Textiles is to remain viable.

The financial straits of Martin's Textiles are not the only issues confronting the business. Its opposition to NAFTA and various trade agreements has recently become more vocal as calls for renegotiation or suspension of the treaty mounts. Protectionism will hurt the company's status as a proponent of global growth. In addition, withdrawing from NAFTA and other trading agreements would enable other companies in the industry to take the lead, which will put Martin's Textiles at a competitive disadvantage (Keesing and Martin 75).