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Mexico Snapshot11th largest world economy

77 percent urban population

Over 50% population under 25(avg age of 27)

Poor and Extreme Poor: 50%(under USD $10 per day)

Transparency: 98 th in World.

Competitiveness: 66 th in World. Behind Brazil and Panama. Ahead of Colombia and Peru

Population . 112 million Unemployment. 5.0%

Inflation. 4.4% Remittances. $21.2 billion

Exports. $320 billion (Jan-Nov 2011) (81% US) Imports. $322 billion (Jan- Nov ‘11) (48% US)

Oil exports. $35.9 billion FDI. $19.44 Billion in 2011 (9.7% increase)

GDP per capita . $17,040 (2011) GDP growth. 3.9% in 2011

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Mexico’s Economic Challenges

GDP 3.9% in 2011

Foreign Direct Investment increasing

18.7 B in 2010, a 16.6% increase from 2009. 19.44 B in 2011. 9.7% increase

Finding other sources of economic growth (Services, IT)

Declining oil production (net oil importer proj. in 2015)

Building on NAFTA Energy cooperation

Monopolies

Improving economic competitiveness

Reducing poverty and inequality

Fighting organized crime and corruption

Improving Education

Labor and migration/people to people

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Why Mexico?

Location / Access to Goods/Services/Market in U.S.

Size, Diversify, and Vast Market

Shared Culture: Western, Hispanic

Manufacturing base in various sectorsStronger legal protections

Politically stable

Macroeconomic stability

Free Trade

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The Impact of NAFTA.

World’s largest free trade area: 455.4 million people; $16.9 trillion GDP

No tariffs on U.S. exports to Mexico

It clarifies and simplifies rules of trade

Institution of Dispute Resolution Process

U.S.-Mexico trade increased 423%: from $88 billion in 1993 to $460 billion in2011.

Trade has grown faster than the infrastructure

Mutual Recognition Agreements for testing/certification insome sectors

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Regional Opportunities. Mexico City.

Location. Mexico City, with a population of 20 million, is one of the largest

cities in the hemisphere and the world.

Capital. It is both the Political Capital and Financial Center of Mexico.

Manufacturing. It is also a manufacturing and distribution powerhouse.

Industrial location. Centrally located near other major industrial areas

including Toluca, Puebla, and Queretaro.

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Regional Opportunities. Guadalajara. “Mexico’s Silicon Valley”

Size. Second largest market in Mexico

Business Culture. Bilingual, open to U.S. goods and services

Logistics. Major distribution center

Major Industries. Electronics, industrial process controls, packaging, agribusiness andfood processing equipment

Largest Exposition Center in Latin America. Regional shows

Multinational Investors. GE, IBM, Intel, HP, Flextronics, Jabil, Oracle

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Regional Opportunities: Monterrey Mexico’sIndustrial Heartland

Location. Strategic location in NAFTA corridor

Business Culture. Bilingual, open to U.S. goods and services. Pro

business environment with stable workforce

Major Industries. automotive, household appliances, electronicequipment, packaging, software, specialized medical services, and

biotechnology.

Other Activities. 11% of Mexico’s total manufacturing output

Multinational Investors. Over 1,800 foreign companies

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Starbucks SWOT analysis 2014

Strengths Weaknesses

1.Sound financial records2.No. 1 brand in coffeehousesegment valued at $4 billion3.Starbucks experience4.Largest coffeehouse chain in theworld

5.Employee management

1.Coffee beans price is the majorinfluence over firm’s profits 2.Product pricing3.Negative publicity

Opportunities Threats

1.Extend supplier range2.Expansion to emerging economies3.Increase product offerings

4.Expansion of retail operations

1.Rising prices of coffee beans anddairy products2.Trademark infringements

3.Increased competition from localcafes and specialization of othercoffeehouse chains4.Saturated markets in thedeveloped economies5.Supply disruptions

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JOINT VENTURES: In contrast to licensing and franchisingarrangements, joint ventures allow companies to own a stakeand play a role in the management of the foreign operation.Joint ventures require more direct investment and training,management assistance and technology transfer. Jointventures can be equity or non-equity partnerships. Equity joint ventures are contractual arrangements with equalpartners. Non-equity joint ventures are the ones where thehost country partner has a greater stake. In some countries, a joint venture is the only way for a foreign company to set upoperations.Advantages: Access to local partners’ knowledge; Sharing

development costs and risks; Politically acceptable.Disadvantages: Lack of control over technology; Inability toengage in global strategic coordination; Inability to realizelocation and experience economies.