Question

Navistar International Corporation is an American company that mostly manufactures the big commercial trucks we typically see on the highway. Despite its being an American company, Navistar runs a number of manufacturing plants in Mexico. If a U.S. firm purchases a commercial truck from one of Navistar’s manufacturing plants in Mexico, does that purchase factor into GDP? Why?

Answer 1

A Strategic partnership is a formal relationship between two or more corporations, usually supported with legal contracts. It is done when both the corporations are looking at similar goals/shared problem to solve and each possess some unique resources/expertise – which they can pool in together to solve the shared business problem. It gives both/all the partnering corporations a competitive edge over their respective rivals and also adds up to their top/bottom lines. It also helps companies to target newer customer segments & product lines, expand their geographical reach and get access to newer technologies.

Yes, I agree that creation of natural gas highway required such a strategic partnership. This is because as rightly mentioned in the article- getting consumers to adopt the newer clean fuel technology would require a complete ecosystem to be built- from extensive fuel stations to service centres to reliable automobile products to reliable gas supplies. Since, each of these part of the ecosystem are specialized business areas – hence, it might not be feasible for a company from one such industry to work out the other parts of ecosystem on its own. Not only it will require the company to diversify away from its core business, it may require significant technical and managerial bandwidth which it may not possess and also to commit enormous financial/other resources to make it successful. Joining hands with corporations from other parts of the ecosystem will help them overcome these challenges, while working together to achieve a common goal of viable natural gas based ecosystem for transportation in US.