Cross Cultural Management Plan 2

Topics: Mexico, United States, North American Free Trade Agreement Pages: 9 (1937 words) Published: March 29, 2015

Jason Campbell

14SU MBAC 6163 B


Dr. Hammond

Letourneau University
Individual Cross-Sectional Cultural Management Plan
North America-Mexico
México is a country located within the southern region of North America. Mexico’s comprised of approximately 1.96 million sq. km and is home to 120,286,655 Spanish-speaking Mexican souls. Mexico’s spans three time zones and has thirty-one states for local administrative authority. Mexico has had several previous constitutions with the latest approved February 5, 1917, that has been amended many times the last amendment was in 2014. Mexico has a president elected by popular vote for a single six-year term. “Mexico's $1.3 trillion economy has become increasingly oriented toward manufacturing in the 20 years since the North American Free Trade Agreement (NAFTA) entered into force.” (Mexico) Mexico has an annual GDP of 1.845 trillion in 2013 with a real growth rate of 1.2% and a PPP of $15,600 within the same year. Mexico’s GDP composition by sector of origin is arranged as 3.6% agriculture, 36.6% industry, and 59.8% services in 2013. Mexico’s unemployment rate in 2013 was at 4.9% with 52.3% of the population living below the poverty line. Mexican drug cartels are active in the transportation and production of drugs such as heroin, marijuana, and cocaine. Most drug trafficking travels from South America up to Mexico to await its eventual destination into the United States where it achieves a higher price. Stats from this section came from the CIA World Fact book. SITUATION ANALYSIS

Mexico can provide cheaper manufacturing labor that can be acquired within the United States. Making use of the NAFTA treaty between the United States, Mexico, and Canada there would be no import/export taxes on goods assembled or made in Mexico and then transported to the United States for sale. This is the same reason large automobile manufacturing firms started producing in Mexico, and now Japan and Korea have invested into Mexico to take advantage of NAFTA as well. Ron Harbour, a manufacturing analyst and partner at consultant Oliver Wyman, said in a telephone interview. “In the late 80s and early 90s, what was coming in from Japan was overwhelming compared with what we thought about from Mexico back then. Obviously, things have changed.” (Case) Mexico has definitely stepped up its game with the auto industry but has not fully utilized their geographic position in conjunction with the NAFTA treaty to enter into other high-tech markets and industries. CORPORATE & SWOT ANALYSIS

“In Mexico, the most common type of business is called an S.A. or Sociedad Anónima”. (A Guide to Establish your Business in Mexico) A US company doing business within the borders of Mexico would most likely want to take advantage of a subsidiary type structure to shield the parent company from any liabilities which may occur in that country. Subsidiaries provide a great form of protection to the parent firm and when used within other countries also sets up a local structure to that country when combined with local management creates an entity that the people and the country can feel is theirs and take pride within what they create. Strengths

1-Mexico’s geographical proximity to the United States is a huge advantage within logistics and transportation to the market. 2-Along with the geographical proximity to the United States Mexico shares the same time zones as US buyers, this will make negotiation, collaboration, and corporate communication a lot easier. 3-NAFTA, the North American Free Trade Agreement has advantages with import export tariffs dealing explicitly with Mexico, Canada, and the United States. 4-Low geopolitical risk and stable government are a huge benefit to dealing with Mexico. Mexico has also been a member of the WTO since 1995. Weaknesses

1-Mexico’s overreliance on the US economy could possibly tie these two countries’ economies were Mexico...
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