Multinationals would be greatly interested in setting operations in Mexico depending in the business being conducted for many reasons. For one, 90 percent of in Mexico is under the free trade agreement. Many MNC’s located in Mexico are moving away from importing parts and materials and doing everything in house. Under the terms of the North American Free Trade Agreement only parts and materials from outside originating in one of the NAFTA trading partners are now allowed to enter the processing zones duty free (Luthan & Doh P, 1997). This saves 25 percent in Tariffs.
Yes, cultural differences would be stumbling block for U.S. MNC’s doing business in Mexico. Countries will have to modify their approaches if they expect to be successful in other countries. In Mexico they believe in Individualism; meaning they look at themselves as individuals and they tend to guard their space more carefully. They believe in particularism which is the belief that circumstances dictate how ideas and practices should be applied. They have neutral relationships and base their achievements on how well they perform their functions. The United States, European and even Japan have many different cultures that would make it somewhat tricky to conduct business in Mexico. Something as simple as the cultural relationship plays a role. The U.S. have different believes of Specific relationships, Universalism and have emotional relationships. Mexico shares none of these traits. When considering Hofstede’s cultural dimensions based on these dimensions (power distance, Uncertainty Avoidance, Individualism and Masculinity) could help deciding what alterations and changes that could be made to conduct business. Japanese have different believes of communitarianism and Ascription. Europeans have different believes of universalism. These believes would all need to be slightly adjusted to be successful for business.
It would be a good idea to study organizational cultures in Mexico before...
References: Hofstede, G. (1997). Cultures and Organizations: Software of the mind. New York: McGraw
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