Ultimately, moves closer toward a manufacturing orientation since

Ultimately,
expanding the printing company into Mexico could result in increased profits
and supply through decreased wage, production, and fringe benefit costs. If the
capital is available to properly expand and adhere to the societal expectations
for businesses within Mexico, there is no reason why an expansion would not be
beneficial to the printing company as well as the foreign market. Based on my
analysis of the Mexican markets and economic outlook, the printing company
would certainly benefit from increasing their international presence to include
the Mexican market.

However,
it is possible and potentially quite lucrative if corporations do their due
diligence in educating themselves. First, the amount of capital needed must be
a top priority. Without enough capital to bribe the proper officials, a
corporation could find themselves with a building but no business license to
perform work, or a business license to perform work but no permit to build a
factory or office building. Also, as previously pointed out, hiring employees
in Mexico is quite costly. Economic integration and funding are also important
to the success of such ventures. Thankfully, funding should not be an issue as
Mexico’s financial sector is growing and open to foreign investment and
participation allowing for additional expansion funding to be acquired if needed,
and, since Mexico participates in NAFTA and follows a similar economic style to
that of the United States, integrating the current economic system with the new
one should not present too many difficulties.

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Mexico’s
economy is currently positioned at $2.2 trillion and moves closer toward a
manufacturing orientation since the North American Free Trade Agreement (NAFTA)
became enforced in 1994. “Since 2013, Mexico’s economic growth has averaged 2%
annually, falling short of private-sector expectations…Growth is predicted to
remain below potential given falling oil production, weak oil prices,
structural issues such as low productivity, high inequality, a large informal
sector employing over half of the workforce, weak rule of law, and corruption.”
(Mexico Economy, 2017) It’s a volatile economy to enter without proper
education, understanding of culture and government corruption, and a large
amount of working capital.

The
current corporate tax rate is set at 30 percent, and, more importantly, there
are no minimum capital requirements for launching a business. However, the
completion of necessary licensing requirements continues to be costly deterring
many smaller businesses. Also, strict labor laws in Mexico provide incentives
to small businesses to operate outside of their formal sector, but this makes
hiring and firing employees quite expensive. Trade remains an important factor
in Mexico’s economy with the value of their combined imports and exports
totaling 73 percent of their GDP, and, on average, the applied tariff rate is 5
percent. Their financial sector is open and competitive as their banking
systems remain well capitalized and foreign participation continues to
increase.

Mexico’s
current economy is relatively healthy and enjoys the use of many free-trade
agreements. Though there are several positive reasons to attempt entry into
Mexico’s market, the government corruption and increase in drug-related crimes
poses a substantial risk to foreign corporations that aren’t familiar with
“greasing palms” to get their permits approved or investments accepted. “In
2016, Freedom House reported that property rights in Mexico are protected by a
modern legal framework but that the weakness of the judicial system, frequent
solicitation of bribes by bureaucrats and officials, widespread impunity, and
the high incidences of extortion harm security of property for many individuals
and business.” (Mexico, 2017)

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