Essay Sample: The Business Environment and Culture of Mexico

Economic environment

Mexico is an emerging economy. The Mexican economy recorded a 2.1 percent growth rate as at 2017, and the forecast shows that this rate will increase to 2.4 by 2020 (Trading Economics-Mexico. 2019). The country is undergoing rapid industrialization. However, poverty levels are high due to unemployment and poor education systems. The Mexican economy presents some opportunities for MRF. It can take advantage of low wage rates.

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The benchmark interest rate is 7.75 percent. The Bank of Mexico intends to hold this rate steadily to encourage investment in the foreseeable future (Esposito, Shumaker, & O'Boyle, 2018). However, the rate could increase in the future. The inflation rate has been fluctuating with 2015's the rate at 2. 72% but raised to a high 6.07% in 2017. Projected inflation rate will decrease below 4.0% by the end of 2019 (Statista-Mexico. 2019). A decline in inflation rate promotes production, increase aggregate consumption and economic growth.

In 2018, Mexico had an employment level of 96.65%. While the range of employment level is between + or - 1% from this value, education levels have declined. There is a rise in the number of unskilled workers. Employees are taking skills programs that help align them with the job opportunities available in the market. These changes provide an opportunity for MRF. Alternatively, Mexico's GDP is currently at 9.78 billion dollars and is projected to growth towards 11.5 billion dollars in the long-term. The GDP per capita is 9.94616 billion dollars (Trading Economics-Mexico. 2019). The Peso to Rupee exchange rate is at 1MXN/3.71INR. Thus producing and distributing goods in the Mexican economy will be favorable for MRF. These forecast amounts depict the economy as an attractive market.

Social-cultural environment

The local lifestyle is an amalgamation of cultural traditions, an assortment of Mexican cuisine, low cost of living and a slow pace of life. The Mexican culture is dominant. It emphasizes on having a good time and family ties. Mexico's population is increasing with an estimate of 132.33 million people in 2019 (Mexico Population. 2018). The demographics of this population shows relatively equal percentages of people along the age spectrum. The working class is the largest thus providing a significant labor market. While men constitute the largest population of workers, cultural changes are gradually embracing women in the workplace.

The distribution of income and education levels presets large gaps between the high and the low class. The Mexican education attainment level shows that approximately seventy percent of the population reached the upper secondary education level. For adults, this rate is as low as 37%. The average monthly income level ranges between 13000-40000 pesos (Mexico Population. 2018). There is a significant income gap. The Mexican culture derives is social values from Catholic principles making it a vital influencer of consumer purchasing behavior (Kesseli, 2017). Consumers are less likely to deviate from social norms.

The cost of living is low in Mexico is low and spending habits are limited. The norms in families constrict the attitude to purchasing. Various employee benefits are valued in Mexico such as health insurance, vacation pays, saving funds, training among others. While most companies do not recognize domestic-partner policies, paid maternity and paternity leaves are given. They are crucial as the Mexican culture is highly social. Current pending legislations hold that employers should pay employees for mandatory rest days (Beguerisse, et al. 2019). Finally, Mexicans are casual, and their attitude to work is relaxed. They have the perception classified as "work to live not live to work." (Nicol, & Taylor, 2019).

Technology environment

Mexico is the largest exporter of high-end technology equipment in Latin America. Over the last five financial years, government budget for technology infrastructure, research and development has been increased to approximately 100 billion pesos annually. The number of tech-startups is also increasing. The changing nature of technology and the economy's reliance on the industry has seen industries and the government have an increased interest in technology. Regulations on intellectual-property rights are being developed gradually but the rate of intellectual rights infringement in the country is still high. The Mexican IP laws recognize trademarks, logos, patents and logos among other IP rights (Heng et al., 2019). With the increase in robotics, the potentiality of disrupting employment levels is high. The rise of such disruptive technologies in Mexico poses a potential threat to workers and companies due to obsolesce of technology.

Environmental factors

Mexico, like many other countries, faces significant levels of pollution. Waste disposal in water sources, dumping of harmful toxins on land, and air pollution are some of the local environmental issues in the country. The Mexican government with the help of various non-governmental organizations implemented environmentally friendly policies under the Green Plan (Plan Verde) Act (UN Environment. 2019). It includes vertical gardens and an increase in the usage of the bicycle as a mode of transport. It has also increased regulation of disposal of waste. MRF operates in the tyre manufacturing industry. The disposal of tyres through burning contribute to carbon emissions. Environmental campaigns emphasize recycle of different auto parts and use of sustainable energy.

Mexico's bilateral relations with USA and Canada have intensified the concentration on resolving environmental issues. International pressure organization has seen the country conduct regular environmental audits (UN Environment. 2019). Campaigns to reduce carbon emission has seen manufacturing industry result in using energy-efficient methods. For MRF, the company ensures that the disposal of tyres is mainly through recycling to improve health and hygiene levels. Mexico has increased its environmental-protection laws to eliminate foreign companies that are negligent. The shift towards sustainable energy generation through solar and wind energy is a current ecological trend.

Legal environment

Mexico's laws on monopolies and private ownership of property depend on the industry. The regulations in Mexico noted that state-owned enterprises are governed by the government and operate as monopolies. However, it only allows the ownership of private property to domestically owned corporations. Some of the competitive industries include the automobile and tech sectors. Mexico's law offer protection through claims to damages caused through the infringement of intellectual rights. Courts settle such disputes. Also, various agencies such as PGR, IMPI, and customs track copyrighted goods (State Gov. -Mexico. 2019). Consumer laws hold business accountable and protect consumers. Besides, product safety and safe workplace policies are requirements that should be met by employers in Mexico.

Conclusion

MRF entry strategy into the Mexican market should incorporate the information generated from the PESTEL analysis. The political state of the country is challenged by issues such as corruption which could affect the company's business ethics. Nonetheless, Mexico provides a diverse market for MRF. It also has a pool of talented employees. The advancement of the technology environment is an opportunity and threat to MRF. Technology development provides a chance for the company to improve its operational efficacy but also intensifies competition in the market. Finally, Mexico has upgraded its environmental protection policies, and MRF has to comply with legal laws in the country.

References

Beguerisse, F. et al., (2019). Retrieved from https://ca.practicallaw.thomsonreuters.com/3-502-9997?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

Esposito, A., Shumaker, L., & O'Boyle, M. (2018). UPDATE 2-Mexico central bank holds interest rates steady in divided... Retrieved from https://www.reuters.com/article/mexico-economy-rates/update-1-mexico-central-bank-holds-interest-rates-steady-in-divided-vote-idUSL2N1WK1E3Gov.UK. (2018, March 2).

Oversea Business Risk - Mexico. Politics. Retrieved from: https://www.gov.uk/government/publications/overseas-business-risk-mexico/overseas-business-risk-MexicoGlobal Security.org. (2018, September 7).

Mexico 2018 Presidential Election. Retrieved from: https://www.globalsecurity.org/military/world/mexico/politics-2018.htm

Heng, A., et al., (2019). Technology Trends in Latin America - Mexico. Retrieved from https://cs.stanford.edu/people/eroberts/cs181/projects/2010-11/TechnologyTrendsLatinAmerica/mexico.html

Kesseli, T. (2017). The Business Environment and Culture of Mexico from the Perspective of Finnish Companies.

Mexico Population. (2018). Retrieved from http://worldpopulationreview.com/countries/mexico/

Nicol, J., & Taylor, S. (2019). Mexico - Mexican Business Etiquette, Vital Manners, Cross Cultural Communication, and Geert Hofstede Analysis. Retrieved from http://www.cyborlink.com/besite/mexico.htmState Gov.

Mexico. (2019). Mexico. Retrieved from https://www.state.gov/e/eb/rls/othr/ics/2015/241661.htmStatista-Mexico. (2019).