Firm strategy plays an important part in determining the competitiveness of an industry in a global market. As governments embrace trade liberalization, local industries have become increasingly exposed to fi erce competition from a growing array of international suppliers. Domestic producers of bulk appliances like dishwashers and refrigerators were largely insulated from foreign competition because of their size, which makes them expensive to ship across the ocean. However, low labor and production costs added to declining transportation costs have enabled many Asian appliance makers such as Chinas Haier Group and South Koreas LG Electronics to increase their U.S. market share. They are also opening plants in Mexico and neighboring countries to save on shipping. Maytag had to adjust to the new competition through global sourcing and collaborative supply chain networks. In the case of dishwashers, its triad strategy entails sourcing the motors from suppliers in China, producing wire harnesses in Mexico, and assembling the parts in Jackson, Tennessee. Dispensing certain activities across the transnational value chain to lower costs and gain competitive advantage is considered a successful global business strategy. This approach allows U.S. companies to share the risk with suppliers and to choose foreign companies with the best product lines or services. Maytag selected certain suppliers (of motors for dishwashers) from China largely due to their low prices. However, it decided to make the wire harness in Mexico because they tend to be different in each model, and sudden shifts in demand require proximity to the market.

Questions 1. Would you advise Maytag to produce motors for the dishwashers in Mexico in view of the latter s proximity to the U.S. market?

2. Would you advise Maytag to lobby the government for higher tariffs on imports of motors and /or wire harnesses so that it could produce them in the United States for the domestic and export market?