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Doing Business in Mexico

Doing Business in Mexico. Kent Ingram, Brittany Self, Lauren Tarpley , Phillip Dahlen , John Minott , Brittany Sanford, Tyler McGinnis, Cole Taylor. Mexican Economy. Classified as a middle-upper economy. Economy grew some 5% after 2009 recession. Even so, 44% live below the poverty line.

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Doing Business in Mexico

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  1. Doing Business in Mexico Kent Ingram, Brittany Self, Lauren Tarpley, Phillip Dahlen, John Minott, Brittany Sanford, Tyler McGinnis, Cole Taylor

  2. Mexican Economy • Classified as a middle-upper economy. • Economy grew some 5% after 2009 recession. • Even so, 44% live below the poverty line.

  3. Mexican Economy • Remittances—Money sent from Mexican immigrants to Mexican natives. • $21 billion in 2010 • 2nd most foreign currency obtained behind oil. • Oil accounted for $125 billion in production per day

  4. Mexican Economy • 13 trade agreements with 44 countries. • $300 billion in exports in 2010 • Electronic and Machinery (38%) • Vehicles and Transportation (17.8%) • Mining and Crude oil (14.6%) • 80% of exports went to the US in 2010.

  5. Mexican Economy • Sovereign debt is investment grade with stable outlook. • Lowest among members of the OECD. • Tourism is a large contributor. • 20 million tourists in 2010, generating around $12 billion. • $1.04 trillion GDP (nominal) 2010.

  6. Cultural Groups Ethnic Composition: • 60% mestizo • 30% Indian • 9% Spanish

  7. Cultural Groups Regional Subcultures: • Northern Border Region • Central Region • Southeast Region • Mexico City • Area along Gulf of Mexico

  8. Cultural Dimensions • Most important value is their focus on the people • Friends and family are of high importance • View accomplishment in terms of affiliation rather than achievement • Machismo • The basic building block in the society is the immediate family

  9. Cultural Dimensions • Whenever problems arise, Mexicans will try to change themselves rather than the environment. Workforce: • 15% agriculture • 30% industry • 55% services • 50% of total Black Market

  10. Customs • Greetings take time and often consist of many hugs, kisses, shakes, and pats on the back. • Gifts are typically brought to the home. It is not necessarily appropriate to bring gifts to the business. • The Mexican Fiesta • Day of the Dead

  11. Communication • The official language of Mexico is Spanish. • Other languages spoken are Nahuatl, Maya, Mixteco, and Zapoteco. • Spanish and English will more than likely be intertwined in business. • Meetings become personal after the initial introduction.

  12. Communication • In Mexico, gestures, facial expressions, glances, posture, and clothing are all nonverbal communicational styles • Hispanics don’t find personal space to be invasive whenever meeting others

  13. Conflict Style • Confrontation of conflict is dealt with indirectly • Hispanics tend to avoid confrontation

  14. Negotiation Style • Since Mexicans are status conscious, you should bring someone on your negotiating team who is an executive. • If you do not speak Spanish, an interpreter is needed. • Negotiations will include a fair amount of haggling. • Attorneys should not be present during negotiations, and they will take time, so patience and flexibility are necessary.

  15. Food & Eating Etiquette • Arrive at least 30 minutes late; arriving on time or early is considered inappropriate. • At a large party, you may introduce yourself, but at a smaller gathering the host handles the introductions. • During the meal, keep your hands visible by resting your wrists on the table. • Do not sit until directed and do not begin eating until the host/hostess begins. • Only men give toasts, and it is seen as polite to leave some food on the plate when finished.

  16. Mexican Business Environment-Technology • Manufacturing and service industry comprises the majority of the economy • Cheap labor rates attract large companies, worldwide • “Knowledge and Innovation Project” • 5 year plan enacted by Mexican government • $663 million total budget ($300 million from World Bank • EU-Mexico Joint Committee • Joint effort between Europe and Mexico to decrease Mexican independence on United States • 4th Pillar: “Cooperation in Science and Technology”

  17. Distribution • Centrally Located • Ideal for distribution of manufactured goods to North America • NAFTA • North American Free Trade Agreement • Free trade between Canada, United States, and Mexico

  18. Ethics and Impressions of Americans • Adopted ethics from current U.S. management practices • Recent influx of ethics • FedEx instills ethical values in their employees by cultivating trust in unsupervised situations

  19. Business Relationships • Emphasis on building close relationships to build trust • Respect of Culture • Assimilate to Spanish language in speech and text • Avoid prolonged eye contact • Formality is expected (Senor, Senorita, etc.) • Small gifts are acceptable, but not encouraged

  20. Management Practices • Class differentiation culture • More loyal to individuals than companies • Build trust before making a business deal • Visit three or four times to build trust • High Power Distance • Strong Hierarchy/vertical company structure • Those in power demonstrating care and concern for their subordinate • Insubordinate unless strong emotional bond

  21. Management Practices • Highly sensitive to criticism • Take their time making decisions • Like to be Compensated for work right after it is completed • Women in the workplace • Lower ranking positions • Stricter sexual code of conduct • Dress conservatively

  22. Human Resources Practices • Obedience and respect valued • All about who you know • Incentive given daily • Currently the minimum is 62.33 pesos ($4.60) a day in zone A (Mexico City). • The Mexican Federal Labor Law • 28 days to evaluate the employee's work ethics • Then employer assumes responsibility for the worker; • Job security is granted and termination becomes expensive

  23. Business Practices • Business card presented at beginning of meeting • Spanish on one side, English on another • Education and experience qualifications listed • Titles important because of hierarchy value • Monochromatic culture • Flexible with time • Deadlines don’t get made before big holidays • Willing to interrupt business for personal concerns

  24. Business Practices • Meetings • Frequent interruptions expected • Considered rude to turn away visitor or phone call • Slight bow to women and wait for her to extent her hand • Shake hands with men • kiss on cheeks common if you know them well. • Gifts common in Mexico • Perfume to executive for his wife • Shows you are thinking about the family

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