Kiwi Medical Devices Offshoring Strategy: Mexico Location Analysis
This paper analyzes four key decisions facing Kiwi Medical Devices as it seeks to offshore manufacturing operations to reduce costs and improve supply chain efficiency. Drawing on the Kiwi Medical Devices case study, the paper argues that Mexico is the optimal country for the new facility due to its proximity to North American markets, competitive costs, and manageable risk profile. It further recommends a port-of-entry city location to minimize logistics costs, a wholly owned subsidiary as the best market entry mode for long-term control and scalability, and an expanded logistics partner selection process that includes local providers. Each recommendation is evaluated against Kiwi's strategic goals of cost reduction, quality maintenance, and supply chain reliability.
- Country Selection: Why Mexico Is the Best Choice: Mexico chosen for proximity, cost, and lower risk
- City Location: Port of Entry vs. Interior City: Port-of-entry city reduces logistics and supply chain costs
- Market Entry Mode: The Case for a Wholly Owned Subsidiary: Wholly owned subsidiary offers control and long-term scalability
- Logistics Partners: Expanding Beyond DHL: Local logistics providers offer competitive costs and local expertise
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What makes this paper effective
- Each question is answered with a clear recommendation supported by specific evidence from the case study, avoiding vague generalities.
- The paper consistently ties each recommendation back to Kiwi's stated strategic priorities — cost reduction, quality, and proximity to North American markets — creating analytical coherence across all four sections.
- Counterarguments (e.g., the appeal of interior cities' lower wages, or subcontracting's ease of entry) are acknowledged before being systematically rebutted, which strengthens the overall argumentation.
Key academic technique demonstrated
The paper demonstrates comparative analysis: for each decision, it identifies the available options, weighs the trade-offs using relevant criteria, and arrives at a reasoned recommendation. This structured approach — options, criteria, decision — is a standard business case analysis technique that keeps the argument focused and easy to evaluate.
Structure breakdown
The paper is organized around four discrete questions from the case study, each functioning as its own mini-argument. Section one addresses country selection; section two covers city type; section three evaluates entry modes; and section four examines logistics partner strategy. The conclusion of each section leads naturally into the next decision level, moving from macro (country) to micro (logistics operations).
Country Selection: Why Mexico Is the Best Choice
Selecting the best country in which to locate offshore manufacturing operations can be a difficult decision owing to the complexities involved in global supply chain management. The various available options must be carefully evaluated if the desired outcomes are to be successfully achieved. With manufacturing costs in New Zealand on the rise, Kiwi must select a country that offers more competitive costs combined with an acceptable level of risk. Of the four most preferable countries — China, Indonesia, Mexico, and Slovakia — Mexico offers the best location.
An important priority for the company, as far as reducing its supply chain costs is concerned, involves locating its manufacturing operations in proximity to its major markets. While headquartered in New Zealand and with a strong presence in Asia and Europe, Kiwi's major markets are in North America, which comprises 46% of its overall sales (Fawcett, 2014). Being in North America, Mexico compares favorably to the other three countries in terms of not only proximity to the company's major markets, but also costs. As explained in the case study, North America offers better costs than New Zealand, and it is much cheaper to transport goods from North America to Europe than from New Zealand or Asia (Fawcett, 2014).
Furthermore, though China and Indonesia offer large markets and more impressive economic indicators compared to Mexico and the relatively small Slovakia, they present market proximity difficulties, more significant cultural differences, greater political risk, and less advanced infrastructural development. These factors make Mexico the most strategically sound choice among the four candidates.
City Location: Port of Entry vs. Interior City
It is important for Kiwi to make the right decision with regard to not only the most suitable country, but also the best city for the new manufacturing facility. The company can choose from either a port-of-entry city or an interior city. Each option offers its own merits and drawbacks. A port of entry provides a simpler setup and fewer logistics difficulties, while interior cities offer lower wage rates, a greater and more stable supply of labor, and better tax benefits (Fawcett, 2014).
Though the advantages of an interior city appear attractive, a port-of-entry location would be better suited for the new manufacturing facility given Kiwi's competitive challenges and strategic goals. From a logistical standpoint, it is more prudent to set up a manufacturing facility closer to suppliers (Kalantari, 2013). Though geographically dispersed, Kiwi's suppliers ship products into a port of entry. The company specifically desires to reduce its manufacturing and supply chain costs, and locating the new facility at a port of entry is more likely to achieve this objective. Though an interior city may offer an abundant labor supply at lower cost, it would increase supply chain costs because raw materials and finished goods would have to be transported to and from the port upon arrival, adding unnecessary complexity and expense.
References
Branch, A. (2009). Global supply chain management and international logistics. New York: Routledge.
Fawcett, S. (2014). Kiwi Medical Devices, Ltd.: Is "right shoring" the right response? In R. Frankel (Ed.), The definitive guide to supply chain best practices. Upper Saddle River, NJ: Pearson Education, pp. 109–121.
Kalantari, A. (2013). Facility location selection for global manufacturing. Theses and Dissertations, Paper 233.
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