The firm manufactures a global positioning system (GPS) that sells for $2,000, with cost of goods sold (hardware 30% and software 70%) of 55% of sales. Compared to the United States, China offers a 7% cost reduction in electronics manufacturing hardware and a 45% reduction in software programming. India offers a 32% reduction in software programming costs. So far, you have been unable to Determine whether India has the facilities to undertake the hardware manufacturing.
The firm has to invest $300 million. As far as China is concerned, you can send hardware and software manufacturing to China or India.