Power point project1

Editor's Notes

• #3: First to get us started .What do you think of when you think about mexico… landscape, food, music, beautiful beaches,there love for soccer, ancient ruins cultures and tradition…
• #4: To get us started I wanted to share a few facts about mexico… The official name of for Mexico is the United Mexican States. Mexico is the 11th most populated country in the world with around 117 million people (as of July 2012). Mexico is the 14th largest country by land area. The main language spoken in Mexico is Spanish. Mexican food is known for its range of flavors and spices. Popular dishes include tacos, burritos and enchiladas. The most popular sport in Mexico is football (soccer).
• #5: Hofestede Dimensions helps us describe some significant differences between Mexico and the United states. Through the chart we are able to discover power distances, indulgence, and Masculinity of each country and determine how similar a country really is. For instance, in Power Distance the United States scored 40 and Mexico scored 81. The high score in Power distance shows us that the culture or the attitude in Mexico, is that the individuals in society are not equal. This is expected and mostly accepted in their country. With keeping this in mind, management could run into problems when implementing new procedures that would disrupt or change the hierarchy. The implications of power distance in an organizational structure would be a hierachy were the boss may or may not listen to what employees have to say, but the boss will most likely do what they want to do anyways. Another area that the countries have a big difference in is Individualism. The United States scored 91 and Mexico scored 30. 1 It is important to understand that Mexico is a collectivistic society; they take care of each other. Long-term relationships are important to them, as is loyalty. When managing a group who have these beliefs, it is important to not to offend them. They value employee/ employer relationship almost like a family relationship or link. When offended it leads to shame or loss of face. The last two areas that have a big divide between Mexico and the United States are Uncertainty avoidance and Indulgence. Mexico scored an 82 on uncertainty avoidance and the United States scored a 46. 1High numbers in this area show that people in Mexico try to avoid the uncertainty. They have very rigid code of belief and behavior, and they have a need to follow rules. This could pose a problem when new ideas and change is brought into a company. Knowing this about the Mexican culture should help managers when making changes. They should be sensitive to the emotional side of their employee’s culture and habits. The last area of difference is Indulgence. Mexico scored 97 and the United States scored 68.. 1 This means that people in Mexico tend to lean more towards indulgent They give in to their impulses and desires. This could cause conflicts with management wanting to cut cost or save money in ways that they feel is being a little to indulgent.
• #6: The right negotiation strategies is essential in making business in any country. A firm or company must get an understanding of their culture and how it relates to their international business relationships. Mexico has very specific negotiation strategies that can help make the perfect impression on building a future relationship. For example: Take the time to foster a personal business relationship Being patient Make a good first impression Don't be too pushy Give contingencies and solutions
• #7: Mexico is a well-functioning Federal Democratic Republic. It’s divided into thirty-one sovereign and free states including DF (Federal District) also known as Mexico City. The head of state is the president, who is the Commander-in-chief of the Mexican military forces. The president is elected for a time of six years in which most occasions they are not re-elected. In the government they've also emplaced a working bicameral legislature and a judicial branch. The country’s last elections were held back in 2012 where votes for the president and seats in the senate were cast. The current president is Enrique Pena Nieto. Though most of the citizens like the current president but the media is convinced that there were irregularities with the past election that was unfair. There have been a number of accounts where recounts are not explained and electoral authorities refuse to release the results of the recounts to the public. Citizens have been outraged due to this outcome and voters have lost faith in their country’s voting system and its results. Mexico is known as one of the largest and most pen economies in the world as well. Contrary to its large economies though there have been some uncertainties when doing business with some countries. For instance Mexico has had high rates of inflation in the past that put them through an international financial crisis. Debt was inevitable and this forced them to borrow money from their international friends and neighbors. Besides some uncertainties Mexico has also had good experiences doing business with other countries. For instance their fast growing population has forced the economy to dedicate mainly to supplying the needs of it Mexican people. The United States has helped in big part providing a large market for exporting goods and a large amount of income from foreign tourists. Mexico is a large growing country with a lot to learn but they have the capacity to grow.
• #8: On a global scale, Mexico ranks 55th in terms of total freedom. Within its region, it ranks 3rd. Its region is comprised of Canada, United States and Mexico.   Mexico’s most repressed freedom is Freedom from Corruption (29.7). Corruption in Mexico is found in every level of their society. This has led to such powers as the mafia and party bosses. One influence on this corruption comes from billions of dollars in drug money entering Mexico from the United States. This influx of money affects Mexico politically on both local and state levels. So although international business contracts are usually upheld, the courts are inadequate and vulnerable to interference from political corruption. Mexico’s highest ranking freedom is Trade Freedom (85.6). With a low tariff rate of 2.2 percent, Mexico is able to trade more freely with other countries. This is very positive from an international business standpoint.   Mexico’s next highest freedom is Fiscal Freedom (80.9). With only a 30% tax rate for both individual and corporate tax, the incentive for International Business is rather appealing, especially with a decline of 1% per year in corporate tax over the next two years. The overall tax burden for Mexico is only 10.6% as opposed to that of the United States which is currently at 25.1%.
• #9: Trades/FDI Restrictions: The majority of Mexico's trade takes place under preferential rules, with the NAFTA remaining as paramount economic significance. In particular, Mexico's principal trade partner is by far the United States. Mexico's trade policy remains closely associated with the promotion of foreign investment. • Import Tax Refund to Exporters: This incentive offers international investors the possibility of paying back a duty that was paid previously on either exporting excisable articles or foreign goods that are being re-exported. • Sectorial Promotion Programs: This incentive is provided mainly for legal entities that are producing certain goods. These incentives are given whether the goods produced will be exported or sold in the domestic market. Tax incentives programs • Immediate deduction: This incentive is used to encourage investments in the country of Mexico. In order to receive this deduction your project must require labor, be non-polluting, and does not use an intensive amount of water. • Tax credit for federal tax on R&D: This incentive is given to eligible companies that focus on research and development activities. They can receive a 30% tax credit on all expenses paid in their R&D activities, including both process and design. Technological development and innovation programs • International Fund: This incentive is specific for research done between Mexico and the European Union. The research must be scientific or technological. The projects must also be joint research between the two countries. They must also be for the creation and strengthening of research networks.
• #10: VALUE OF MEXICOS PESO VS U.S DOLLAR: The graph below details the bid rate for the US dollar compared to the Mexican Peso. Throughout the past five years, the value has varied, but has not had a gain or loss greater than five pesos in the last five years. The Mexican Peso was strongest compared to the US dollar during July 2011, where the bid was 11.5 pesos for every 1 US Dollar. This may have been due to the U.S recession. The Mexican Peso got stronger and stronger since 2009. It took until the end of 2011 for the Peso bid to go higher; up to 14. With a few more dips back towards 12, there has been a steady rise in the bid in the last two years. A serious rate fluctuation like what was seen during those two years would be detrimental to conducting a venture in Mexico. GPD GROWTH ANNUAL %: By looking at GDP we can see how a country's economy is doing and perhaps what implications may come in the future. From this graph we can see that 5 years ago the GDP in Mexico was in the negatives. Within a year, Mexico's GDP increased tremendously. Since then it has been kind of steady until this past year where it seems to be decreasing. When GDP decreases it could mean a lot of things of which some are an increase in (1) unemployment, (2) less money and (3) purchasing power. This information is essential to understand as we look to introduce a new product into the Mexican market. GPD Growth Annual Percentage: "Mexico: GPD Growth Annual Percentage." The World Bank DataBank. The World Bank, n.d. Web. 16 Oct. 2014. < http://databank.worldbank.org/data/views/reports/chart.aspx>. GROSS NATIONAL INCOME PER CAPITA: Since the purchasing power in most countries differ, it is important to use the purchasing power parity (PPP). Using the PPP will help someone entering the Mexican market with a new product know the purchasing power of their consumers. From this graph we can tell that Mexico's purchasing power parity per capita has been going up over the years and therefore so has their real income. Introducing a new product in the Mexican market at this time is strongly recommended. Gross National Income per capita, based on PPP. "Mexico: Gross National Income per capita, based on PPP." The World Bank Data. The World Bank, n.d. Web. 18 Oct. 2014. <http://data.worldbank.org/country/mexico>. UNEMPLOYMENT RATE: The Unemployment Rate in Mexico has been fairly low and steady for the past 5 years. (Data for 2013 is unavailable.) This graphs shows that the economy is strong enough to employ the majority of those in their country wanting work. As we look to introduce a new product to Mexico, the situation is currently favorable since unemployment is down and incomes are up and steady Unemployment, total (% of total labor force) http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS
• #11: Other than Mexico’s economic partnerships, Mexico has also entered into the following bilateral free trade agreements:   Mexico- Chile Mexico- Israel Mexico- Uruguay Mexico- Japan Mexico- Colombia Mexico- Peru Mexico- Bolivia Mexico has one of the most open trade policies in the world. Having an open trade policy has benefited their country economically and has also helped with their dependence on the United States. This was an important issue for the government to make and they have been working on this since the early 1990’s.   The benefit for Mexico in being a member of so many free trade agreements means that they can have access to a bigger foreign market. Trade agreements reduce barriers and eliminate tariffs making it easier for Mexico to do business with other countries. http://trade.gov/fta/
• #13: WHY A WEIGHT LOSS SUPPLEMENT? BECAUSE Last year Mexico surpassed the obesity rate of the United States. The Huffington Post wrote an article titled, “Mexico Obesity Rate Surpasses the United States', Making It Fattest Country in the Americas.” In this article it explained that Mexico now has the highest obesity rate in North, Central and South America. Due to spanish “novelas (soap operas)” people’s perception of beauty and attractiveness is portrayed by slim, fit individuals. Therefore, many individuals are looking for weight loss products. There are a lot of smaller companies in Mexico selling natural and herbal weight loss products. The major companies selling weight loss products in Mexico are Herbalife and Amway. These two companies sell weight loss supplements, shakes and pills. Many people hesitate buying these products because not only will they sell you their products, but they will invite you to join the company and become a distributor of their products. Due to the culture values in Mexico, it is hard for people to say no because they feel they might offend someone. Due to this reason, Mexicans hesitate from buying from these big companies. Despite the difficulty of selling these products in Mexico, weight loss products will continue to have a high success rate because most people have the desire to look slim and fit, and because the obesity rate in Mexico is continually increasing.
• #14: JEWELRY Boston Consulting Group has completed a survey that shows Mexico's luxury market is growing every year. Mexico is constantly growing and it would be perfect for our firm to start producing and selling this product immediately seeing how high the demand for luxury goods is. Rolex is also known for being too overpriced for their Mexican buyers which have dropped their sales. As a new company we can exploit this and use it for our advantage by selling luxury watches and jewelry to our consumers at a lower price. With the middle class growing the wealth in Mexico is thriving. This new product will thrive and grow, helping us make a great new company in a great company.
• #15: WATER FILTERS Mexico is currently one of the largest consumers of bottled water. Because of the dangerous and unhealthy water conditions all over the country, bottled water is an essential product in many Mexican homes. Water can cost a family up to 10% of their weekly income. Tap water in many Mexican cities can be filthy and discolored. A study last year found that the average Mexican individual uses around 127 gallons of bottled water per person per year. This is more than four times the bottle water consumption per person in the United States. By introducing inexpensive and reliable water filters, we could drastically help Mexican families reduce their spending on bottled water. Now is the perfect time to invest and introduce water filters in the Mexican market, especially among the middle and poor class.