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Paola Velandia

on 28 September 2013

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Transcript of MEXICO

Legal processes

Mexico City
Federal Republic
Nominally Roman Catholic 89% Protestant 6%,
Other 5%

Mestizo (Amerindian-Spanish) 60%
Amerindian or predominantly Amerindian 30%
white 9%
other 1%

Ethnic Make-up
History & Culture
Federal Democratic Republic - President serving as figurehead Enrique Pena Nieto
Three dominant political parties:
PRI (Institutional Revolutionary Party)
PAN (National Action Party)
PRD (Party of the Democratic Revolution).
Achieved Democratic government in 2000 after numerous political upheavals. PRI lost to PAN after ruling Mexico for 71 yrs and engaging in corruption and fraud.
The Change in government deepened business, cultural, personal and community relations with the United States.

118,395,054 (2013)
Human Resources in Mexico

Mexico’s gross domestic product (GPD) was an estimated $1.1 trillion in 2011, about 7% of U.S. GDP of $15 trillion.
Mexico’s economy is the 11th-largest economy in the world and the 2nd largest in Latin America, after Brazil’s.
Mexico has an open market economy with a strong export sector, though for many years it had strong protectionist trade policies to encourage industrial growth in the domestic economy.

Corruption &

In 2006, former Mexican president Felipe Calderón launched a massive crackdown against drug trafficking organizations, with the United States.
Since then:
More than 47,515 people have been killed in drug-related violence.
More than 3,000 Mexican soldiers and police have been killed by the cartels (NPR)
More than 20 sitting mayors! have been killed by cartels (IBT), and many other politicians have since been murdered or have disappeared.
Massacres of civilians, beheadings, and mass graves also have become increasingly common.

Mexico's drug system provides direct or indirect employment for much of its population as described by narcotics expert Vanda Felbab-Brown. She estimates that as much as 40 to 50 percent of the Mexican population works in the "informal, if not illegal, economy.
Officials estimate that the drug trade makes up 3 to 4 percent of Mexico's $1.5 trillion annual GDP—totaling as much as $30 billion.
The police are easily bought, since they can make 2-3 times their salary if they agree to look the other way.
The CFR (Counsel of Foreign Relations) report notes police agencies "suffer from dangerous and deplorable working conditions, low professional standards, and severely limited resources.“

Kidnapping Facts
Mexico is the third leading country for kidnappings after Venezuela and the Philippines.
Kidnapping cases in Mexico went from 12,000 in 2009 to almost 26,000 in 2012 according to The Council from Law in Human Rights.
The average ransom demand is $1.15 million, the average settlement is $355,000
Precautions to Take
Companies should provide or employees going abroad should request the following:
Anti-kidnapping insurance - $10,000-$50,000 annually per individual to cover from $700,000 to $35 millions
GPS Chip - Devise injected under the skin that sends signals to security services $2,000 + annual fee $2,000

"The Bite" is a term used for a bribe in Mexico. Even though is not legal, it is a traditional and normal way of doing business.
Does not guarantee the actions but speed the process and make it easier.
According to "Encuesta de Fraude y Corruption en Mexico in 2008" Out of 235 companies, 32% paid bribes to obtain permits and licenses.
"La Mordida"
Economic History
Mexico currently has 12 free trade agreements with 44 countries including North, Central and South America, as well as in Europe, Asia and Israel
Up’s and down’s throughout its independence
Great Depression in 1929
Did not feel the effects as directly unlike other countries
Mexican Miracle – 1940
Economy boom and prosperity producing sustained economic growth of 3-4% annually for 30 years, How?
Increasing commitment to primary education for the general population
Imposing high tariffs and barriers to imports
Promoted industrial expansion through public investment in agricultural, energy, and transportation infrastructure
By 1970 Mexico had diversified its export base and become largely self-sufficient in food crops, steel. However, economy begins to Deteriorate.
Fiscal mismanagement
Oil shock
Devaluation of the peso

More History...
1982 Crisis
Caused by poor fiscal policies
Higher world interest rates
Rising inflation and overvalued peso (devalued three times in one year)
Nuevo Peso
Mexican Peso Crisis
Even though a real decline in GDP of -6.22% in 1995 caused Mexico’s economy to stagnate it has been able to rebound via improving economic conditions in the United States.

Current Market Economy
2012: Economy grew by 3.9%
2013 Forecast to drop down to 3.2%
Mexico benefits from Exports due to:
Weak peso
Rising labor cost in China
Market analyst predict Growth is expected to average 3.8% per year in 2015–17

Monetary Unit
Mexican Peso
Exchange Rate: 12.80 pesos = $1

The flow of people has skyrocketed because of the bilateral relationship with the US.
Over 4 million Mexican citizens have headed north in the last decade, while over a million U.S. citizens have migrated south, forming the largest nonmilitary community of American expatriates in the world (O’Neil).

"The Beginning"
Mexican culture dates back to the Mayan & Aztec Indians
Their empires were destroyed by Spanish conquistadors, ruled by the Spanish for nearly 300 years
Mexico came under colonial rule in 1521
"El grito de dolores" which was delivered on 1810 by Father Mighel Hidalgo, was a very important speech that issued a call for independence.
Mexico achieved independence in 1821.
Trompenaars Analysis
Upon arrival in Mexico, business travelers must complete and submit the Forma Migratoria Multiple (FMM) authorizing the conduct of business, but not employment, for a 30-day period. Keep this form in a safe location, Mexican immigration agents and federal police may ask for proof of legal status in Mexico or you may be detained by police.

The major types of Mexican employment visa categories are as follows:
A) FM-2 Visa - For foreigners who have family ties to Mexico or have work in the country over 5 years;
B) FM-3 Visa- For foreigners who will be paid locally, import household goods or transfer to Mexico with family members.
HR Laws
The federal Labor Law of Mexico sets forth a maximum of 48 hours per week of work without going overtime. Even so, most companies only run the work week at 40 to 45 hours
For every 6 days of work ( Monday through Saturday ), employees are entitled to one day of rest with full pay. Therefore, when hiring in Mexico please keep in mind that you are hiring per week and not per day, when deciding on the salary
The employer should comply with the Mexican Institute of Social Security (medical care). If not, then he will be liable for the medical care and will also still owe Social Security.
Employment-at will does not exist; Mexican labor law identifies “justified causes” for dismissal
In 1994, Mexico became a full member of the North American Free Trade Agreement
(NAFTA), joining the United States and
Achievement vs. Ascription: Mexico status depends on performance and accomplishment. Titles are used when relevant. Mexican culture is high on the achievement dimension. People from such cultural dimensions have a
tendency to prefer high status, are self-oriented,
not following any universal pattern of rules.
Individualism versus collectivism: Trompenaars study revealed Mexico as an individualistic nation; contrary to Hofstede
Neutral vs. Emotional: Mexico is a high-emotion country.
Time Orientation: time is considered to be flexible, relaxed and circular; therefore unlimited. Punctuality is not expected between Mexicans (Its acceptable to be 30mins late), but it is for foreigners
Power-Distance (PDI): Higher than other Latin neighbors (Rank 81), versus an average of 70.
Higher level of inequality of power and wealth within the society.
Uncertainty-Avoidance (UAI): Mexico's highest dimension is UAI (82), indicating the
society’s low level of tolerance for uncertainty
Collectivism vs. Individualism (IDV):
Low Individualism (
IDV) ranking (30), slightly higher than other Latin countries with an average 21.
Masculinity (MAS): 2nd highest Masculinity (MAS) ranking in Latin America (69). This indicates
higher degree of gender differentiation of roles.
A country rich in history, tradition and culture, Mexico is made up of 31 states and one federal district. It is the 3rd largest country in Latin America and has the largest population—more than 100 million—making it the home of more Spanish speakers than any other nation in the world.
Spanish is the official national language. However, another 60 indigenous languages are still spoken in Mexico
According to Forbes Global 2000- list 2013 http://www.economywatch.com/companies/forbes-list/mexico.html
There are large labor unions existing in Mexico.
Collective labor contracts are signed between the employer's representative and the representative of the labor union.
Labor union collective contracts are reviewed every two years.
A labor union is permitted in a place of employment provided that at least 20% of the employees belong to it.
The registry process is slow and complicated.
The Mexican Federal Social Security system (IMSS) is funded by a mandatory charge paid by the employer, calculated on the salary paid to the employees. This money is to create social security hospitals and staff them, to provide full medical coverage to employees.

Employer required to make contributions to:
(IMSS), the Living Quarters Fund (INFONAVIT) and the Retirement Savings System (SAR).
Vacations, vacation premiums, and year end bonuses.

These benefits represent an average of 29% of the salary that is paid. Thus,
the salary is 129% of what you state as the base salary
Federal Laws
Federal labor law (Ley Federal de Trabajo) passed in 1931. It provides detailed employment guidance on:
• Minimum wages.
• Working hours per day.
• Vacations.
• Employee profit sharing.
• Christmas bonus (aguinaldo).
• Social security, housing program, retirement.
• Equal pay for men and women.
• Collective bargaining regulations.
Secretariat of Labor and Social Welfare
The STPS stands for Secretaría del Trabajo y Previsión Social (Secretariat of Labor and Social Welfare),
Responsible for the performance of faculties attributed by the Organic Law of the Federal Public Administration, the Federal Labor Law, other laws and trades, as well as regulations, decrees, agreements and orders from the President of the Republic.
Promotes investments in a more competitive economy that foments labor relations based on productivity; the conciliation of interests between the factors of the production to obtain labor, and the legality to make be worth the law, mainly being about social forecast, labor inclusion and fairness of sort.

Legal Work Age
According to the STPS the minimum established age to legally work in Mexico is 14 years old (Article 123 of The National Constitution of Mexico). People older than 14 and younger than 16 are allow to work up to 6 hour per day.
Unemployment Rate
The unemployment rate was 5.1% during may 2013.

This percentage made
Mexico the 3rd country with the lowest unemployment rate
among the nations that conform the Organization for Economic Co-operation and Development (OECD). After Japan (4.1%) and Austria (4.7%).

Imports - Exports
Trade has tripled, and Mexico has become the United States' 3rd-largest commercial partner (O’Neil).
Business Cultural Etiquette
Meeting and Greeting:
Shake hands between man.
Only shake hands with a woman if she extends her hand first.
Physical contact is essential to gaining people's trust and understanding
Little things count. Not saying good-bye, for example, may well offend and affect your relationship to a much greater extent.
Gift giving is not always a necessity when doing business in Mexico, however, they are appreciated.
Flowers should always be given when visiting a Mexican home.
Exports: $32.20 Million (July 2013)
Manufactured goods, oil, oil products, silver, fruits, vegetables, coffee, and cotton.

Imports: $33.65 Million (July 2013)
Metalworking machines, steel mill products, agricultural machinery, electrical equipment, car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts.
Corporate Etiquette
Corporate Culture:
Punctuality is expected of foreign businesspeople. Your Mexican counterpart may be late or keep you waiting.
Spanish is the language of business. You may need to hire an interpreter
Meet with top executives first.
Negotiations move slowly. Be patient.
Deal-making almost never occurs over the phone (and rarely by letter). Mexicans prefer to do business in person.
Be persistent! Don't give up if you don't receive a response to your phone calls or letters right away or if your meetings are continually postponed or canceled.
Staffing Practices
Extensive personal and professional information is required to be hired
Personal referrals.
Succession planning (for middle and upper-level management).
Psychometric tests.
Employment fairs.

E-recruitment is generally considered isolating and unfriendly in the Mexican work culture. Mexican HR directors have expressed feelings of alienation and power loss with e-recruitment process.

The official age of retirement in Mexico depends on the retirement plan of the employee.
60 - 65 years old as long as they complete the payment of 1250 weeks of contributions. However due to most Mexicans do no make it at the official age, the effective age of retirement is 69 for women and 72 for men.
Hofstede's Analysis
Women in Business
Women should prepare for some difficulty when doing business in Mexico.
Talk and behavior considered sexist and inappropriate in the United States may well have to be endured in Mexico.
Mexico is often viewed as a 'machismo' culture where a strong separation is made between the roles of men and women, visiting female executives will encounter few if any problems when doing business with Mexican males
Mexican men, business colleagues included, will pay foreign businesswomen many compliments and may even be flirtatious.
Foreign businesswomen should not invite Mexican businessmen to dinner unless their spouses also come along.

Training Practices
Employees generally receive two weeks of training per year.
Training is mandated by the federal law, and there are fines for non-compliance.
Several kinds of training are offered:
Total quality management training (Japanese methods of kanban, kaizen, zero defects).
Technical training.
Management training.
Corporate virtual universities exist to promote continuous learning and education.

Compensation & Benefits
Mid- to large-size companies usually offer
Health care.
Tuition for children’s private schools.
Food coupons.
Mortgage credit.
Employer-sponsored saving fund.

Large companies to their executives:
Company car.
Gym membership.
Club memberships.

Maternity Benefits:
Women receive 12 weeks paid maternity leave.
Two 30-minute daily breaks are given for nursing mothers after they return to work.

Would You Accept a Position in Mexico???
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