...Emerging Market Economy: Mexico Introduction The success of any business will be greatly determined by the environment in which the operations are carried out. The legal, political and economic conditions of a given country are some of these determining factors, especially for emerging markets (Lassar, Haar, Montalvo and Hulser 135). Consequently, the management of any multinational corporation that intends to expand its operations into a given country must have an understanding of the economic and political factors in the country. While there are countries that have undergone industrialization and have developed markets, there are those that have not attained that state, but can be considered as emerging market economies. Mexico is one of these emerging markets given the economic stability that has been recorded since the late 1990s (Heyman 31). Mexico is a federal constitutional democracy in the continent of North America. The country contains thirty-one states and the federal district that houses the national government offices. The office of the president is currently held by Enrique Pena Nieto who came into power on December 1, 2012 as the 57th president. The country was colonized by Spain and gained her independence on September 27, 1821 after eleven years of war for independence. The Mexicans had affirmed themselves sovereign towards the end of 1810. This colonization made Spanish the most spoken language in the country and still remains at the top. Political...
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...At the end of 1994 Mexico was hit by one of the worst economic crisis in its history, which is called "The Peso crisis" or "Tequila Crisis" and is considered one of the first ones that had global effects. After only three weeks in charge, the newly elected President Ernesto Zedillo Ponce de León was forced to lift the upper band of the exchange rate by 15%, devaluating de facto the Mexican currency. In fact, the Central Bank of Mexico had insufficient international reserves to keep the fixed exchange rate with the US dollar. This triggered panic among Mexicans, who started buying dollars because they were fearing that further and more serious devaluations would occur. This contributed to exacerbate the situation even more. The crisis was very harsh, but thanks to a US$50b rescue package from USA, the IMF, the Bank for International Settlements and private commercial banks, Mexico was able to roll over its short term dollar denominated debt and did not default on its short term securities. As it results from the following data, Mexico managed to recover very quickly: * The GDP decreased by 5.8% in 1995, but in 1996 and in 1997 it grew by 5.9% and 7.0% respectively * Household final consumption expenditure contracted by 11.5% in 1995, but in 1997 it went back again to 1994 level * Foreign direct investments decreased by 13% in 1995 and by 4% in 1996, but they grew by 40% in 1997 to a level 16% higher than in 1994 * Unemployment rate grew by almost 3 percentage...
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...Switzerland vs. Mexico Switzerland My research paper will individually concentrate on Switzerland and Mexico in its history, competitive advantage, export, trading, and globalization. I will then compare and contrast both countries by their competitive advantage in the market, government intervention, trading, export, and globalization. The Switzerland economy is founded on an exceedingly competent labor force and skilled work. The principal areas consist of micro technology, hi-tech, biotechnology, and pharmaceuticals, also, includes banking and insurance knowledge. Switzerland was not the success story that it is today; in the late nineteenth century Switzerland was a poor nation and its major exports were mercenaries and emigrating citizens. By the early period of the twentieth century, Switzerland had emerged as an industrial nation of importance despite its small size. Switzerland was one of the richest nations in the postwar period and by the 1960 using some measures, Swiss per capita income was the highest in the world. The wealth of Switzerland is the outcome of national competitive advantage where there are shockingly numerous competitors in a wide range of advanced manufacturing and service industries and Switzerland a small nation was able to establish their competitive advantage over large nations and their competitors. The industrial success has allowed Swiss citizens to be employed at high wages and for many years the unemployment has affected...
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...Mexico: An Emerging Market Country Mexico has one of those economies that many people tend to overlook and undervalue. I am unsure as to why many take Mexico out of the equation when looking at the world market investment and business options, however, in my opinion, Mexico is a strong emerging market country. Perhaps many Americans are frightened of sending their investment money into the Mexican economy because of the negative press Mexico is always getting. Not more than a month or two seems to go by without some mention of a drug cartel, violence, border enforcement, or poverty. The purpose of this paper is to discuss the positive and negative aspects of an American company doing business in Mexico, to discuss Mexico’s laws and government stability, and finally to discuss Mexico’s gross domestic product (GDP) and other elements that involve Mexico’s market economy. Rowland, 2012, lists some of the concerns most business owners would have when doing business in Mexico. Fear of corruption and violence likely top the list, both of which seem to be problematic in the country. Some American businesses may also dislike the idea of bringing jobs from the United States into Mexico. However, looking past these top concerns gives one a huge glimpse into the possibility of growth and investment to be had within the Mexican economy. Cost alone is a huge motivating factor when deciding on whether or not to do business in Mexico. Kohli, 2014, states “Mexico’s manufacturing cost is...
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...Mexico has always struggled with water allocation and getting clean water to its inhabits. Whenever anyone visits Mexico they are instructed to only drink from bottled water due to the fact that the water is contaminated from faucets and showers. People who live in poverty may not have access to this bottled water and are forced to drink the contaminated water, which can lead to sickness and lack of health within the country. As Mexico is developing this problem is holding them back from really being a leading country within the world. Their economy is making strides to become a large and prosperous economy. Mexico has many natural resources that can be exploited and used to further their development, such as wealth in mining and many other resources. But, in order for the resources to be exploited water is needed and this takes away from the drinking water for the inhabitants. Mexico has not been able to allocate water correctly and their economy and people have been suffering. As a team we addressed the issue by doing a lot of background research on not only the water industry, but also on the culture and economy of Mexico. This gave us insight into every aspect of how Mexico is attempting to solve this problem of water allocation. In our research we found that there are two main industries that the lack of clean water effects and those are the bottled water industry and the mining industry. After we narrowed it down to these two industries we researched them heavily and...
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...Mexico Overall, Mexico is the second largest economy in Latin America after Brazil and is also an oil-exporting nation. Mexico realized that trade is one of the most important factor that driven Mexico economy, this country started free trade in a early time and continue participates lots of free trade agreements for decades. Based on the data that I have downloaded from work bank(2017), GDP per capita are: 7236.6 in 1990, 7277.6 in 1995, 8568.1 in 2000, 8706.1 in 2005 and 8861.5 in 2010. From that, we can see that economy develop in Mexico is increasing but modest in general. Since 1994, Mexico participated NAFTA and thought that agreement would boost Mexico’s growth and economy development. However, the economy performance was not going...
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...Analysis of Foreign Direct Investments of North America Kristin Daughdril & William Cassidy Business Administration 418 Abstract Foreign Direct Investment (FDI) is an investment involving a long-term relationship and reflecting a lasting interest in and control by a resident entity in one economy of an enterprise resident in a different economy (UNCTAD). There are two types of FDI, inflows and outflows, which can be used to help determine the investment strategies and economies of countries engaged in FDI. North America has been the source of nearly one-half of all investment and almost three-quarters of the jobs created throughout the globe (Huggins, 442). North America is probably the most important continent when it comes to dealing with FDI. The three main countries of North America, the United States, Canada, and Mexico, all rank in the top 15 of world economies, proving them to be desirable partners in FDI transactions. The trends of FDI discussed in this report will be unparalleled to this information and can lead to some predictions on how future trends of the countries of North America will continue to be superior to that of the other continents of the world. Keywords: Foreign Direct Investment, FDI Inflow, FDI Outflow Foreign Direct Investment is investment of a company located in a different country either by buying a company in the country or expanding its business into the country. FDI can be done for many purposes. Companies may have tax incentives abroad...
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...In January 1994, the United States, Mexico, and Canada implemented the North American Free Trade Agreement (NAFTA), forming the largest free trade zone in the world. The goal of NAFTA is to create better trading conditions through tariff reduction, removal of investment barriers, and improvement of intellectual property protection. NAFTA continues to gradually reduce tariffs on set dates and aims to eliminate all tariffs by the year 2004. Before NAFTA was established, investing in Mexico was a difficult process. Investors needed the Mexican Government's approval and were also required to meet specific investment guidelines. These requirements necessitated investors to export a set level of goods and services, utilize domestic goods and services, and transfer technology to competitors. Under NAFTA, investors no longer need government approval to invest and are treated as domestic investors. NAFTA has also increased intellectual property rights and allowed companies to obtain patents in Mexico and Canada. In the past, companies were hesitant to export research and development intensive goods; with increased intellectual property protection, however, exports of these goods have shown a definite increase. As a result of better trading conditions, exports and imports of most other goods have increased along with the research and development intensive goods. In Mexico, the elimination of investment barriers has allowed investment to expand. Increased trading and investment has then...
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...Individual Assignment – Export of Food Products to Mexico Rishabh Passwala – 300685892 Global Business Management Centennial College Professor James Macdonald International Enterprenueship 12/10/2012 Abstract Any export activity and its multiplier effect on the economies of the both the country – host and guest country, is the result of the globalisation of the economies activities of the world. However, it will never easy for any company to enter into the market of any other country with the mindset of providing same kinds of products with the same features that have been provided in their host country. Because the culture, economy, legal considerations, political and social factors of the host country may be different than their own country. These are the factors that will determine the extent of the success and its impact on the economy of the host country. So it is the test of the entrepreneur to decide to go to which country and to decide how to go to that country with the different product mix. So it will highly influence the domestic people of the host country and make the company competitive. Keywords: Multiplier Effect, Globalisation, factors affecting Macro Environment Introduction: Canada is known for their highly quality food products worldwide. The Canadian food industry ranges from the farming to the retailing and assembling and includes most of the well- known products that are considered rich in health. The NAFTA agreement between the three...
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...Country Analysis MEXICO Aga Wyporska 100853121 Executive Summary: Mexico is located in North America with a population total of 113,423,000 people (University Michigan State 1994 - 2012). It borders 3 countries: Guatemala, Belize and the world economic super power, the United States of America. It has the second greatest economy in Latin America and is a major exporter and refiner of oil. Mexico is currently experiencing growth in its economic factors such as GDP, labor productivity and its exports of goods and services; however, due to the current political instability and the extremely high amount of drug trafficking and the associated violence, it is not recommended to proceed. A lack of an ability to implement laws leads to a lack of solid property rights and enforcement of contracts, which ultimately leads to a loss of business. Country’s Macro Environment: Some of Mexico’s most critical industries include agriculture, which is in the decline (3.9% of GDP in 2006 down from 7% in 1980) and electronics, which is experiencing an upsurge (Central Intelligence Agency 2012). Furthermore Mexico is the 6th largest oil producer in the world and so has a strong performance in the energy and mineral resource industry. Lastly Mexico is involved heavily in services such as tourism (it is the 8th most visited country in the world) and finance (World Tourism Organization 2012). Mexico is the second largest supplier of electronic parts to the US market (exported $71.4 billion...
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...Country Report; Mexico Eric D. Crivello 09/11/2011 City University of Seattle Abstract This paper is examining the decision of Guitar Center to begin opening franchises in the country of Mexico. The following pages examine the cultural, legal and economic issues that are associated with such a decision, detailing the current situation in Mexico and considerations that an organization such a Guitar Center must be aware of. Overall, the purpose of this paper is to provide the reader with some insight into the specific details that a firm like Guitar Center must take into consideration when deciding whether to move into Mexico or some other emerging market nation when planning on internationalizing their business operations. Country Report; Mexico The country of Mexico seems like a convenient choice for any firm considering nationalization. The United States shares a border with Mexico, so they are a lot closer than most other countries that could be considered. They are bound to the North American free trade agreement (NAFTA), which allows U.S. firms to export to Mexico or set up operations within their borders without penalty of high tariffs or other forms of import taxes when bringing products back to the U.S. They are also a democratic country and they have a stable government with a fairly strong economy. Yes, there are a lot of positives when considering expanding operations to Mexico, however there are also some negatives that firms must take into consideration...
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...Mexico, land rich in history and culture, is located on the northern border of the United States. Throughout the last decade and a half Mexico has struggled to maintain a stable economy, all the while trying to control the trafficking of drugs and humans across the American border. The U.S. Department of State website (2010) states Mexico is classified by the World Bank as an upper-middle-income country. Poverty is widespread (around 44% of the population lives below the poverty line) and high rates of economic growth are needed to create legitimate economic opportunities for new entrants to the work force. The Mexican economy in 2009 experienced its deepest recession since the 1930s. The stated reason above is what has caused many Mexican citizens to cross the border into the United States looking taking any job they can find in order to help their families back home survive the trying times. Many have died in the trek to seek a better life, yet just as many have survived and are living and working in a large number of U.S. States. According to a PBS video called “Beyond the Border” (2001) one out of ten families in Mexico depend on the money sent to them by those family members that have managed to cross the U.S. border and get jobs. Although during his political campaign President Obama promised address the immigrations issues of the United States, this issue has been put on hold for a number of years. The New York Times (2011) report that the member of illegal immigrants...
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...countries such as Mexico could improve economically. In this section, we will look into the impacts of NAFTA on the lives of Mexicans with focus on the economic lives. We also determine the attainment of the objectives of NAFTA NAFTA did not bear any resemblance to the forecasts and the expectations of the agreement. The agreement was not a solution to the unemployment challenges in mexico.it was not helpful in raise the average wages of the Mexicans or reducing the flow of Mexican immigrants to the US. It was however useful in...
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...CASE ANALYSIS: Kentucky Fried Chicken and the Global Fast-Food BUS 478 D1.03 Professor Wosk By: Frank CHU 20005-6416 March 3, 2003 0 Individual Case – Kentucky Fried Chicken History and Introduction Kentucky Fried Chicken Corporation (KFC) is the world’s largest chicken restaurant chain. It operates more than 10,200 restaurants worldwide in more than 79 countries. After PepsiCo brought up KFC in 1986, KFC carried out significant changes in different areas including the new focus on product quality, the new product offerings and differentiation, and the control system. Recently, KFC is inevitably facing a lot of business problems such as losing market shares and dealing uncertainties with the international markets. This report will focus on the recent matters that KFC have and will organize into four sections. First it will analyze KFC’s external environments, then the internal. Later, it will discuss the company’s global environments and strategies. At the end, it will provide recommendations for the identified problems. External Analysis The external analysis will focus on Porter’s five forces. Risk of entry by potential competitors The threat of entry barrier of the chicken fast-food chain industry is moderate. On one side, the entry barrier is low because the entry capital investment is low. For example, Chick-fil-A enters the industry by opening many small units in the food courts of shopping malls. Instead of investing millions in building restaurant houses, those...
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...and Its Advantages in Mexico Regional Integration is described as a process in which states enter into a regional agreement in order to enhance regional cooperation through regional institutions and rules. North American Free Trade Agreement was the removal of barriers between Mexico and the United States. It was the phasing out of virtually all restrictions on trade and investment flows. “The expanded trade resulting from NAFTA has raised the United States' gross domestic product very slightly. (The effect on Mexican GDP has also been positive and probably similar in magnitude. Because the Mexican economy is much smaller than the U.S. economy, however, that effect represents a much larger percentage increase for the Mexican economy.)” (The Effects of NAFTA on U.S. –Mexican Trade and GDP, May 2003). Over the years NAFTA has helped Mexico to improve on their exports and imports trading with the United States. NAFTA has had a positive effect dealing with the international investments. This is because some of the restrictions Mexico had on their foreign investment dealing with the ownership of capital. NAFTA also allowed Mexico to do away with tariffs and quotas. This allowed Mexico to become a profitable place to invest, in plants and assembling of products in the United States. NAFTA eliminating the tariffs in Mexico helped to reduce the different license requirements and restrictions on foreign investment. This meant that it would open the doors for Mexico to invest in private...
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