You are the global subsidiary branch manager of a U.S.-based MNE, Leather Extraordinaire, which manufactures leather goods. The Latin American division exports the largest volume of goods due to the high quality of leather and cheap labor, of which the majority is produced in Argentina. The Argentine subsidiary is proposing to Headquarters to be given the mandate to produce all of the leather clothing goods exported to Canada and the U.S. and be termed the "Center of Distinction" for leather clothing.
What factors will you consider to determine if the Argentine subsidiary is acting on good-faith efforts in the best interest of the MNE, or if it is promoting its own self-interest, such as power, prestige and jobs?
How will you respond to the Argentine subsidiary?
Acting out of self-interest and proposing the mandate for the good of the multinational company may not be mutually exclusive. The questions to ask the Argentinian subsidiary relate to costs of production and costs of bringing the line of leather clothing to the U.S. and Canada.
Are there any tax benefits to having all the clothing manufactured in Argentina for the company?
Are there any drawbacks ...
The solution discusses knowledge management and R&D.