Globalization of  Mexican Businesses By Arun Kottolli
Introduction <ul><li>Mexico became an emerging economy in the last decade mainly due to NAFTA and proximity to US </li></u...
Globalization Routes <ul><li>Mexican firms are becoming global firms by </li></ul><ul><ul><li>Creating subsidiaries abroad...
External Factors <ul><li>External Factors influencing globalization are: </li></ul><ul><ul><li>Market liberalization in fo...
Mexican FDI in USA <ul><li>Compared to Japan & Europe, Mexican investments in US has been small but is growing steadily  <...
Entry Strategies <ul><li>Most Mexican firms which went global were manufacturing firms making auto parts, steel, aluminum,...
Entry Strategies  <ul><li>Partnerships via Joint ventures and strategic alliances were designed to minimize risks, speed u...
Positioning Strategies <ul><li>Most Mexican firms expanding in US emphasis on Low price and high quality or high service <...
Ethnic Positioning <ul><li>Contrary to expectations, most Mexican firms avoid targeting exclusively to Hispanics </li></ul...
Pricing Strategies <ul><li>Initially Prices in US was identical to that in Mexico  </li></ul><ul><li>In few cases prices w...
Distribution <ul><li>Most Mexican firms prefer to use channels instead of direct marketing </li></ul><ul><ul><li>Agents, D...
Closing Thoughts <ul><li>A close study on expansion of Mexican firms in US serves as a learning point for firms from other...
Upcoming SlideShare
Loading in...5
×

Globalization Of Mexican Business

3,035
-1

Published on

Published in: Business, News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
3,035
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
59
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Globalization Of Mexican Business

  1. 1. Globalization of Mexican Businesses By Arun Kottolli
  2. 2. Introduction <ul><li>Mexico became an emerging economy in the last decade mainly due to NAFTA and proximity to US </li></ul><ul><li>NAFTA fueled the globalization of Mexican businesses by US investments in Mexico and by creation of new market opportunities in US </li></ul><ul><li>Mexican firms are investing and expanding in US, Europe and Latin America </li></ul><ul><li>This offers a learning opportunity to firms in other emerging countries </li></ul>
  3. 3. Globalization Routes <ul><li>Mexican firms are becoming global firms by </li></ul><ul><ul><li>Creating subsidiaries abroad </li></ul></ul><ul><ul><li>Forming Strategic Alliances </li></ul></ul><ul><ul><li>Sale of stock & securities abroad </li></ul></ul><ul><ul><li>Networking with other MNC’s </li></ul></ul><ul><li>Globalization can be attributed to Internal factors such as: </li></ul><ul><ul><li>NAFTA </li></ul></ul><ul><ul><li>High Internal Debt </li></ul></ul><ul><ul><li>Deregulation of industry </li></ul></ul>
  4. 4. External Factors <ul><li>External Factors influencing globalization are: </li></ul><ul><ul><li>Market liberalization in foreign countries </li></ul></ul><ul><ul><li>Changes in finances & huge investments needed to modernize </li></ul></ul><ul><ul><li>Use of FDI by other Latin American firms to compete </li></ul></ul><ul><ul><li>Emphasis on cost based strategies to enhance export performance – Need to achieve economies of scale </li></ul></ul><ul><ul><li>Globalization of various Industry sectors resulting in global customers </li></ul></ul>
  5. 5. Mexican FDI in USA <ul><li>Compared to Japan & Europe, Mexican investments in US has been small but is growing steadily </li></ul><ul><li>Mexican FDI in US has tripled in the last decade </li></ul><ul><li>In 1999, Mexican FDI was about $3.61 Billion </li></ul><ul><li>Mexican firms have generated sales of $9.2 billion in US, generated 30,000 jobs and a net income of $132 million in 1998 </li></ul><ul><li>Exports from Mexican subsidiaries in US have crossed 1 Billion dollars </li></ul>
  6. 6. Entry Strategies <ul><li>Most Mexican firms which went global were manufacturing firms making auto parts, steel, aluminum, paper, alcoholic beverages, etc </li></ul><ul><li>Most Firms expanded into USA, Canada and Brazil </li></ul><ul><li>Other countries were Argentina, Venezuela, Columbia, Costa Rica, El Salvador, Spain, Germany, France and China </li></ul><ul><li>Joint Ventures is the favored means of expanding abroad, followed by acquisitions, strategic alliances and mergers </li></ul>
  7. 7. Entry Strategies <ul><li>Partnerships via Joint ventures and strategic alliances were designed to minimize risks, speed up entry, and secure access to resources or key assets </li></ul><ul><li>Acquisitions by Mexican firm CEMEX has well defined criteria: </li></ul><ul><ul><li>Match parent’s expertise </li></ul></ul><ul><ul><li>Does not effect current financial structure </li></ul></ul><ul><ul><li>Meet financial targets, returns exceed the firm’s Weighted Average Cost of Capital </li></ul></ul><ul><ul><li>High level of 2-way communication </li></ul></ul><ul><ul><li>Significant centralized control </li></ul></ul>
  8. 8. Positioning Strategies <ul><li>Most Mexican firms expanding in US emphasis on Low price and high quality or high service </li></ul><ul><li>A mix of low cost focus & differentiation gives Mexican firms the most desirable position </li></ul><ul><li>Focus on quality is necessary to succeed in a developed country </li></ul><ul><li>Firms prefer sales to channels or other businesses rather than directly selling to customers </li></ul><ul><li>Consumer products are targeted at all ethnic groups, few target Hispanic community only </li></ul>
  9. 9. Ethnic Positioning <ul><li>Contrary to expectations, most Mexican firms avoid targeting exclusively to Hispanics </li></ul><ul><ul><li>Mexicans in US are trying to fit-in, so they prefer American products & avoid ethnic Mexican products </li></ul></ul><ul><li>By catering to a wider ethnic base, firms can maximize market potential </li></ul><ul><li>Advertising and product positioning strategies are therefore directed towards more general markets </li></ul><ul><li>Products are being localized to meet local demands – Consistent with positioning </li></ul>
  10. 10. Pricing Strategies <ul><li>Initially Prices in US was identical to that in Mexico </li></ul><ul><li>In few cases prices was higher in US, but in general firms maintain price parity with Mexico </li></ul><ul><ul><li>Reduces arbitrage </li></ul></ul><ul><ul><li>Fits with Low cost strategy </li></ul></ul><ul><ul><li>Market penetration pricing strategy </li></ul></ul><ul><ul><li>Long term outlook, rather than opportunistically cashing in </li></ul></ul>
  11. 11. Distribution <ul><li>Most Mexican firms prefer to use channels instead of direct marketing </li></ul><ul><ul><li>Agents, Distributors, Brokers, and Wholesalers </li></ul></ul><ul><li>Very few have their own sales & marketing offices </li></ul><ul><li>Distribution via channels is a low risk option </li></ul><ul><li>Direct marketing is expensive in US </li></ul><ul><li>Personal selling is the preferred sales method </li></ul><ul><li>Samples, discounts, coupons etc are used sparingly </li></ul>
  12. 12. Closing Thoughts <ul><li>A close study on expansion of Mexican firms in US serves as a learning point for firms from other emerging nations to enter US markets </li></ul><ul><li>Low Price, High quality strategy is necessary to combat country-of-origin effects. </li></ul><ul><li>Firms need to aggressively pursue quality, get quality certification and demonstrate quality to gain market acceptance </li></ul><ul><li>Low price, long term objective is better than a opportunistic high price strategy </li></ul><ul><li>Indian Firms in Auto parts, machinery etc can emulate Mexican success in US </li></ul>
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×