Topics: Economics, Mexico, Mexico City Pages: 3 (955 words) Published: April 8, 2013
consequence of the above strategy is drastic. Turnover tends to be high. Employee loyalty as well as their performance drops. This drives down KFC’s market shares, limits its efficiency, and reduces its growth. Mexican Environments and Global Strategies KFC operates 50% of its restaurants outside US, mainly in Japan, China, and Mexico. KFC emphasizes on building company owned restaurants. The section will only discuss on KFC’s business in Mexican environment because KFC encounters problems and uncertainties here. Mexican Business Environment Mexico has a long history of close economy until 1988. When De Gortari, Mexico President, ambitiously strengthens free market, his policies attract many US businesses because of the neighborhood and low transportation cost. In addition, Mexico has a lower labour wage and capital cost. Many US companies realize these Mexican location economies and begin trade. As a result, total value of import and export between US and Mexico rises from US$82 billion in 1992 to US$149 billion in 1996. Anyway, the investment in Mexico is moderately risky because of the fairly unstable government, Mexican labour unrest, and anti-Americanism culture. Mexican Economy Economic stability is an important factor in determining foreign investment. In term of this, Mexico is poor in manipulating and controlling its economy. The crisis of Peso exchange and hyperinflation threaten the investors. The devaluation of Peso reduces the profits of the foreign investors in term of US dollar; and the hyperinflation reduces the purchasing power of Peso, and makes the market environment unstable. The cause of these events contributes to the rapid change to open market. Since the Mexican government just opens the market, it lacks the skills and experiences to manipulate and control market movements, and the existing Mexican regulations and controls are still immature and inadequate. Those economic events give Mexico 4 a valuable lesson. In the long run, Mexican...
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