The Usa and Mexico

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Introduction………………………………………………………………………………..….3

1. Cultural differences in a business environment between the USA and Mexico ….……4

2. The USA – Mexico relations overview ……………………………………………..…….5

3. The USA – Mexico relations in the automotive industry, trade and FDI………………6

4. Government support program for Mexican auto part producers…..…………………11 5. NAFTA ……………….…………………………………………………………………...11

6. Entry mode strategy………………………………………………………………………12

7. Political risks for investors……………………………………………………………….13

Conclusion……………………………………………………………………………………14

References……………………………………………………………………………………15

Introduction
Automotive industry in Mexico is one of the fastest growing sectors in its economy. Around 2.1 million produced cars are exported to markets in South and North America, Japan and Europe. Around 64% of the Mexican-made vehicles are exported to the USA market. Since 2008, Mexico has arisen as one of the most competitive ground for foreign manufactures of producing vehicles. American leading automobile producers are rapidly expanding in Mexico as it is the most attractive market due to its proximity to the USA and signed North American Free Trade Agreement (NAFTA) between countries. In turn, Mexico offers such competitive advantages as skilled cheap labor force (nowadays even cheaper and more qualified than in China), product quality, geographical position, top local and multinational suppliers and easy access to other markets due to free trade agreements. This report will clarify the trade relation between the USA and Mexico, and make the business collaboration more understandable in order to help American automobile producer company enter a new market with good elaborated strategy. Furthermore, in this report it will be described current situation in the automobile market, the level of government protectionism policy against FDI and import, the influence of NAFTA and possible political risks. This paper will give a short overview about the automobile market in Mexico and also provide with the best strategy for entering this market.

1. Cultural differences in a business environment between the USA and Mexico Before enter the new market it is highly important to get to know about the culture and about the main business features. It is important to know how people cooperate with each other. The following descriptions and recommendations will help to negotiate successfully. Business meetings as a basement for successful negotiations

a) Mexico is a Spanish speaking country with expressive culture. Even during business meetings the Mexican businesspeople show more emotions and affections than the Americans. b) Appointments should always be made from two to three weeks earlier before the meeting. Upon arrival on Mexico it is necessary to inform the Mexican business partner and in addition officially confirm the meeting. c) Punctuality is not as important in Mexico as it is in the USA. The Mexican counterpart can keep business partners waiting even for 30 minutes or he/she can be late. d) First letter and fax should be in Spanish, but it is also allowed to ask if that is possible to correspond in English. Not every the Mexican businessman speaks English. In Mexico Spanish language is the business language. The cards should be in both languages English and Spanish. e) Mexicans prefer the direct communications. Meetings face-to-face or phone calls are more welcomed than e-mail. However, e-mail communications are also used. f) In comparison with American business system where the meetings proceed seriously and quickly, Mexican businessmen use to conduct meetings slowly in friendly atmosphere, with ten – fifteen minutes talks before getting down to business. Business negotiations

a) Mexicans prefer to do business only with people they know. Therefore, foreign company needs to have ties with a...
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