Metalfabriken Brazil

Brazil during the 1980s faced difficult times in its economy. The country had high inflation, and an increasingly large foreign debt responsibility. Companies such as Metalfabriken Brazil, which were composed of Brazilian units but owned ultimately by companies outside of Brazil, came under increasing scrutiny and regulation as Brazil sought to maintain internal control of its economic situation. Regulations were imposed which determined how much of a product manufactured in Brazil could be comprised of imported components; if this percentage were exceeded, the product itself was considered an import and subject to additional regulation. In MFK's case, so long as the product itself was considered domestic, the all-important attachments would be considered domestic, as well.

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odels in Brazil would be put into marketing and promotional activities designed to increase the sales, not the production, of these models. This alternative solves Metalfabriken Brazil's problem of increasing its exports (although it would be exporting goods imported from Germany), and it reduces the manufacturing costs which are currently plaguing the company because of inflationary pressures. In addition, the overall investment exposure to the German parent company is limited, which suggests a benefit to that group, as well. However, this is a short-term solution that could put the company in worse straits down the road than it currently faces. If Metalfabriken Brazil eliminates production of all but the X20, it loses considerable training experience among its Brazilian workers. Also, as competition continues to increase in South American for similar products, other companies are likely to develop similar technologies to Metalfabriken's other lathes, but because they do not have to pay either the transportation costs nor the other costs associated with importing goods, they will be able to offer the competing products at lower prices. Even if Metalfabriken Brazil were not facing strong competitive pressure from products co
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Approximate Word count = 1494
Approximate Pages = 6 (250 words per page)