Widget Pro’s Expanding to Mexico

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There are a many reasons why we should consider expanding our operations into Mexico. Mexico has a lower cost of labor compared to the United States (Mexico Labor Costs). Mexico also has the most free-trade agreements than any other country in the world. This international trade increases market share resulting in lower costs and higher rates of production (Griffin, 2015).

To ensure a successful transition, I recommend the following;

- Widget Pro’s should establish its headquarters in Mexico City

- Purchase a building large enough to begin operation and have enough room for growth

- Educate Widget Pro’s employees in the Mexican culture and business practices.

- Consider hiring some locals to create a diverse workforce.

- Make sure the Widget Pro’s name is appropriate when translated in to Spanish.

- After 1 year, evaluate the production line.

- Interview the employees to get feedback on operations.

- Conduct surveys with customers to ensure satisfaction with our product.

- Compare the operations with our Arkansas operations

- If Widget Pro’s Mexico operations is deemed profitable, Widget Pro’s operations should expand to accommodate more business.

- Explore more locations for further expansion to increase the market share

- Consider expanding our product line to manufacture other products that will be profitable.

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Introduction

In keeping up with the competetive marketplace and increasing sales figures in the previous years, I have conducted research on the feasibility in expanding operations abroad. I have investigated the possibility of moving our operations into Mexico.

I have conducted research there to ensure Widget Pro’s will be successful in entering the foreign market.

Purpose and Scope

With a substantial growth in our production output, Widget Pro’s have out grown our current production plant and need to expand. It would be ideal to expand globally in order to better reach foreign markets. The purpose of this report is to decide whether or not to move operations into the country of Mexico.

This report will cover several topics about Mexico including their government, economy, culture as well as business practices. I will not have any on-site research due to limited time and monetary resources.

Assumptions

The recommendations I make in this report is based mostly on research conducted on the internet and data retrieved from other businesses that have expanded their operations into Mexico. I believe that our company will also be successful in our expansion assuming the government and the economy will remain as relatively stable as at the time the research was conducted.

Methods

As mentioned earlier, the information for this report was retrieved from several reputable online sources that provided a wealth of knowledge about the country. A great amount was obtained from various sources such as; The Central Intelligence Agency’s World Fact book, The Congressional Research service and Trading Economics among others.

Limitations

Due to time and cost restraints, I was limited to conducting my research solely from internet resources. I was not able to travel to Mexico to conduct research on-site.

Criteria

I have established some criteria that need to be considered in before I give a positive recommendation about moving operations into Mexico. These criteria include Government, Political dealings, Economy, and Culture, Business practices. I will explore each of these separately and give recommendations as favorable or not favorable. Each of the five criteria will be weighted as 20% each and I need a minimum score of at least 60% to give a positive recommendation.

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Government

Mexico’s Government Today

Mexico is a federal republic made up of 31 states and 1 Federal District (Mexico City) occupying 756,066 square miles in North America (Mexico Country Overview, 2015). Mexico has three branches of government: executive, legislative, and the judicial. The government is a federal republic system which means power is shared between the national and state levels. Figure 1 below shows a visual example of Mexico’s system of government. Voters in each state elect a governor. Each state has its own legislature. Local governments provide public services to towns and villages. Local governments depend on money from the national government (The Wolrd Fact Book, 2015). The term for the President, State Governors, and Senators is six years with no re-election. There is no re-election for political officials. They usually sit out a term, run again for another term in the same office or run for another post.

[pic 2]

Figure 1. Mexico’s Government System.

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Political Dealings

Political Parties

The politics of Mexico are dominated by three political parties: National Action Party (PAN), the Party of the Democratic Revolution (PRD) and Institutional Revolutionary Party (PRI) (Guanajuato, 2007). The political parties in must promote the participation of the people in the democratic life of the country, contribute in the representation of the nation and citizens, and be the access through which citizens can participate in public office. All political parties must be registered with the Federal Electoral Institute (IFE), which is the institution in charge of organizing and overseeing the federal electoral processes. It must obtain at least 2% of votes in the federal elections to keep their registry. Registered political parties are entitled receive public funding for their operations and also receive private funding within the limits of the law (Pansters, 2015).

Political