WP application 2 ASM

Assignment: Please carefully read the current situation and all the other information on the WP APP 2 document that is attached. You will complete the section that says: what are you required to do? Please include all of the requirements under this section which are listed as numbers 1-5. Also look at the grading rubric chart that is there to make sure that everything is included!
I have also attached document (WA 1 Assessment Correction) so you can view the corrections and details the professor made to a previous assignment which will help to complete this assignment.

What is the current situation?

According to the National Resources Defense Council (NRDC), single-use plastics are goods that are primarily produced from fossil fuels-based chemicals that provide a single purpose and are meant to be disposed of immediately after use. Currently, 300 million tons of plastic is produced each year globally, half of which is for single-use items. Of that 300 million tons, it is estimated that 91 percent will not be recycled. This unrecycled portion of plastics ends up in our landfills, rivers, and forests where it poses a serious risk to the environment, human health, and the overall sustainability of life on Earth.

To combat the negative effects of both the production and disposal of plastics, governments across the globe are administering policies to restrict the use of single-use plastics. Two countries in particular, who have been at the forefront of this response, are China and Mexico. In January 2021, both countries began enforcing new laws banning the use of single-use plastics in their respective major cities. These bans will be followed with additional measures that will eventually apply to the entire country.

Seeking to take advantage of the potential opportunity, Jess Mariano, CEO of World Centric (a leading manufacturer of biodegradable kitchenware and packing products out of Petaluma, California) plans to expand his company into these emerging markets. His team has been tasked with identifying potential locations to build a new state-of-the-art manufacturing plant that will produce biodegradable cups, bowls, plates, containers, utensils, bags, straws, toothbrushes, and paper towels. After conducting initial research, World Centric, is considering two locations for this new plant: Shenzhen in China, and Mexico City in Mexico.

Shenzhen is a major sub-provincial city on the east banks of the Pearl River estuary on the central coast of southern Guangdong province in China. The city has a current population of 12.5 million people and serves as a critical trade hub for China due to its proximity to Hong Kong and the coast. Shenzhen’s superior infrastructure, skilled work force, and abundance of inexpensive resources has made it extremely popular for foreign manufacturers. World Centric executives identified Shenzhen as a potential launching point into the Chinese market because they currently are the largest adopters of single-use plastic in the world and have an overall population of 1.4 billion people. Unfortunately, under Chinese Law, World Centric would have to pay a one-time foreign business fee of $1,000,000 (USD) to the province of Guangdong.

Mexico City is the capital and largest city of Mexico, with a current population of 9.2 million people. Historically, Mexico City is one of the most important cultural and financial centers in the world. Its proximity to California would make it significantly easier for World Centric’s executives to ensure product quality. In addition to having a large workforce, Mexico City offers a world-class international airport. Traditionally, Mexico offers a very friendly business climate towards American businesses, with ample opportunities for tax breaks and business stipends, as well as very welcoming international trade policies.

An initial feasibility schedule found the estimated construction cost of the manufacturing plant in both Shenzhen, China and Mexico City, Mexico is as follows:

Today’s exchange rates:

• 1.00 US Dollar = 21.00 Mexican Peso
• 1.00 US Dollar = 6.50 Chinese Yuan

 Who are you?

You are the Chief Strategist for World Centric. 

What are you required to do?

Evaluate the options proposed (i.e., Shenzhen or Mexico City) and provide a recommendation, via email, to the CEO of World Centric, Jess Mariano, on which option World Centric should pursue. All comparative financial information must be shown in US Dollars. You may assume that both projects will take the same amount of time to complete. Apply the appropriate business writing standards for content, style, and organization in your email. [Note: You are NOT required to take into consideration time value of money and discounted cash flows in your appraisal].

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