Mexico and Us Macroeconomic Environment

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CAPSTONE CASE
PHASE I
The Mexican and the United States Macroeconomic Analysis and Recommendations.

Felix Letellier Merida A4047647
Adrien Nhem 122534
Cécile Koskas 122544
Aurélie Tsati
Marcus Eriksson Rejmell
Felix Letellier Merida A4047647
Adrien Nhem 122534
Cécile Koskas 122544
Aurélie Tsati
Marcus Eriksson Rejmell

Introduction

In order to analyse both markets from a subjective and relevant point of view; we have decided to act as consultants hired by the Mexican government, with the mission of building a set of recommendations in order to enhance a more competitive national economy. Additionally, we are going to focus and deepen our analysis on the bottle water industry. Even tough Mexico is the biggest consumer of bottled water per capita in the world; its industry lack of solid competition and seems to be fragile against TNC of the global market. However, the tourism is one of the most important kinds of revenue for the country and with its proximity to the American market in terms of trade exchange. We will use the United States as a type of benchmark as well as showing their competitive advantage in this industry and try to extract the key success factor the Mexican government needs to improve. This report will not only provide insights about the competitive factors of the two countries at a macroeconomic level, but will also provide short recommendations and analysis which leads to the Phase II.

I. Macroeconomic environment of the United States

Even though the United States has the highest GDP in the world, actually twice as much as the China, with around $14 trillions (Table). According to the Global Competitiveness report of 2012, the United States has lost two positions and is now ranked 7th most competitive country in the world.

“The key to our success—as it has always been—will be to compete by developing new products, by generating new industries, by maintaining our role as the world’s engine of scientific discovery and technological innovation. It’s absolutely essential to our future.”

—President Barack Obama, November 17, 2010

The United States has been the superpower of the 20th century. This wide territory of 9,826,675 sq. km possesses a large amount of strategic resources such as coal, uranium, oil, gold and natural gas. All of these raw materials lead the US to a successful industrialization in all the sectors. Indeed, companies had at their disposal all the resources they needed and were able to grow rapidly in the domestic market. This is still the case today. (CIA)

Domestic companies have access to large market. Even though the distribution of wealth in the US remains unequal according to the GINI index, the US has the one of the highest GDP per capita in the world. (Table)

It has reached the edge of the Innovation, by developing impressive clusters. The Silicon Valley, veritable influence of the US worldwide in matter of high technologies, has brought to the companies, strong graduates from Stanford University, suppliers and improved the flux between companies. As a result, the US productivity increased over the years and it is still by far the most productive country in the world. The added value per person in the US is around $63, according to the key indicators of the labour market (ILO, 2007).

Furthermore, the commercial policy of the US contributes to its economical efficiency. Indeed, the US is one of the major players when it comes to sign multilateral agreements. It tends to reduce the barriers of trade. The NAFTA for example contributes to the development of infrastructure through Mexico, the United States and Canada. As a result, the US is the third largest exporting country (Sandretto, R. 2010).

All of these factors make the United States so attractive for foreign direct investment.

1.1. The Bottled Water industry

The US is the largest bottled water market. The US market accounts for around 23% of the $163 billions global market...
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