University of Phoenix
Global Business Strategies
Dec 12, 2007
Global Business Plan
Orange R Us has been in business for a while and has made very strategic business decisions. When the company decided to export out of the country to Mexico, the company had to perform some research. The company performed many task such as a country risk and strategic planning analysis, devise a business plan and a marketing strategy. Oranges R Us, a company located in Tampa, Florida, produces high quality and nutritional orange juice. Since being in business for over fifteen years, the company is venturing into the international market. After thorough research of Mexico’s politics, economy, social environment, and the risks in each, ORU has decided to choose this country to export their product.
Mexico is a member of the North American Free Trade Agreement, also known as NAFTA. This agreement removes most barriers to trade and investment among the United States, Canada, and Mexico (usda.com, 2007). Since Mexico is a trading partner with the United States, ORU feels confident that exporting their product to Mexico is the right choice for their company.
ORU’s selection of Mexico to begin exporting their product to is a good choice because of the close proximity of the countries. Likewise, since the U.S. and Mexico are trading partners, ORU will not have to worry about double taxation when exporting to Mexico. Mexico’s economy has been doing progressively well over the past few years, so there is tentatively minimal risk of doing business with the country from an economic standpoint. In addition, the social environment in Mexico is similar to the United States, so exporting orange juice should be a smooth transaction. Orange juice is consumed in Mexico, so providing high quality product should prove to sell in the country. Analysis of Mexico
The country of Mexico and the United States share a border of 1,958 miles; “from monument 258 Northwest of Tijuana to the where the Rio Grande ends in the Gulf of Mexico” (Embassy of Mexico in Washington, 2007). The country is about three times the size of Texas or 761,600 square miles (U.S. Department of State, 2007). Political
Mexico consists of 32 federal entities, 31states, and one Federal District. Mexico has a multi-party system. “The three largest political parties that dominate are the Institutional Revolutionary Party (PRI), the National Action Party (PAN), and the Party of the Democratic Revolution (PRD). As of 2006, there are eight national parties and 13 local political parties that exist as local coalitions of the three main parties (Wikepedia, 2007). “In the 2006 elections, the PAN emerged as the largest party…with just over 40 percent of the seats in each house of Congress. Even though the PRI no longer controls the Presidency…it remains a significant force in Mexican politics” (U.S. Department of State, 2007). Since the United States and Mexico are allies and trading partners, the process of exporting goods to the country should not be a complicated transaction. ORU feels confident that Mexico will prove to be a solid trading partner since both countries are working to maintain a friendly political relationship. Economics
Mexico has an export-oriented economy and is “firmly established as an upper middle-income country with the highest income per capita in Latin America, in market exchange rates” (Wikipedia, 2007). In addition, Mexico has a free market economy that has just entered into a trillion dollar class. A free market economy is “an economy in which the allocation for resources is determined only by their supply and the demand for them.” (About.com, 2007) The economy contains a mixture of both modern and outmoded agriculture. Mexico’s GDP purchasing power, as of 2006 is $1.149 trillion, and its GDP per capita, as of 2006 is $10,700. In 2006, Mexico exported $250 billion f.o.b. of...