Assignment: Report On Doing Business in Mexico

ASSIGNMENT:
REPORT ON DOING BUSINESS IN

MEXICO
Submitted To: Submitted By:

Mrs. Amar Aujla
Saket Kumar
1
ACKNOWLEDGEMENT
We, Saket Kumar, Saurabh Goenka, Sandeep Kumar Singh, Sadhvi and Sanchir Bayaraa and
of PGDM Batch 2009 -11 hereby, declare that the report prepared titled “International
Business Analysis on Mexico” is solely our own research and understanding under the
guidance and instructions of
Mrs. Amar Aujla, Faculty, FOSTIIMA Business School.
The project report titled “International Business Analysis on Mexico” is submitted to

Mrs. Amar Aujla on February 27th 2010.
Signature(s)
Saket Kumar
Saurabh Goenka
Sandeep Kumar Singh
Sadhvi
Sanchir Bayaraa
2
CONTENT
Sl No Topics Page no
1 Introduction
2 History
3 Economic System
4 Legal System & Political System
5 Health and Social System
6 Political System
7 External Trade
8 Hofstede Cultural System
9 Factors For Business Success In The Country
10 Business Plan 1
11 Business Plan 2
12 Bibliography
3
Executive Summary
Mexico’s is the second largest economy in Latin America and the

United States’ largest regional economic partner.
The report provides detailed information of many different aspects

of Mexico. It starts with brief information of Mexico. In relation to
the history of the country, we have used pictorial representation
which reflects the various environments including the Economic,
Legal, Cultural, Social, Political and Medical/Health.
The Success factors for setting up a business in Mexico has been

mentioned so that it gives a true picture as to how can businesses
be established along with certain transnational issues including
drug trafficking in Mexico.
The detailed analysis of the two business Ideas that we plan to

establish has been graphically represented including pie charts,
relative monthly and yearly graphs. In order to relate it to the
realistic goal that we plan to achieve in short term we have also
provided a hypothetical financial structure for the same keeping in
mind other criteria’s including hiring of personnel’s for setting up
the business.
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MEXICO: AN INRODUCTION
Capital Mexico City

(and largest city)
Official language(s) Spanish (de facto)
National language Spanish, and 62 Indigenous Amerindian languages[3]
Demonym Mexican
Government Federal presidential republic
Felipe Calderón
- President
(PAN)
Legislature Congress
- Upper House Senate
- Lower House Chamber of Deputies
Independence from Spain
- Declared September 16, 1810
- Recognized September 27, 1821
Area
1,972,550 km2
(15th)
- Total
761,606 sq mi
- Water (%) 2.5
Population
5
- July 2009 estimate 111,211,789[4] (11th)
- 2005 census 103,263,388
55/km2 (142nd)
- Density
142/sq mi
GDP (PPP) 2009 estimate
- Total $1.563 trillion (11th)
- Per capita $14,534 (55th)
GDP (nominal) 2009 estimate
Total $1.143 trillion (13th)
Identification:
The word "Mexico" is derived from Mexica (pronounced "Me-shee-ka"),

the name for the indigenous group that settled in central Mexico in the early fourteenth
century and is best known as the Aztecs. The United Mexican States, commonly known as
Mexico (English: /ˈmɛksɪkoʊ/) (Spanish: México (help·info) [ˈmexiko]), is a federal
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constitutional republic in North America. It is bordered on the north by the United States; on
the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the
Caribbean Sea; and on the east by the Gulf of Mexico. Covering almost 2 million square
kilometres (over 760,000 sq mi), Mexico is the fifth-largest country in the Americas by total
area and the 14th largest independent nation in the world. With an estimated population of
111 million, it is the 11th most populous country. Mexico is a federation comprising thirty-
one states and a Federal District, the capital city.
In Pre-Columbian Mesoamerica many cultures matured into advanced civilizations such as

the Olmec, the Toltec, the Teotihuacan, the Maya and the Aztec before the first contact with
Europeans. In 1521, Spain conquered and colonized the territory, which was administered as
the viceroyalty of New Spain which would eventually become Mexico as the colony gained
independence in 1821. The post-independence period was characterized by economic
instability, territorial secession and civil war, including foreign intervention, two empires and
two long domestic dictatorships. The latter led to the Mexican Revolution in 1910, which
culminated with the promulgation of the 1917 Constitution and the emergence of the
country's current political system. Elections held in July 2000 marked the first time that an
opposition party won the presidency from the Institutional Revolutionary Party (Spanish:
Partido Revolucionario Institucional, PRI).
As a regional power and the only Latin American member of the Organisation for Economic
Co-operation and Development (OECD) since 1994, Mexico is firmly established as an upper
middle-income country,[16] considered as a newly industrialized countryand has the 13th
largest nominal GDP, the 11th largest by purchasing power parity, and also the largest GDP
per capita in Latin America according to the International Monetary Fund.[21] The economy is
strongly linked to those of its North American Free Trade Agreement (NAFTA) partners
Despite Mexico's position as an emerging world power, the increase in drug-related violence
and uneven income distribution remain issues of concern.
The site of advanced Amerindian civilizations, Mexico came under Spanish rule for three
centuries before achieving independence early in the 19th century. A devaluation of the peso
in late 1994 threw Mexico into economic turmoil, triggering the worst recession in over half a
century. The nation had been making an impressive recovery until the global financial crisis
hit in late 2008. Ongoing economic and social concerns include low real wages,
underemployment for a large segment of the population, inequitable income distribution, and
few advancement opportunities for the largely Amerindian population in the impoverished
southern states. The elections held in 2000 marked the first time since the 1910 Mexican
Revolution that an opposition candidate - Vicente FOX of the National Action Party (PAN) -
defeated the party in government, the Institutional Revolutionary Party (PRI). He was
succeeded in 2006 by another PAN candidate Felipe CALDERON. In January 2009, Mexico
assumed a nonpermanent seat on the UN Security Council for the 2009-10 term.
Geography
Mexico is bordered by the United States to the north and Belize and Guatemala to the
southeast. Mexico is about one-fifth the size of the United States. Baja California in the west
is an 800-mile (1,287-km) peninsula that forms the Gulf of California. In the east are the Gulf
of Mexico and the Bay of Campeche, which is formed by Mexico's other peninsula, the
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Yucatán. The center of Mexico is a great, high plateau, open to the north, with mountain
chains on the east and west and with ocean-front lowlands beyond
Government
Federal republic.
History
Campfire remains in the Valley of Mexico have been radiocarbon-dated to 21,000 BCE, and
a few chips of stone tools have been found near the hearths, indicating the presence of
humans at that time. Around 9,000 years ago, ancient indigenous peoples domesticated corn
and initiated an agricultural revolution, leading to the formation of many complex
civilizations. Between 1,800 and 300 BCE, many matured into advanced pre-Columbian
Mesoamerican civilizations such as: the Olmec, the Teotihuacan, the Maya, the Zapotec, the
Mixtec, the Toltec and the Aztec, which flourished for nearly 4,000 years before the first
contact with Europeans.
These civilizations are credited with many inventions and advancements in fields such as
architecture (pyramid-temples), mathematics, astronomy, medicine and theology. The Aztecs
were noted for practicing human sacrifice on a large scale. At its peak, Teotihuacan,
containing some of the largest pyramidal structures built in the pre-Columbian Americas, had
a population of more than 150,000 people. Estimates of the population before the Spanish
conquest range from 6 million to 25 million.
Miguel Hidalgo y Costilla "The Father of Mexico"

Source: http://en.wikipedia.org/wiki/mexico
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In the early 16th century, from the landing of Hernán Cortés, the Aztec civilization was
invaded and conquered by the Spaniards.Unintentionally introduced by Spanish conquerors,
smallpox ravaged Mexico in the 1520s, killing millions of Aztecs, including the emperor, and
was credited with the victory of Hernán Cortés over the Aztec empire. The territory became
part of the Spanish Empire under the name of New Spain. Much of the identity, traditions and
architecture of Mexico were created during the colonial period.
On September 16, 1810, independence from Spain was declared by priest Miguel Hidalgo y
Costilla, in the small town of Dolores, Guanajuato. The first insurgent group was formed by
Hidalgo, the Spanish viceregal army captain Ignacio Allende, the militia captain Juan Aldama
and "La Corregidora" Josefa Ortiz de Domínguez. Hidalgo and some of his soldiers were
captured and executed by firing squad in Chihuahua, on July 31, 1811. Following his death,
the leadership was assumed by priest José María Morelos, who occupied key southern cities.
In 1813, the Congress of Chilpancingo was convened and, on November 6, signed the
"Solemn Act of the Declaration of Independence of Northern America". Morelos was
captured and executed on December 22, 1815. In subsequent years, the insurgency was near
collapse, but in 1820 Viceroy Juan Ruiz de Apodaca sent an army under the criollo general
Agustín de Iturbide against the troops of Vicente Guerrero. Instead, Iturbide approached
Guerrero to join forces, and in 1821 representatives of the Spanish Crown and Iturbide signed
the "Treaty of Córdoba", which recognized the independence of Mexico under the terms of
the "Plan of Iguala".
General Antonio López de Santa Anna, a centralist and two-time dictator, approved the Siete
Leyes in 1836, a radical amendment that institutionalized the centralized form of government.
When he suspended the 1824 Constitution, civil war spread across the country, and three new
governments declared independence: the Republic of Texas, the Republic of the Rio Grande
and the Republic of Yucatán.
Texas successfully achieved independence and was annexed by the United States, a border
dispute led to the Mexican–American War, which began in 1846 and lasted for two years,
settled via the "Treaty of Guadalupe-Hidalgo" forcing Mexico to give up nearly half of its
land to the U.S., including California and New Mexico. Further transferred some of its
territories, southern Arizona and New Mexico, via the Gadsden Purchase in 1854. The Caste
War of Yucatán, the Mayan uprising that began in 1847,[43] was one of the most successful
modern Native American revolts.[44] Maya rebels, or Cruzob, maintained the Maya free state
until the 1930s.
Dissatisfaction with Santa Anna's return to power led to the liberal "Plan of Ayutla",
initiating an era known as La Reforma, after which a new Constitution was drafted in 1857
that established a secular state, federalism as the form of government and several freedoms.
As the conservadores refused to recognized, the War of Reform began in 1858, both groups
had their own governments, but ended in 1861 with the liberal victory led by Amerindian
President Benito Juárez. In the 1860s underwent a military occupation by France, which
established the Second Mexican Empire under the rule of Habsburg Archduke Ferdinand
Maximilian of Austria with support from the Roman Catholic clergy and the conservadores,
who later switched sides and joined the liberales. Maximilian surrendered, was tried on June
14 and was executed on June 19, 1867.
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Porfirio Díaz, a republican general during the French intervention, ruled Mexico from 1876–
1880 and then from 1884–1911 in five consecutive reelections, period known as the
Porfiriato, characterized by remarkable economic achievements, investments in arts and
sciences, but also of economic inequality and political repression.
20TH CENTURY
A likely electoral fraud that led to Diaz's fifth reelection sparked the 1910 Mexican
Revolution, initially led by Francisco I. Madero.
Díaz resigned in 1911 and Madero was elected president but overthrown and murdered in a
coup d'état two years later directed by conservative general Victoriano Huerta. Event that re-
ignited the civil war, involving figures such as Francisco Villa and Emiliano Zapata, who
formed their own forces. A third force, the constitutional army led by Venustiano Carranza,
managed to bring an end to the war, and radically amended the 1857 Constitution to include
many of the social premises and demands of the revolutionaries into what was eventually
called the 1917 Constitution. It is estimated that the war killed 900,000 of the 1910
population of 15 million.
Between 1940 and 1980, Mexico experienced a substantial economic growth that some
historians call the "Mexican Miracle".Although the economy continued to flourish, social
inequality remained a factor of discontent. Moreover, the PRI rule became increasingly
authoritarian and at times oppressive (i.e.: the 1968 Tlatelolco massacre, which claimed the
life of around 30–800 protesters).
Electoral reforms and high oil prices followed the administration of Luis Echeverría,
mismanagement of these revenues led to inflation and exacerbated the 1982 Crisis. That year,
oil prices plunged, interest rates soared, and the government defaulted on its debt. President
Miguel de la Madrid resorted to currency devaluations which in turn sparked inflation.
Source: http://en.wikipedia.org/wiki/Political_divisions_of Mexico
Vicente Fox was the first president from an opposition party to win the presidential election
in over 70 years
In the 1980s, first cracks in the political monopolistic position of PRI were seen such as the
election of Ernesto Ruffo Appel in Baja California and the 1988 electoral fraud, which
10
prevented leftist candidate Cuauhtémoc Cárdenas from winning the national presidential
elections, who lost to Carlos Salinas de Gortari, leading to massive protests in Mexico City.
Salinas embarked on a program of neoliberal reforms which fixed the exchange rate,
controlled inflation and culminated with the signing of the North American Free Trade
Agreement (NAFTA), which came into effect on January 1, 1994. The same day, the
Zapatista Army of National Liberation (EZLN) started a two-week-lived armed rebellion
against the federal government, and has continued as a non-violent opposition movement
against neo-liberalism and globalization.
In December 1994, a month after Salinas was succeeded by Ernesto Zedillo, the Mexican
economy collapsed, with a rapid rescue packaged authorized by U.S. President Bill Clinton
and major macroeconomic reforms started by president Zedillo, the economy rapidly
recovered and growth peaked at almost 7% by the end of 1999.
In 2000, after 71 years, the PRI lost a presidential election to Vicente Fox of the opposition
National Action Party (PAN). In the subsequent presidential elections, Felipe Calderón from
the PAN was declared the winner, with a razor-thin margin over leftist politician Andrés
Manuel López Obrador of the Party of the Democratic Revolution (PRD). López Obrador,
however, contested the election and pledged to create an "alternative government".
Economic Environment
Following World War II, the government emphasized economic growth. During the mid-
1970s, under the leadership of President José López Portillo, Mexico became a major
petroleum producer. By the end of Portillo's term, however, Mexico had accumulated a huge
external debt because of the government's unrestrained borrowing on the strength of its
petroleum revenues.
Mexico has a free-market economy with a mixture of modern and traditional industry and
agriculture, increasingly dominated by the private sector. Until the mid-1980s, state
regulation of the economy and protectionist policies were influential, but since then the
Mexican economy has experienced deregulation, internationalization, and privatization. The
number of state-owned companies fell from more than one thousand in 1982 to fewer than
two hundred in 1998.
The collapse of oil prices in 1986 cut Mexico's export earnings. In Jan. 1994, Mexico joined
Canada and the United States in the North American Free Trade Agreement (NAFTA), with
the plan to phase out all tariffs over a 15-year period, and in Jan. 1996, it became a founding
member of the World Trade Organization (WTO).
In 1995, the U.S. agreed to prevent the collapse of Mexico's private banks. In return, the U.S.
won virtual veto power over much of Mexico's economic policy. In 1997, in what observers
called the freest elections in Mexico's history, the PRI lost control of the lower legislative
house and the mayoralty of Mexico City in a stunning upset. To increase democracy,
President Ernesto Zedillo said in 1999 that he would break precedent and not personally
choose the next PRI presidential nominee. Several months later, Mexico held its first
presidential primary, which was won by former interior secretary Francisco Labastida,
Zedillo's closest ally among the candidates.
Mexico has a free market economy in the trillion dollar class. It contains a mixture of
11
modern and outmoded industry and agriculture, increasingly dominated by the private sector.
Recent administrations have expanded competition in seaports, railroads,
telecommunications, electricity generation, natural gas distribution, and airports. Per capita
income is roughly one-third that of the US; income distribution remains highly unequal.
Trade with the US and Canada has nearly tripled since the implementation of NAFTA in
1994. Mexico has 12 free trade agreements with over 40 countries including, Guatemala,
Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of
trade under free trade agreements. In 2007, during its first year in office, the Felipe
CALDERON administration was able to garner support from the opposition to successfully
pass pension and fiscal reforms. The administration passed an energy reform measure in
2008, and another fiscal reform in 2009. Mexico's GDP plunged more than 7% in 2009 as
world demand for exports dropped and asset prices tumbled, but GDP is expected to post
positive growth late in 2010. The administration continues to face many economic
challenges, including improving the public education system, upgrading infrastructure,
modernizing labor laws, and fostering private investment in the energy sector. CALDERON
has stated that his top economic priorities remain reducing poverty and creating jobs.
GDP (purchasing power parity):
$1.473 trillion (2009 est.)
country comparison to the world: 12
note: data are in 2009 US dollars
GDP (official exchange rate):
$866.3 billion (2009 est.)
GDP - real growth rate:
-7.1% (2009 est.)
1.3% (2008 est.)
3.3% (2007 est.)
GDP - per capita (PPP):
$13,200 (2009 est.)
$14,400 (2008 est.)
$14,400 (2007 est.)
note: data are in 2009 US dollars
GDP - composition by sector:
agriculture: 4.1%
industry: 34.5%
services: 61.3% (2009 est.)
Labor force:
46.1 million (2009 est.)
Labor force - by occupation:
agriculture: 15.1%
industry: 25.7%
services: 59% (2005)
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Unemployment rate:
6.2% (2009 est.)
3.967% (2008 est.)
note: underemployment is perhaps 25%
Population below poverty line:

18.2% using food-based definition of poverty; asset based poverty amounted to more than
47% (2006)
Household income or consumption by percentage share:
lowest 10%: 1.7%
highest 10%: 36.3% (2006)
Distribution of family income - Gini index:
48.2 (2008)
53.1 (1998)
Investment (gross fixed):
20.8% of GDP (2009 est.)
Budget:
revenues: $188.2 billion
expenditures: $222.7 billion (2009 est.)
Public debt:
42.6% of GDP (2009 est.)
35.8% of GDP (2008 est.)
Inflation rate (consumer prices):
5.3% (2009 est.)
5.1% (2008 est.)
Central bank discount rate:
NA% (31 December 2008)
Commercial bank prime lending rate:
8.71% (31 December 2008)
7.56% (31 December 2007)
Stock of money:
$92.34 billion (31 December 2008)
Stock of quasi money:
13
Stock of domestic credit:
$287 billion (31 December 2008)
Market value of publicly traded shares:
Agriculture - products:
corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes; beef, poultry, dairy
products; wood products
Industries:
food and beverages, tobacco, chemicals, iron and steel, petroleum, mining, textiles, clothing,
motor vehicles, consumer durables, tourism
Industrial production growth rate:
-9% (2009 est.)
Electricity - production:
245 billion kWh (2008 est.)
Electricity - consumption:
200.9 billion kWh (2007 est.)
Electricity - exports:
1.288 billion kWh (2008 est.)
Electricity - imports:
584 million kWh (2008 est.)
Oil - production:
3.186 million bbl/day (2008 est.)
Oil - consumption:
Oil - exports:
Oil - imports:
479,600 bbl/day (2008 est.)
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Oil - proved reserves:
10.5 billion bbl (1 January 2009 est.)
Natural gas - production:
52.15 billion cu m (2008 est.)
Natural gas - consumption:
Natural gas - exports:
Natural gas - imports:
Natural gas - proved reserves:
372.7 billion cu m (1 January 2009 est.)
Current account balance:
$-10.12 billion (2009 est.)
$-15.81 billion (2008 est.)
Exports:
$223.6 billion (2009 est.)
$291.3 billion (2008 est.)
Exports - commodities:
manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton
Exports - partners:
US 80.2%, Canada 2.4%, Germany 1.7% (2008)
Imports:
$234.6 billion (2009 est.)
$308.6 billion (2008 est.)
Imports - commodities:
metalworking machines, steel mill products, agricultural machinery, electrical equipment,
car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts
Imports - partners:
US 49%, China 11.2%, Japan 5.3%, South Korea 4.4%, Germany 4.1% (2008)
Reserves of foreign exchange and gold:
$89.74 billion (31 December 2009 est.)
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Debt - external:
$177 billion (31 December 2009 est.)
Stock of direct foreign investment - at home:

Stock of direct foreign investment - abroad:
Exchange rates:
Mexican pesos (MXN) per US dollar - 13.64 (2009), 11.016 (2008), 10.8 (2007), 10.899
(2006), 10.898 (2005)
Legal Environment (Turn of the Century Presidential Elections)
In elections held on July 2, 2000, the PRI lost the presidency, ending 71 years of one-party
rule. The new president, Vicente Fox Quesada of the conservative National Action Party
(PAN), vowed tax reform, an overhaul of the legal system, and a reduction in power of the
central government. By 2002, however, Fox had made little headway on his ambitious reform
agenda. Disfavor with Fox was evident in 2003 parliamentary elections, when the PRI
rebounded.
In 2004, a two-year investigation into the “dirty war,” which Mexico's authoritarian
government waged against its opponents in the 1960s and 1970s, led to an indictment—later
dropped—against former president Luis Echeverria for ordering the 1971 shooting of student
protesters.
In 2005, Andrés Manuel López Obrador, the enormously popular mayor of Mexico City,
emerged as a presidential candidate for the leftist Party of the Democratic Revolution. López
Obrador seemed likely to defeat the party of the deeply unpopular incumbent, Vicente Fox.
But in Oct. 2005, Felipe Calderón unexpectedly became the candidate of Fox's National
Action Party (PAN), defeating Fox's chosen successor. By spring 2006, Felipe Calderón had
caught up to López Obrador in opinion polls. In the July election, Calderón won 35.9% of the
vote, a razor-thin margin over López Obrador, who received 35.3%. López Obrador appealed
the election, but on Aug. 28, Mexico's top electoral court rejected López Obrador's
allegations of fraud. His supporters held massive protest rallies before and after the verdict.
Calderón was sworn in on Dec. 1.
Health and Social Reforms
16
Mexico has a very unequal distribution of wealth, even compared to
other Latin American countries. With the introduction of neoliberal economic policies,
inequalities have sharpened. In 1998, the top 20 percent of income earners accounted for
55 percent of Mexico's income, while an estimated 27 percent of the population was living
below the poverty line. The size of the middle classes has shrunk in recent years.
There is a correlation between socioeconomic hierarchy and ethnicity. Among the poorest
segments of the population a strong presence of Indian groups can be found. In 1995,
almost all communities whose populations were comprised of more than 40 percent
native language speakers suffered from high degrees of marginalization. This strongly
contrasts with the wealthiest segments of the Mexican population, which are
predominantly made up of whites.
The Mexican health system is sharply divided between public and private facilities, the
latter being accessible only to the well-to-do. The overwhelming majority of the
population depends on government.
A Mexican woman prepares tortillas with salsa and beans. Corn, chili peppers, and
beans are the main items in most Mexican foods.
The national health system consisted of more than seventeen thousand medical units in 1998,
of which 885 were hospitals and the rest basic medical service centers in rural areas. The
government health sector had a budget of approximately $11 billion (U.S.) in 1999 and
employed around 300,000 doctors and nurses. Many doctors from public hospitals also have
their own private consultation clinics. Ordinary Mexicans frequently discuss sickness, health,
and medicine and are familiar with self-treatment. Since most medicines can be purchased
freely in commercial pharmacies, Mexicans tend to consume medication in considerable
quantities.
Graphic Arts: Mexico's long tradition of graphic arts goes back to pre-Columbian
times.When the different Indian civilizations prospered, they constructed impressive urban
centers and religious buildings and produced sophisticated graphic art such as pottery and
frescos.
Performance Arts: In classical music the Mexico City–based National Symphony
Orchestra and the Philarmonic Orchestra of the National University are most
renowned.Mexico's most important composer of the twentieth century was Carlos Chávez
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(1899–1978).One of Mexico's most important venues for the performance arts is the Festival
Cervantino, which is held every year in the provincial town of Guanajuato.
On Feb. 26, 2008, lawmakers approved new legislation that restricts cigarette smoking in
public spaces. Violators will be heavily fined and sentenced to up to 36 hours in jail. The
government reported that $642 million of healthcare costs are due to smoking-related
diseases.
In May 2008, Attorney General Eduardo Medina Mora announced that over 4,000 people had
been killed in drug-related violence since President Calderon took office—1,400 of the
deaths occurred in 2008 alone.
In Aug. 2008, hundreds of thousands of protesters across the country marched for the more
than 2,700 people who were killed and 300 kidnapped in drug-related violence since January
2008. In Dec. 2008, the number of killings registered between 1 January and 2 December was
5,376—a rise of 117% from the previous year. In Nov. 2008 alone, there were 943 drug-
related murders.
In Dec. 2008, the U.S. released $197 million of a $400 million plan called the Merida
Initiative to help Mexico fight the drug cartels, yet drug violence continued mostly unabated.
In the first six weeks of 2009, an estimated 1,000 people were killed in drug-related violence.
Late April and early May 2009 brought a new challenge: a flu outbreak. A new strain of
influenza, known as swine flu, originated in Mexico and spread to at least 24 other countries.
The World Health Organization declared that a pandemic was a possibility. Originally, Swine
Flu was thought to be quite dangerous, though as time passed, Mexican authorities said they
may have overestimated the threat. As a precaution, the Mexican government shut down all
nonessential business for five days starting on May 1, 2009. Other governments limited travel
to and from Mexico.
Political Environment
The United Mexican States are a federation of thirty-one free and sovereign states, which
form a union that exercises jurisdiction over the Federal District and other territories. Each
state has its own Constitution and Congress, as well as a judiciary, and its citizens elect by
direct voting, a governor for a six-year term, as well as representatives to their respective
unicameral state congresses, for three-year terms.
The states are also divided into municipalities, the smallest administrative political entity in
the country, governed by a mayor or "municipal president", elected by its residents by
plurality. Municipalities can be further subdivided into non-autonomous boroughs or in semi-
autonomous auxiliary presidencies.
Constitutionally, Mexico City, as the capital and seat of the federal powers, is the Federal
District, a special political division that belongs to the federation as a whole and not to a
particular state, and as such, has more limited local rule than the nation's states.Since 1987, it
has progressively gained a greater degree of autonomy, and residents now elect a head of
government and representatives of a Legislative Assembly directly. Unlike the states, the
Federal District does not have a Constitution but a Statute of Government. Mexico City is
coterminous and coextensive with the Federal District.
18
The United Mexican States is a federation made up of thirty-one "free and sovereign states".
These states constitute one federated State or Union. The federal government has exclusive
jurisdiction over the Federal District, a territory which does not belong to any state but to all,
as well as the islands, atolls and reefs that do not belong to any state. The Federal District is
coextensive with Mexico City, capital of the federation and seat of government. The 31 states
and the Federal District are collectively called federal entities (entidades federativas in
Spanish).
The United Mexican States were born as an independent Union after the ratification of the
Federal Constitution of the United Mexican States, on October 4, 1824. During the course of
the year, several provinces which had been part of the ephemeral Mexican Empire, decided to
not join the Union and to become an independent state made up by the territory that once had
formed the Captaincy General of Guatemala. In the Central American region of Chiapas a
movement requested a referendum to let their citizens choose whether to remain as part of
Mexico or to join the Central American newly formed federation. The majority of the
population voted for Union with Mexico, and Chiapas seceded from Central America and
joined the Mexican federation in 1824.Thus, the founding states were 19: Chiapas,
Chihuahua, Coahuila y Tejas, Durango, Guanajuato, México, Nuevo León, Oaxaca, Puebla
de los Ángeles, Querétaro, San Luis Potosí, Sonora y Sinaloa (also called Estado de
Occidente, "Western State"), Tabasco, Tamaulipas, Veracruz, Jalisco, Yucatán and
Zacatecas. Three federal territories were formed: Alta California, Baja California, Colima,
and Santa Fé de Nuevo México. Later that year the Federal District was created. Tlaxcala
(after a long debate at the Congress) became a federal territory in November 1824.
Source :www.Wikipedia.com
Map of the Mexican federation in 1847
The Federation was dissolved on two separate occasions during the 19th century and a
centralist type of government was established. The first period spanned from 1835 to 1846
19
starting with the ratification of the Siete Leyes (Seven Laws), the foundational and
constitutional framework that created the "First Central Republic" and after a brief dictatorial
period, the ratification of the Bases Orgánicas de la República confirmed this form of internal
organization and created the "Second Central Republic". During this period Texas, Nuevo
León, Coahuila, Tamaulipas, Zacatecas and Yucatán declared their independence from
Mexico if federalism was not fully restored. Texas became an independent republic in 1836
and never joined Mexico again. Yucatán became an independent republic for 2 years and
rejoined the Union when Antonio López de Santa Anna allowed the state to retain its political
and fiscal autonomy (a constitution and custom laws) which differentiated the state from the
rest of the states which had been transformed into "departamentos". It became independent
again when these privileges were abolished, but rejoined the Union after the Mexican-
American War.After the Mexican-American War, and through the Pact of Guadalupe-
Hidalgo, Mexico ceded the territories of New Mexico and the Upper California to the United
States. These territories would eventually become the US states California, New Mexico,
Arizona, Nevada and Utah and included regions that would become part of the states of
Colorado, Oklahoma, Kansas and Wyoming.
Federalism was restored in 1846, and in 1857 a new federal constitution was ratified. In 1864,
the federation was dissolved for a second time and a constitutional and centralist monarchy
was established, headed by Emperor Maximilian of Habsburg. Maximilian was deposed in
1867 by the republican forces, and the federation was finally restored.
The union
The national territory, as defined in the Mexican Constitution, is composed of the 31 free and
sovereign states and the Federal District. The states and the Federal District are collectively
called "federative entities" (entidades federativas in Spanish), as they are the individual
constituent parts or entities of the federation. In addition, the national territory includes the
islands, reefs and atolls in the adjacent seas, some of which belong to a particular state (like
the case of the Guadalupe and Revillagigedo islands which belong to Baja California and
Colima, respectively), and some of which belong to the federation.
The states
The states of the Mexican federation are free, sovereign, autonomous and independent from
each other. They have the right to create their own constitution. However, they cannot make
an alliance with any other state of the Union nor with any independent state except those
agreements between the states located at the international borders if there is an unexpected
invasion from a foreign nation.
The political organization of each state is based on a separation of powers in a congressional

system: the legislative power is represented by a bicameral congress, the executive power is
independent from the legislative and is headed by a "governor" and its cabinet, the judicial
power is exercised by a Court of Justice.
Every state is represented by three senators in the Senate: two are elected through universal
suffrage by plurality; the third one is assigned to the "first minority" party. The federation
conforms a single constituency from which 32 senators are elected by proportional
representation with open party lists. Deputies, on the contrary, do not represent the states, but
the citizens. The Chamber of Deputies and the Senate form the Congress of the Union.
20
Admission
Population ISO
State Capital to Area Region
(2005) 3166
Union
5,618 km2 North Central

01. Aguascalientes Aguascalientes 1835 1,051,000 AGU
(2,169.1 sq mi) Mexico
71,446 km2 North West

02. Baja California Mexicali 1952 2,842,000 BCN

03. Baja California Sur La Paz 1974 517,000 BCS
57,924 km2 South East

04. Campeche Campeche 1858 751,000 CAM
Tuxtla 73,289 km2 South West

05. Chiapas 1824 4,256,000 CHP
Gutiérrez (28,297.0 sq mi) Mexico

06. Chihuahua Chihuahua 1824 3,238,000 CHH
151,563 km2 North East

07. Coahuila Saltillo 1824 1 2,475,000 COA
5,625 km2
08. Colima Colima 1857 562,000 COL West Mexico
(2,171.8 sq mi)

09. Durango Durango 1824 1,489,000 DUR

10. Guanajuato Guanajuato 1824 4,893,000 GUA
63,621 km2 South West

11. Guerrero Chilpancingo 1858 3,116,000 GRO
20,846 km2
12. Hidalgo Pachuca 1869 2,334,000 HID East Mexico
(8,048.7 sq mi)
78,599 km2
13. Jalisco Guadalajara 1824 6,652,000 JAL West Mexico
(30,347.2 sq mi)
22,357 km2 South Central

14. Mexico Toluca 1824 14,161,000 MEX
58,643 km2
15. Michoacán Morelia 1824 3,988,000 MIC West Mexico
(22,642.2 sq mi)
4,893 km2 South Central

16. Morelos Cuernavaca 1869 1,605,000 MOR
17. Nayarit Tepic 1917 943,000 27,815 km2 NAY West Mexico
21
(10,739.4 sq mi)

18. Nuevo León Monterrey 1824 2 4,164,000 NLE
93,343 km2 South West

19. Oaxaca Oaxaca 1824 3,522,000 OAX
34,251 km2
20. Puebla Puebla 1824 5,391,000 PUE East Mexico
(13,224.4 sq mi)

21. Querétaro Querétaro 1824 1,593,000 QUE

22. Quintana Roo Chetumal 1974 1,134,000 ROO

23. San Luis Potosí San Luis Potosí 1824 2,412,000 SLP

24. Sinaloa Culiacán 1831 3 2,610,000 SIN

25. Sonora Hermosillo 1831 3 2,384,000 SON

26. Tabasco Villahermosa 1824 2,013,000 TAB

27. Tamaulipas Ciudad Victoria 1824 2 3,020,000 TAM
3,997 km2
28. Tlaxcala Tlaxcala 1857 1,061,000 TLA East Mexico
(1,543.3 sq mi)
71,856 km2
29. Veracruz Xalapa 1824 7,081,000 VER East Mexico
(27,743.8 sq mi)

30. Yucatán Mérida 1824 4 1,803,000 YUC

31. Zacatecas Zacatecas 1824 1,357,000 ZAC
Source:Wikipedia.com
^1 Joined the federation under the name of Coahuila and Texas. In 1833 the district of Bexar
seceded constitutionally from the state to form the separate state of Texas, but the
constitution was never approved by the General Congress in Mexico City. Texas became an
independent republic in 1836, and the name of the southern region was shortened to
Coahuila. Briefly, in 1856 Nuevo León annexed Coahuila in a referendum and declared its
22
independence from Mexico. After the defeat of the separatist forces, Coahuila separated from
Nuevo León.
^2 Nuevo León, Tamaulipas and Coahuila declared their independence from Mexico and
formed a de facto independent country for 250 days, after which the separatist forces were
defeated and they rejoined the federation.
^3 In 1824 this state joined the Union as the state of Sonora and Sinaloa, though its own
constitution chose the name "Estado de Occidente". In 1830, the state was divided in two to
form the separate states of Sonora and Sinaloa, which, after ratifying their own constitutions
joined the federation in 1831.
^4 The Intendencia of Yucatán joined the Mexican Empire and then the federation in 1824.
It became an independent republic in two occasions (1841–1843 and 1846–1848). This state
comprised the territories of Campeche, Quintana Roo and Yucatán.
Internal divisions of the states

Main articles: Municipalities of Mexico and Settlement classification in Mexico
The states are divided into municipalities. Each municipality is administratively autonomous;
citizens elect a "municipal president" who heads an ayuntamiento or municipal council,
responsible for providing all public services for their constituents. This concept, which
originated after the Mexican Revolution is known as a municipio libre ("free municipality").
The municipal president cannot be reelected for the next immediate term. The municipal
council consists of a cabildo (chairman) and several síndicos (trustees). If the municipality
covers a large area and contains more than one city, one city is selected as a cabecera
municipal (head city, seat of the municipality's government) while the rest elect
representatives of a presidencia auxiliar (auxiliary presidency). There are 2,438
municipalities in Mexico; the state with the greatest number of municipalities is Oaxaca (with
570 municipalities) and the states with the least number are Baja California and Baja
California Sur (with only 5 each).
The Federal District
Mexico City has a special status within the federation. According to a recent change in the
constitution, article 44 states that Mexico City is the Federal District, seat of the government
(powers of the Union) and capital of the United Mexican States. The city is coextensive with
the Federal District territorially and administratively. If the federal government moves to
another city, the Federal District would be transformed into another state of the Union, called
"State of the Valley of Mexico" with the new limits and area that the Congress of the Union
gives it.
Mexico City was separated from the State of Mexico, of which it was the capital, in 1824 to
become the capital of the federation. As such, it does not belong to any state in particular but
to all (i.e., to the federation). Therefore, it was the president of Mexico, in representation of
the federation, who designated its head of government (previously called regente, "regent" or
jefe del departamento del Distrito Federal, "head of the department of the Federal District").
However, the Federal District received full autonomy in 1997 and its citizens now elect
directly their chief of government, the head of the boroughs (or delegaciones) and the
representatives of the unicameral legislature called the Asamblea Legislativa, "Legislative
23
Assembly". It does not have a constitution but a statute of autonomy. Nonetheless it enjoys
many privileges as the capital of the federation.
The Federal District is represented at the Congress of the Union like any state by two senators
elected by plurality and one assigned to the first minority.
With 8.5 million inhabitants Mexico City is the most populous city in Mexico and, being
coextensive with the Federal District, is the second most populous political division (or
entidad federativa, "federal entity") in the country. The metropolitan area of the city,
however, extends over 40 municipalities of the state of Mexico and 1 of the state of Hidalgo,
and with a population of 19.2 million, it is one of the largest metropolitan areas in the world.
Internal divisions of the Federal District

Main article: Boroughs of the Mexican Federal District
For administrative purposes, the Federal District is divided into 16 delegaciones or boroughs.
While not fully equivalent to a municipality (nor the concept of a municipio libre), the 16
boroughs have gained significant autonomy and since 2000 the heads of government of the
boroughs are elected directly by plurality (they were previously appointed by the head of
government of the Federal District). Given that Mexico City is organized entirely as a Federal
District most of the city services are provided by the Government of the Federal District and
not by the boroughs themselves, while in the constituent states these services would be
provided by the municipalities. It should be noted that while other cities within the
constituent states of the federation exercise their autonomy through the municipal council,
some, like Querétaro, have further subdivided the municipality into delegaciones or boroughs
for administrative purposes as well.
Self-determination of the indigenous peoples
The second article of the constitution recognizes the multicultural composition of the nation
founded upon the indigenous peoples to whom the government grants the right of self-(free)
determination and autonomy. According to this article the indigenous peoples are granted
 the right to decide the internal forms of social, economic, political and cultural
organization;
 the right to apply their own normative systems of regulation as long as human rights
and rights of women (gender equality) are granted;
 the right to preserve and enrich their languages and culture;
 the right to elect representatives before the municipal council in which their territories
are located;
amongst other rights.
The nation commits to and demands the constituent states and municipalities to promote the
economic and social development of the indigenous communities as well as an intercultural
and bilingual education. According to the Law of Linguistic Rights, the nation recognizes 62
indigenous languages as "national languages" with the same validity as Spanish in the
territories in which they are spoken and the indigenous peoples are entitled to request public
services in their languages.
24
abundant rainfall in recent years along much of the Mexico-US border region has
ameliorated periodically strained water-sharing arrangements; the US has intensified security
measures to monitor and control legal and illegal personnel, transport, and commodities
across its border with Mexico; Mexico must deal with thousands of impoverished
Guatemalans and other Central Americans who cross the porous border looking for work in
Mexico and the United States
Transnational Issues
Refugees and internally displaced persons:
IDPs: 5,500-10,000 (government's quashing of Zapatista uprising in 1994 in eastern Chiapas
Region) (2007)
Illicit drugs:
major drug-producing nation; cultivation of opium poppy in 2007 rose to 6,900 hectares
yielding a potential production of 18 metric tons of pure heroin, or 50 metric tons of "black
tar" heroin, the dominant form of Mexican heroin in the western United States; marijuana
cultivation increased to 8,900 hectares in 2007 and yielded a potential production of 15,800
metric tons; government conducts the largest independent illicit-crop eradication program in
the world; continues as the primary transshipment country for US-bound cocaine from South
America, with an estimated 90% of annual cocaine movements toward the US stopping in
Mexico; major drug syndicates control the majority of drug trafficking throughout the
country; producer and distributor of ecstasy; significant money-laundering center; major
supplier of heroin and largest foreign supplier of marijuana and methamphetamine to the US
market (2007).
Military branches:
Secretariat of National Defense (Secretaria de Defensa Nacional, Sedena): Army (Ejercito,
includes Mexican Air Force (Fuerza Aerea Mexicana, FAM)); Secretariat of the Navy
(Secretaria de Marina, Semar): Mexican Navy (Armada de Mexico, ARM, includes Naval
Air Force (FAN), naval infantry) (2009)
Military service age and obligation:
18 years of age for compulsory military service, conscript service obligation - 12 months; 16
years of age with consent for voluntary enlistment; conscripts serve only in the Army; Navy
and Air Force service is all voluntary; women are eligible for voluntary military service
(2007)
Manpower available for military service:

males age 16-49: 27,774,688
females age 16-49: 29,376,791 (2008 est.)
Manpower fit for military service:

males age 16-49: 22,541,654
females age 16-49: 25,149,027 (2009 est.)
Manpower reaching militarily significant age annually:
25
male: 1,109,981
female: 1,072,094 (2009 est.)
Military expenditures:
0.5% of GDP (2006 est.)
Hofstede Cultural Dimensions
* Description for each of Hofstede's Dimensions listed below
Source : www.geert-hofstede.com
Mexico is similar to many Latin countries when Hofstede's Dimensions are compared and
analyzed (see Latin America Hofstede graph below).
Mexico's highest Hofstede Dimension is Uncertainty Avoidance (UAI) (82), indicating the
society’s low level of tolerance for uncertainty. In an effort to minimize or reduce this level
of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented. The
ultimate goal of this population is to control everything in order to eliminate or avoid the
26
unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does
not readily accept change and is very risk adverse.
* Average rankings of all Hofstede Latin Countries
Mexico has a low Individualism (IDV) ranking (30), but is slightly higher than other Latin
countries with an average 21. The score on this Dimension indicates the society is
Collectivist as compared to Individualist. This is manifest in a close long-term commitment
to the member 'group', be that a family, extended family, or extended relationships. Loyalty
in a collectivist culture is paramount, and over-rides most other societal rules and regulations.
The society fosters strong relationships where everyone takes responsibility for fellow
members of their group
Mexico has the second highest Masculinity (MAS) ranking in Latin America (69). This
indicates the country experiences a higher degree of gender differentiation of roles. The male
dominates a significant portion of the society and power structure. This situation generates a
female population that becomes more assertive and competitive, although not at the level of
the male population.
Another Dimension in which Mexico ranks higher than other Latin neighbors is Power
Distance (PDI) with a rank of 81, compared to an average of 70. This is indicative of a high
level of inequality of power and wealth within the society. This condition is not necessarily
subverted upon the population, but rather accepted by the culture as a whole.
Power Distance Index (PDI) that is the extent to which the less powerful members of
organizations and institutions (like the family) accept and expect that power is distributed
unequally. This represents inequality (more versus less), but defined from below, not from
above. It suggests that a society's level of inequality is endorsed by the followers as much as
by the leaders. Power and inequality, of course, are extremely fundamental facts of any
society and anybody with some international experience will be aware that 'all societies are
unequal, but some are more unequal than others'.
Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to
which individuals are inte-grated into groups. On the individualist side we find societies in
27
which the ties between individuals are loose: everyone is expected to look after him/herself
and his/her immediate family. On the collectivist side, we find societies in which people from
birth onwards are integrated into strong, cohesive in-groups, often extended families (with
uncles, aunts and grandparents) which continue protecting them in exchange for
unquestioning loyalty. The word 'collectivism' in this sense has no political meaning: it refers
to the group, not to the state. Again, the issue addressed by this dimension is an extremely
fundamental one, regarding all societies in the world.
Masculinity (MAS) versus its opposite, femininity, refers to the distribution of roles
between the genders which is another fundamental issue for any society to which a range of
solutions are found. The IBM studies revealed that (a) women's values differ less among
societies than men's values; (b) men's values from one country to another contain a dimension
from very assertive and competitive and maximally different from women's values on the one
side, to modest and caring and similar to women's values on the other. The assertive pole has
been called 'masculine' and the modest, caring pole 'feminine'. The women in feminine
countries have the same modest, caring values as the men; in the masculine countries they are
somewhat assertive and competitive, but not as much as the men, so that these countries show
a gap between men's values and women's values.
Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and
ambiguity; it ultimately refers to man's search for Truth. It indicates to what extent a culture
programs its members to feel either uncomfortable or comfortable in unstructured situations.
Unstructured situations are novel, unknown, surprising, different from usual. Uncertainty
avoiding cultures try to minimize the possibility of such situations by strict laws and rules,
safety and security measures, and on the philosophical and religious level by a belief in
absolute Truth; 'there can only be one Truth and we have it'. People in uncertainty avoiding
countries are also more emotional, and motivated by inner nervous energy. The opposite type,
uncertainty accepting cultures, are more tolerant of opinions different from what they are
used to; they try to have as few rules as possible, and on the philosophical and religious level
they are relativist and allow many currents to flow side by side. People within these cultures
are more phlegmatic and contemplative, and not expected by their environment to express
emotions.
Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was
found in a study among students in 23 countries around the world, using a questionnaire
designed by Chinese scholars It can be said to deal with Virtue regardless of Truth. Values
associated with Long Term Orientation are thrift and perseverance; values associated with
Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting
one's 'face'. Both the positively and the negatively rated values of this dimension are found in
the teachings of Confucius, the most influential Chinese philosopher who lived around 500
B.C.; however, the dimension also applies to countries without a Confucian heritage.
28
Business Plan in Mexico
Whenever anyone starts a new venture whether in home country or Host County, need
funding or want to monitor the health of your business, creating a business plan should be
first step on the path to success.
We will discuss some different types of business plan, which are to be considered before
starting a new venture
THE BASICS
 How long should your plan be?
 Who needs a business plan?
 Finding the right plan for you?
 Types of plan

PLAN YOUR PLAN
 Determine your objective
 Your financing goals
 How will you use your plan
 Assess your company potentials

Elements of a Business Plan
 Executive summary
 Business Description
 Market Strategies
 Competitive Analysis
 Design and development Plan
 Operation and Management Plans
 Financial components
What is so special about Mexico?

Mexico is a country of huge potential that for the past decade has followed sound economic
policies that have delivered solid growth and stable inflation. It is a dynamic market and
analysts have predicted that its economy will be larger than the UK’s by 2040.
It covers an area about the same size as the whole of Western Europe and occupies a strategic
global position, being the natural bridge between Latin America to the south and the United
States and Canada to the north.
Mexico is the largest trading nation in Latin America. GDP has grown strongly since 1996
and the country has high levels of foreign direct investment. This has been driven by
Mexico’s competitive production costs, and since 1994, its membership of the North
American Free Trade Agreement (NAFTA).
29
As the economy has grown so has the demand for imports. UK exports of sophisticated goods
and services have grown due to that demand. Mexico is the only Latin American member of
the OECD and is also a founding member of the World Trade Organization (WTO).
KEY SUCCESS FACTOR FOR DOING BUSINESS IN MEXICO
Key factors for success when starting, running and making a small business enterprise
profitable in Mexico include ;
Capitalizations; Ensure that you have sufficient funds to open and run business for a longer
period than you would normally expect in the USA, Canada or Europe. Ideally at least a
couple of year’s worth of operating expenses. It can take longer and cost more to get small
business up and running profitably in Mexico
Keep cost low; Trim your expenses in the early years and keep them trimmed thereafter.
Mexico has a lot of hidden expenses if you are running a small business. So by keeping costs
minimum you will create cushion for the ones you cannot yet see. Also markets and the
commercial environment tend to be more volatile in Mexico than USA, Canada or the EU, so
keeping cost low will help to ride out any situation or unforeseen changes in commercial
environment
Local knowledge and local contracts; you need to know your market intimately (and that
includes who your customers are going to be). You need to know your business inside out and
to speak, read and write Spanish (or to able to afford to hire expert translators and
interpreters), also you need to be comfortable and patient with local custom and you need o
get involved in local community and develop contacts.
Making a contribution; local people like to see the contribution your company is making to
their community. Ensure that your business gives something back. That means doing things
like hiring local suppliers , contracting local trade people and hiring local workers wherever
possible. When you have to hire from outside ,make sure why are you doing so with your
Mexican employees and other stake holders and try to convenience them.
Get your sales marketing right; Selling to market in Mexico is different to the USA ,
Canada and Europe. although your clients may be foreigners, you may also have a significant
opportunity if you market to potential domestic customers successfully.
Executive Summary
In regard of the success factors for doing business in Mexico, following factors will have to
be considered while doing so. We will be discussing the business plan along with projected
financials and graphical representation of which we think would be profitable in the long run
on monthly and yearly basis. All the fictional financials have been disclosed in the plan along
with the personnel details.
Idea Generation
30
The Internet is changing the World. Before our eyes, the World Wide Web is systematically
transforming industry after industry. To an increasing extent, a company does not exist if it is
not present on the Internet.
Spanish Resources plans to exploit this trend. The tourism industry is in the early stages of
being transformed by the Internet. Spanish Resources will passionately focus on the Mexican
tourism segments of this industry. The company will bring Mexican resorts and tourist
destinations onto the World Wide Web. By creating websites for our clients, we will establish
them on the Web at a key moment in the transformation of the tourism industry.
The company will use its marketing resources to define a new niche in the Mexican tourism
market. This niche focus will include website design and overall Web strategy for resort
operators and other tourist destinations in Mexico. We will then define ourselves as the leader
in this niche.
Spanish Resources expects revenue of $751,350 in the first year, $1,441,500 in the second
year and $1,807,550 in the third year. Profits for the same time periods will increase steadily.
We expect employee headcount to grow from four to eleven over the first year and to hold
steady there after. The company expects paid-in capital of $300,000 to provide more then
adequate working capital for the duration of the plan.
The company will provide a turn-key solution to its clients. However, we will rely on
multiple outside vendors to supply website implementation and hosting. The company will
provide all other aspects of the service.
1.1 Objectives
Our most important objectives are:
1. Three major referenceable accounts in the first six months.

2. An annual revenue of $1,441,500 in the second year.
3. In the first year, at least fifteen mentions of the company in tourism industry
magazines and newsletters.
1.2 Mission
31
Spanish Resources will remove the language and technology barriers to travel destination
operators in Mexico through the use of the Internet in order to reach perspective english-
speaking tourists.
We will provide a dynamic and fun work environment with stable, long-term job
opportunities that will include exotic travel for some employees and incentive bonuses for all
key personnel.
Company Summary
Spanish Resources will be incorporated in the state of Connecticut as a general corporation.
The company will provide website development services to tourism destinations in Mexico.
Although the company has no operating history, the founders, as our Team, have extensive
experience in the competencies required for the company to succeed. The company will have
a more than adequate amount, with $300,000 investment.
2.1 Start-up Summary
There are three features of the start-up expenses that are worth noting.
First, the research and development expense involves founders travelling to appropriate
destinations to gather first-hand information about the market and market conditions.
Second, the company is investing heavily in sales collateral because of the need to project a
strong quality image from the company's inception.
Third, the company is assuming the need for only a single base of operations.
Start-up
Requirements
32
Start-up Expenses
Legal $5,000
Stationery etc. $1,000
Brochures $7,500
Consultants $20,000
Insurance $2,000
Rent $1,500
Research and development $20,000
Expensed equipment $500
Other $5,000
Total Start-up Expenses $62,500
Start-up Assets
Cash Required $367,500
Other Current Assets $0
Long-term Assets $20,000
Total Assets $387,500
Total Requirements $450,000
Start-up Funding
Start-up Expenses to Fund $62,500
33
Start-up Assets to Fund $387,500
Total Funding Required $450,000
Assets
Non-cash Assets from Start-up $20,000
Cash Requirements from Start-up $367,500
Additional Cash Raised $0
Cash Balance on Starting Date $367,500
Total Assets $387,500
Liabilities and Capital
Liabilities
Current Borrowing $100,000
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $50,000
Other Current Liabilities (interest-free) $0
Total Liabilities $150,000
Capital
Planned Investment
Founders $300,000
34
Other $0
Additional Investment Requirement $0
Total Planned Investment $300,000
Loss at Start-up (Start-up Expenses) ($62,500)
Total Capital $237,500
Total Capital and Liabilities $387,500
Total Funding $450,000
Services
The company will offer two basic services: creating a basic website, and creating an in-depth
website.
The company's core competencies are an understanding of cultural and linguistic issues and
the infrastructure of the World Wide Web. The company intends to partner with firms that are
proficient in website implementation, rather than building such an operation internally.
In order to provide a high level of service, the company will have operations in both
Stamford, Connecticut and in Mexico. The Stamford operation will serve as headquarters and
the point of contact for partner Web design firms. The Mexican operation will support direct
sales, after sales support and account management.
3.1 Service Description
The company offers two basic categories of service.
The basic service, which is sold to small resorts and travel destination, provides a simple
website. This website will typically include photographs, location and contact details for the
destination. In addition, the website will be submitted to all of the Web search engines and be
provided to travel- oriented websites.
The basic website is designed to inform Web users about the existence of resorts and travel
destinations. This basic level of service is provided for people whose primary goal is
establishing a presence on the Web. This service will cost $2,000 to $3,000 dollars.
The in-depth website is designed for large resorts. This site provides everything included in
the basic website and adds more depth and interactivity. This form of website will provide
more detailed description and images of the resort and its facilities.
In addition, the website will allow users to make bookings, ask for promotional literature to
be mailed to them and make other requests directly of the resort operators. The in-depth
35
website goes beyond a presence on the Web, by using the Web to establish the initial
relationship with potential guests. We will make the in-depth website available to smaller
resorts and other destinations if requested. This service cost $8,500.
We intend to provide ongoing services to basic and in-depth website customers that will
include updates and expansions of their site, as well as brokerage for Web hosting services.
We expect ongoing services to account for approximately the same dollar amounts as the
initial contracts.
3.2 Fulfillment
Fulfillment for the company relies on both internal resources and our Web designer partners.
The company will establish relations with at least two Web design firms.
The company will handle the direct relationships with the clients including all linguistic and
cultural issues as well as a collection of imagery, identification of key resort facilities, and a
high-level design concept for the website.
The Web design firm will be responsible for converting imagery to computer form,
typesetting of text, and other technical website implementation issues. For basic website
work, the Web design firm will be paid from $1,000 to $1,500 and for in-depth website work,
they will be paid from $3,000-$3,500 dollars.
Market Analysis Summary
The tourism market in Mexico is enormous. In 1998, according to The Bank of Mexico, 19.8
million international tourists traveled to Mexico and spent over six billion dollars.
350 major hotels and thousands of smaller travel destinations serviced these tourists.
Increasingly tourists are researching and booking travel using the Internet.
The company plans to target the large resorts that don't yet have a website and expand into
the thousands of smaller destinations as the business develops.
The company will approach this market primarily through advertising. Our advertising will
serve two different functions.
First, we will use testimonials from reference accounts to expose the benefits of our services
to tourism operators.
Second, we will use advertising through trade publications and direct mail to establish a
brand that the Mexican tourism industry will associate with high-quality professional
services.
4.1 Market Segmentation

We broadly divide our market between resort hotels and other travel destinations. Within
resort hotels we segment between 1, 2, 3, 4, and 5 star hotels.
Within other travel destinations we include apartments, bed and breakfast, suits, villas,
condos, trailer parks, and bungalows.
Within the category of resort hotels, we define large resorts as being 4 or 5 star hotels.
36
We define smaller resorts as 3 or 4 star hotels. Please note this analysis counts 4 star hotels
twice.
In addition, we have excluded 1 and 2 star hotels entirely. Furthermore the company believes
these estimates are conservative because they exclude the major beach resort areas such as
Acapulco, Puerto Vayarta, Cancun, Zihuatenejo, Ixtapa, etc.
Market Analysis
Year 1 Year 2 Year 3
Potential Customers Growth
Large resorts 10% 557 613 674
Smaller resorts 10% 1,136 1,250 1,375
Other travel
10% 678 746 821
destinations
Total 10.00% 2,371 2,609 2,870
4.2 Target Market Segment Strategy

The company's market strategy is to focus on resort hotels and tourist travel destinations in
Mexico that meet two important criteria.
First, we are targeting the segments of the market that can afford Web-based promotion.
Second, we are targeting those segments of the market that can benefit from a presence on the
World Wide Web.
37
The company has gathered market data from the official Mexican tourism website. To be
conservative, we gathered data that excludes the major beach resort areas.
Many of the major beach resorts already have websites. Although we intend to target those
areas as well, for purposes of this analysis, we have left them out of the numerical totals. If
they were included, these resorts would approximately double the number of large resorts.
Smaller resorts and other travel destinations would also be affected, but by a smaller amount.
Although there are many more 1 and 2 star hotels than any other category, the company
decided to exclude them because their segment can neither afford nor benefit from a presence
on the World Wide Web.
We decided to include 4 star hotels in both large and small resort segments because we
predict that 4 star operators will divide themselves between large and small service offerings.
It is also important to note that many of the 4 and 5 star hotels are controlled by resort chains,
where as the smaller hotels tend to be individually owned.
Furthermore, 5 star hotels often have affiliations with other travel destinations such as golf
courses. Also note that the predicted 10% growth rate was estimated by the company, not by
the tourism board.
Strategy and Implementation Summary
The company will focus on the Mexican tourism market. By using the company's services,
our clients will either establish, or improve, their presence on the World Wide Web. By using
this Web presence, they will be able to reach tens of millions of consumers who use the Web
regularly.
Our marketing strategy is based on testimonial and reference advertising. We will use trade
publications and direct advertising to establish our brand as the high quality source for Web
design and infrastructure services in the Mexican tourism industry.
Our strategy involves creating a niche for Web services in our industry and then positioning
ourselves as the leader in this new niche.
Our sales strategy will begin by supporting marketing's need for reference accounts.
Subsequently sales will focus in two areas. First, the sales force will work leads generated by
advertising and word of mouth to establish new customer accounts. Second, the sales force
will work with existing customers to renew and improve their website.
5.1 Competitive Edge
There are four principal things that will differentiate Spanish Resources from the
competition.
First, the company will have a blend of both Mexican cultural understanding, and World
Wide Web infrastructure.
Second, the company will build a strong brand through advertising and promotion.
Third, the company intends to define its business activities as a new niche blending website
design with Mexican tourism.
Fourth, the company will use its position as an early entrant in this new niche to create
opportunities for a word of mouth reputation based on quality and a high level of service.
38
Taken together, these four differentiators represent a proven World Wide Web competitive
strategy.
As Web markets move from the early stages of experimentation into more mainstream usage,
an opportunity is created to aggressively define a new service niche targeted specifically on
the peculiar needs of a specialized market.
The company's research indicates that several resorts are experimenting with websites. As
tourism booking move online, this market is a natural target for such a strategy.
5.2 Sales Strategy
The company's sales strategy has two distinct phases.
In the first phase the company will identify direct sales opportunities in Mexican regions that
have a high concentration of resorts. The direct sales force will approach these sales
opportunities in one-on-one meetings.
The primary goals in this first phase are locating accounts that appear to be good candidates
for advertising references (for example a famous Acapulco resort), improving the quality of
the sales presentation and refining sales technique. Meeting revenue targets are secondary
consideration in the first phase.
In the second phase, the company expects to generate sales leads from advertising promotion
and word of mouth. This should make the direct sales force more efficient, and therefore
capable of making revenue targets the primary sales goal. Furthermore, the sales force will be
operating on a steadily increasing client base from whom new orders can be taken.
The company expects the first phase to take approximately six months and the second phase
to begin thereafter.
The company's compensation plan for salespeople is based on a combination of base salary
and sales commissions.
5.2.1 Sales Forecast
The sales forecast is based on several assumptions.
First, that the potential market is very large, in particular there is significant pent-up demand
for an Internet presence among travel destination operators.
Second, that initial sales will come from sales calls on potential clients.
Third, that establishing reference accounts are the most important early sales targets.
Fourth, that advertising and promotion, in the presence of referenceable accounts, will
generate most of the sales leads starting in the third quarter of operation and extending into
the steady state.
The principal limiter of sales volume is the company's capacity. We expect advertising to
generate more sales leads then the company can fulfill.
Therefore, we have projected approximately 25% year-on-year sales growth based roughly on
the growth and size of operation. Furthermore, we anticipate the ability to be selective about
clientele due to the excess demand for the company's services.
39
Management Summary
At the end of the first year of operation, the company will have eleven employees. Of these,
two of whom will be founders and two of whom will be managers (yet to be hired). The plan
also includes three account managers, a bookkeeper, and three administrative assistants.
Our team general responsibilities will be: overseeing client relationships, supervising all
cultural and linguistic issues, and insuring that the final design meets the customer's
expectations.
Our team founder member (Sanchir) will also provide overall management for the company
by supervising the sales and marketing manager and the production manager (yet to be
hired).For that role Leader gained experience in hiring, training and managing people.
Other co-founder member of team (Saket) will have overall responsibilities will include:
finance, legal, accounting, and general business guidance. He will also negotiate and oversee
the partnering relationships with Web design firms. He has thirteen years experience in all
areas of general business including technology, management, finance, legal and general
administrative functions.
The sales and marketing manager will report to Sanchir and be responsible for overseeing
both the account managers in sales and the company's marketing efforts.
The marketing activities will involve extensive contact with the press, as well as overseeing
outside contractors for the development of sales collateral and other materials. The sales and
marketing manager will also be responsible for developing corporate identity materials.
The account managers serve a dual role: they provide the direct sales force as well as a point
of customer care after the sale. The first account manager will be located in Mexico to
provide the cultural familiarity necessary to make sales. The account managers report to the
sales and marketing manager.
The production manager will oversee the day to day flow of information between customers,
Spanish Resources, and the outside Web design firms. The production manger will insure that
the high-level design is carried out, that production schedules are met, and that standards of
quality are maintained. The production manager reports to Sanchir.
40
7.3 Projected Profit and Loss
There are several features of the company's Profit and Loss statement that merit explanation.
First, note the 90% increase in sales between year one and year two and the 25% increase
between year two and year three.
The dramatic difference is explained by examining fourth quarter sales numbers in year one.
If the fourth quarter numbers in year one were extended for an entire year, the sales growth
between that year and year two would be approximately 25%.
Second, the dramatic growth in overall marketing budget (60% from year one to year two) is
explained by the company's strategy of using advertising generated sales leads as the most
important source of new clients.
Third, it is worth noting that the increase in profit from year two to year three is much greater
then the corresponding increase in sales. This is due to the need to both hire and train
personnel ahead of increased sales expected in year three and the need to spend heavily in
marketing in year two to achieve those sales.
Fourth, the lack of an advertising and promotion budget for the first quarter in year one is due
to the company's strategy of using reference account in company's advertisements. The first
reference accounts will be established in the first quarter of year one with advertising based
on those accounts starting in the second quarter.
Bibliography
1)http://en.wikipedia.org/wiki/Mexico
2)https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html
41
3)http://www.infoplease.com/ipa/A0107779.html
4)http://www.worldatlas.com/webimage/countrys/namerica/mx.htm
5)http://maps.google.co.in/maps?
hl=en&source=hp&rlz=1R2SKPB_enIN352&q=mexico&um=1&ie=UTF-
8&hq=&hnear=Mexico&gl=in&ei=5PdZS8XXJ4GC7QOqkpkJ&sa=X&oi=geocode_result&
ct=title&resnum=11&ved=0CDwQ8gEwCg
6)http://www.geert-hofstede.com
42

Assignment: Report On Doing Business in Mexico

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ASSIGNMENT:

REPORT ON DOING BUSINESS IN

Submitted To: Submitted By:

Mrs. Amar Aujla, Faculty, FOSTIIMA Business School.

The project report titled “International Business Analysis on Mexico” is submitted to

Sandeep Kumar Singh

4 Legal System & Political System

5 Health and Social System

8 Hofstede Cultural System

9 Factors For Business Success In The Country

Mexico’s is the second largest economy in Latin America and the

The report provides detailed information of many different aspects

The Success factors for setting up a business in Mexico has been

The detailed analysis of the two business Ideas that we plan to

Capital Mexico City

Official language(s) Spanish (de facto)

National language Spanish, and 62 Indigenous Amerindian languages[3]

Government Federal presidential republic

- Upper House Senate

- Lower House Chamber of Deputies

Independence from Spain

- Declared September 16, 1810

- Recognized September 27, 1821

- Water (%) 2.5

- 2005 census 103,263,388

- Total $1.563 trillion (11th)

- Per capita $14,534 (55th)

GDP (nominal) 2009 estimate

Total $1.143 trillion (13th)

The word "Mexico" is derived from Mexica (pronounced "Me-shee-ka"),

In Pre-Columbian Mesoamerica many cultures matured into advanced civilizations such as

Miguel Hidalgo y Costilla "The Father of Mexico"

Source: http://en.wikipedia.org/wiki/Political_divisions_of Mexico

Population below poverty line:

Stock of direct foreign investment - at home:

Legal Environment (Turn of the Century Presidential Elections)

Health and Social Reforms

Map of the Mexican federation in 1847

The political organization of each state is based on a separation of powers in a congressional

5,618 km2 North Central

71,446 km2 North West

73,922 km2 North West

57,924 km2 South East

Tuxtla 73,289 km2 South West

247,455 km2 North West

151,563 km2 North East

123,451 km2 North West

30,608 km2 North Central

63,621 km2 South West

22,357 km2 South Central

4,893 km2 South Central

17. Nayarit Tepic 1917 943,000 27,815 km2 NAY West Mexico

64,203 km2 North East

93,343 km2 South West

11,658 km2 North Central

42,535 km2 South East

61,165 km2 North Central

57,331 km2 North West

179,516 km2 North West