I thought that Schumpeter’s latest post was interesting because he pointed out even though the consumers’ willingness for buying a car was low in Mexico, some car industries such as Nissan, Mazda and Honda still tried to expand their business there and continuously invested  money on it.

Recalled what we had learned in the class talking about operation, I believe that the reason why car industries still interested in Mexico is it accelerates the inventory velocity. Since Mexico is near to the world’s biggest car market- America, it takes less time for car industries to ship their products to the market, which means that the inventory time is short. Therefore, it helps company to save money on some fixed costs, such as rent, electricity bills and shipping fees. In other words, If the selling price of a car is unchanged, pulling down the cost will definitely increase companies’ profits.