INB 355.

2
Exporting Mum Water Bottles to Mexico

Instructor: Kashfah M. Khan Chowdhury

Prepared by:
NAMES

IDs

Hasin Tazwal Khan

113 0924 030

Abir Ahmed

123 0409 030

Alvee Musharrat Hridita

131 0146 030

Nahiyan Fayza

131 0272 030

Md. Tausif Rashid

131 0254 630

Fahim Mosabbir

131 0282 030

Progya Paromita Khan

141 0740 030

North South University

Letter of Transmittal
March 30, 2016
Kashfah Khan Chowdhury
Lecturer
Department of Marketing & International Business
North South University

Subject: Submission of project report.

Dear Maam,
The purpose of this letter, as stated in the subject is the submission of this project report, on the
topic Exporting Mum Water Bottles to Mexico as given in class as part of the requirement for
the completion of the INB 355 course.

We would also like to take this opportunity to put forward our most heartfelt thanks for giving
this opportunity to create this project report and in turn have one of the most memorable
experiences of our lives. If any assistance is required in the comprehension of this report, please
do not hesitate to contact us.

Sincerely yours,
NAMES

IDs

Hasin Tazwal Khan

113 0924 030

Abir Ahmed

123 0409 030

Alvee Musharrat Hridita

131 0146 030

Nahiyan Fayza

131 0272 030

Md. Tausif Rashid

131 0254 630

Fahim Mosabbir

131 0282 030

Progya Paromita Khan

141 0740 030

Signature

Table of Contents
Political Environment Analysis:...................................................................................................1
Political system and structure......................................................................................................1
Stability of Government...............................................................................................................1
Future Political Risks...................................................................................................................2
Bribery and corruption risk/index................................................................................................2
Economic and Business Environment Analysis...........................................................................2
Demographics..............................................................................................................................2
Per Capita Income Level and Wealth Distribution.......................................................................4
Major Exports and Trading Partners............................................................................................6
Business Environment..................................................................................................................7
Inflation Level and Currency Exchange Rates............................................................................8
Education, Literacy Level, Availability of Skilled Labor and Labor Costs.................................9
Membership in Regional Economic and Trading Blocs.............................................................11
Legal System:.............................................................................................................................11
Market Opportunity Analysis.....................................................................................................12
Market Prospect.........................................................................................................................12
Current Product Usage Habit.....................................................................................................12
Competitive Products in the Market..........................................................................................13
Retail Distribution Channels......................................................................................................13
Major Advertisement media used..............................................................................................14
Total size of the Market and Market Potential...........................................................................15
Target Market and Demographics..............................................................................................16
Cultural Insights Summary:.......................................................................................................17
Cultural Dimension of doing business in the country:.............................................................19
Major religions, ethnic make-up and languages:.......................................................................19
Major Sports, recreation:............................................................................................................20
Beliefs, values, customs and behaviors, role of family:.............................................................21
Unique business customs, etiquette and practices:....................................................................21
Unique aspect of oral and non-verbal communication:.............................................................24
Hofstedes model of Cultural Dimension:.................................................................................25

Market Entry Mode:...................................................................................................................26

Direct Exporting:........................................................................................................................26
Entry Strategies of other MNCs:................................................................................................28
Summary:.....................................................................................................................................29
Interesting Facts:........................................................................................................................29
Key Challenges:.........................................................................................................................29
Bibliography.................................................................................................................................31

Executive Summary:
In this team project we performed a detailed Country Analysis and Market Entry strategy for
expanding the business of Mum water bottles to Mexico. Mexico is the highest consumer of
bottled water. This is the main reason we chose to export Mum water bottle to Mexico. Mexico is
the 15th largest export economy in the world and the 23rd most complex economy according to
the Economic Complexity Index (ECI). Mexican authorities have pursued an active de-regulation
policy and compliance with regulatory and competition impact is required for any new
government legislation. These measures have led to a substantial improvement in general
business conditions and ease of doing business in Mexico. The inflation rate was 4.65% in
March, 2016. It was the biggest increase since last October, 2015. US Dollar to Mexican Peso
Exchange Rate is at a current level of 17.76. Literacy level is satisfactory in Mexico. Mexico
runs by a federal republic under a centralized government. Mexico has a presidential system
with strong and independent legislative, executive and judicial branches. The executive branch is
being ruled by the president and must be ruled according to law. The government of Mexico is
relatively weak in comparison to other countries. One of the future risks to look out for would be
to see if the drug related violence spikes between the drug cartels and the government. A change
in the central banks interest rate policy is another risk associated with doing business in Mexico.

Mexicans usage of bottled water comes in both individual small bottles which is 1.5 liters or less
and in garrafones which are large, 20-liter bottles. In 2008 bottled water sales totaled a whopping
$5.8 billion. Packaged water is relied as the only safe source of drinking water. Most households
in Mexico buys bottled water in large 20 liter garraphones. This fact proves that tap water has
been replaced by privately owned bottled water. According to Geert Hostedes Cultural
dimensions Mexico has an intermediate score of 81 in power distance. It scores 30 in
individualism, 69 in masculinity and 82 in uncertainty avoidance index.

The method to enter the Mexican market for Mum will be Direct Exporting. The export
business will be handled by the parent company which is Partex Beverages Ltd. This simply
indicates that no production facilities in Mexico.

Political Environment Analysis:

Political system and structure: The Constitution of 1971 which emerged from the Mexican
Revolution is the origin of the current political system in Mexico. The Constitution captures the
ideals of the Revolution and also reflects three centuries of Spanish Colonial rule. The
Constitution is revolutionary in that it aggressively protects the rights of workers, peasants and
their organization. Mexico runs by a federal republic under a centralized government. Mexico
has a presidential system with strong and independent legislative, executive and judicial
branches. The executive branch is being ruled by the president and must be ruled according to
law. The president is elected by majority votes for a six year term. The President can serve only
one term as there is no re-election rule. The President assigns the Sectaries of the state who are in
charge of environment, education, commerce, social development, energy, labor etc. The
Legislative branch is in charge of making laws and discussing the countries problem with other
countries. This branch is called the Congress of the Union and is made up of the Chamber of
Representatives and the Chamber of Senate, whose duty is to discuss and pass laws. The Judicial
branch is divided into federal and state systems. Mexicos highest court, Supreme Court of
Justice, consists of twenty-one magistrates and five auxiliary judges, all appointed by the
president and confirmed by the Senate or the Permanent Committee.

Stability of Government: The government of Mexico is relatively weak in comparison to other

countries. In recent time the political system in Mexico is stable but the governments position is
still weak. There has been seen a lot of disorderly transfers of power. Executive authority is used
excessively to keep things in control.
Risk category
Political Stability risk

Rating
B

Comments
Political System is stable, but
governments position is weak.

Source: www.pwc.com/ca/private

The above chart is prepared by a company called PricewaterhouseCoopers (PwC) which

provides industry focused assurance, advisory and tax services for public, private and
government clients. They also graded it with a B from a scale of A to D.

Future Political Risks: The Mexican drug cartels have always been in war with the government
and with each other. One of the future risks to look out for would be to see if the drug related
violence spikes. A change in the central banks interest rate policy is another risk associated with
doing business in Mexico.

Bribery and corruption risk/index: Bribery and corruption are the major risk factors for
Mexico. Mexico was ranked 99th of 144 countries in the Irregular Payments and Bribes
indicator of the 2014-2015 WEF Global Competitiveness Index (Overseas Business Risk Mexico). Mexico was also ranked 95 out of 167 countries in 2015 by Transparency International,
having a CPI of 35. A CPI of 35 is below the moderate limit and indicates that there are high
levels of corruption in the country.
Country
Mexico
Source: Transparency International

Rank
95 out of 167

CPI
35

Economic and Business Environment Analysis:

Demographics:
Toward the end to 20th century there was a high population growth in Mexico. Although,
according to researchers, the population growth is decreasing. In fact, it is expected that the
working age population will begin to decrease by 2030. (Molina, 2008)
The population of the country is 120,286,655 with a growth rate of 1.21%. The distribution of
population is as follows:

Percentage
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

40.40%
27.90%
18.10%
7.00%

6.60%

Percentage

(Mexico Demographics Profile 2014, 2015)

(Mexico Demographics Profile 2014, 2015)

With an annual rate of 1.49% urbanization, population in cities has been increasing each year

Urban population was 99,244,722

and rural population was 25,990,865
(Urban /rural division of countries
for the years 2015 and 2025, n.d.).

(Mexico Demographics Profile 2014, 2015).

Urban vs Rural

21%

79%

The populations of major cities are as follows:

Mexico City - 20.446 million;

Guadalajara - 4.525 million
Monterrey - 4.213 million
Puebla - 2.335 million
Tijuana - 1.82 million
Toluca de Lerdo- 1.748 million

Per Capita Income Level and Wealth Distribution:

Mexico has improved a lot in terms of quality of life, education, jobs and many other sectors.
This fact is supported by the increase in the per capita income level over the years.

GDP per capita in US$

10,400.00
10,200.00
10,000.00
9,800.00
9,600.00
9,400.00
9,200.00
2011

2012

2013

2014

GDP per capita

(GDP per capita (current US$))

Even though standard of living has improved, the richest 10% of Mexicans earn 30 1/2 times as
much as the poorest 10%. This sort of inequality still exists (Woody, 2015). The graph below
shows each states contribution to GDP (blue bars) and their share of Mexicos total population
(red bars).

(RR, 2011)

Major Exports and Trading Partners:

Mexico is the 15th largest export economy in the world and the 23rd most complex economy
according to the Economic Complexity Index (ECI). In 2013, Mexico exported $379B and
imported $355B, resulting in a positive trade balance of $24.3B (OEC).
Top exports of Mexico are:

Crude Petroleum
Cars
Vehicle Parts

Top export destinations are

The United States

Canada
Spain
Brazil
7

Delivery Trucks
Computers

Business Environment:
Trade liberalization, an extensive Free Trade Agreements network and the increasing exposure to
the world economy have led Mexico to increasingly embrace international standards and
regulations in most areas of economic activity. In addition, Mexican authorities have pursued an
active de-regulation policy and require that any new government legislation complies with a
regulatory and competition impact assessment. These measures have led to a substantial
improvement in general business conditions and ease of doing business in Mexico. According to
the latest Doing Business 2014 publication by the World Bank, Mexico ranked 38 (out of 183
countries) in the overall Ease of Doing Business Index, a considerably higher position than
other BRIC countries (Brazil, Russia, India and China) (Doing Business in Mexico, 2014).

Then we try to analyze the market with the help of porters five forces. Porter's five forces
analysis is a framework that attempts to analyze the level of competition within an industry and
business strategy development.
Porter five forces:
Threat of new entrant:
Threat of new entrant is high as Mexico is the worlds largest consumer of bottled water. Thus
more and more new firms will try to take advantage of this lucrative market. However the entry
barrier in this industry is high, as new firms will have to accumulate a large capital to enter this
highly competitive market. The economies of scale enjoyed by large company like Coca-Cola,
Pepsi and DANONE is very high.

Competitive rivalry:

Competitive rivalry is also very high in the bottled water industry in Mexico as the number of
competitors is very high. Renowned local and international brands like Coca-Cola, Pepsico,
Danone, Peafiel and Topo Chico provide high quality which further increases the competition.
Since these companies are well established in Mexico the consumers are loyal towards those
brands and prefer to buy their products.
Threat of substitution:
Since there are many companies producing bottled water the threat of substitution is also very
high. There are many brands residing in the industry and their performance in the market is very
good. Thus the chance of Mum getting substituted by brands like Bonafont, Ceil or Epura is
high.
Suppliers power:
Due to having multiple suppliers of bottled water in Mexico the competition is high. As a result
the bargaining power of supplier is low. More competition means the suppliers has to please their
consumer much more than being able to dominate them.
Buyers power:
Since the market is competitive the suppliers have to cater their strategies to meet the demands
and preferences of the consumer. This makes the buyers power high. Since there are ample
bottled water brands in the market the buyers can easily switch to other brands if they do not like
the price or quality that the supplier is offering.

Inflation Level and Currency Exchange Rates:

The inflation rate was 4.65% in March, 2016 after crossing the $4 target ceiling of the official
target range in February. It was the biggest increase since last October, 2015. The consumer
prices rose to 4.25% which was again the biggest increase since November, 2015 (Mexico
Inflation Rate, 2016).

US Dollar to Mexican Peso Exchange Rate is at a current level of 17.76 and up from 15.18 one
year ago. This is a change of 16.97% from one year ago (US Dollar to Mexican Peso Exchange
Rate).

Education, Literacy Level, Availability of Skilled Labor and Labor Costs:

5.1% of GDP is spent in education. Literacy level is satisfactory in Mexico. In terms of
definition, literacy in Mexico means age 15 and above can read and write. 93.4% of the total
population is considered to be literate.

10

Percentage
0.95

94.80%

0.95
0.94
0.94
0.93
0.93

92.30%

0.92
0.92
0.91
Male

Female
Percentage

There is 52.81 million population in the labor force. The unemployment rate may be 4.5% and
underemployment may be as high as 25%

Percentage
70.00%
61.90%

60.00%
50.00%
40.00%
30.00%
20.00%

24.10%

13.40%

10.00%
0.00%
Agriculture

Industry

Services

Percentage

11

(The World Factbook).

Membership in Regional Economic and Trading Blocs:
World Trade Blocs play a central role in international trade negotiations. If world trade talks fail,
many observers believe regional groupings will play an even bigger role. Mexico is a member of

APEC - The Asia-Pacific

Economic Cooperation forum is bordering the Pacific Ocean who have pledged to
facilitate free trade.

12

G20 - Standing firm in

insisting that rich countries make concessions on agriculture before there will be any final
agreement on services or reductions in tariffs on manufactured goods.

13

NAFTA - The United States

has linked with Canada and Mexico to form a free trade zone, the North American Free
Trade Agreement (A Guide to World Trade Blocs, 2016).

Legal System:
Mexico is a civil law country, meaning that the Mexican system does not rely on stare decisis or
considers case law as binding precedent. As a result, the Mexican intellectual property rights are
very strongly practiced. Mexican law recognizes only intellectual property that has industrial
uses. For example, Mexico recognizes and protects patents, utility models, industrial design,
trademark, trade secret, slogan, trade name, and origin identification (Understanding Mexicos
Intellectual Property Laws, 2014).

Consideration is not required while enforcing a contract but witnesses are vital in Mexico and
public registration of contracts so that third parties to the contract will be legally bound is a
peculiarity of Mexican law. Only a formal agreement needs to exist between the parties (Mexico
Contract Law).
14

Market Opportunity Analysis:

Market Prospect:
Mexico is the worlds largest consumer of bottled water. The Mexicans consumes about 13% of
all bottled water sold in the world. It surpassed the U.S. to become the worlds largest market for
bottled water. The bottled water market in Mexico has grown from 6.5 billion dollars in 2009 to
10.4 billion in 2013. Analysts have projected that by 2016 Mexican bottled-water sales will
grow to $13 billion.

Therefore the market for bottled water in Mexico is very lucrative. Thus Bottled water is a highly
profitable business. Mum being a very efficient company has great prospect of doing business in
Mexico. Since Mum is a well-established company and has been in this industry for a very long
time can take advantage of this dynamic industry.

The reason why Mexico has such a high demand for bottled water is the lack of confidence that
Mexicans have in the purity of public water supplies. They do not trust the city water systems as
they have proved to be very inefficient. Apart from that Mexicos warm climate is another
reason why this market is the worlds largest for bottled water.

Current Product Usage Habit:

Mexicans usage of bottled water comes in both individual small bottles which is 1.5 liters or less
and in garrafones which are large, 20-liter bottles. Since the water supply of Mexico is not up to
the standard local people does not consume water directly from tap lines but prefer to consume
15

bottled water. Thus both small and large quantity of water in the form of small bottles and
garrafones are consumed. Garrafones or 10- to 20-liter jugs of water are delivered to the homes
in Mexico and by volume, 85% of bottled water in Mexico is sold in this manner. Tourists also
consume the bottled waters as direct consumption of water from taps can be dangerous for their
health. Even in the restaurants in Mexico bottled water are served.

Competitive Products in the Market:

In Mexico vigorous publicity and advertising campaigns are carried out by bottled water
companies. The market is mainly dominated and Mums biggest competitors are the three foreign
firms: Bonafontby Danone (France), Ceil by Coca-Cola (USA) and Epura by PepsiCo (USA). In
addition to that local brands like Peafiel and Topo Chico are also tough contenders. Mum has to
come up with equally vigorous or more advertising and publicity campaign to create its identity
in the market. Mum needs to figure out how they are different from the other brands, how they
will be providing better quality product at a lower price and capture the market.

Retail Distribution Channels:

One of the biggest sectors in the Mexican economy is retailing. It accounts for 7 percent of GDP.
This sector also employs 10 percent of the labor force. It is one of the sectors that lead to
Mexicos economic growth. Food and beverage is the largest category of retailing In Mexico.
There are both modern retailing stores and traditional or informal retail stores. Modern retailers
like Walmart, Soriana, FEMSA, Chedraui, and Comercial Mexicana do operate in Mexico and
they account for about 42 percent of the food and beverage market. Modern retailers also account
for the majority of food and beverage retail revenue. In addition to that the food and beverage
stores range from hypermarkets to stalls at public markets and also street fairs. The percentages
of retailing happening through modern retailing is rising day by day and are replacing city
markets and mom & pop groceries. There are 36 supermarket chains that operate in Mexico. For
Some chains their coverage is limited to specific regions for others their coverage is the entire
nation. This growth in modern retailing will offer plenty of opportunity for food and beverage
16

manufacturers. Mum needs to get their hands on the large supermarkets to get space on their
shelves and at the same time should contact the local, traditional small stores as well, as they are
too rising in Mexico day by day. In this way Mum sells their bottles at a large distribution
channel and as a result Mums water bottles can reach many consumers.

However there are certain challenges that Mum might face with Mexicos distribution channel.
The distribution channel has Complex regulatory environment. The regulations keep on changing
and the document and product requirements are very complex. Understanding these requirements
become very difficult for exporters thus they need to seek help and advice from local agent. The
Mexican distribution system is not only just complex, its also fragmented. Thus these factors
will make the distribution system a bit challenging for Mum.

Major Advertisement media used:

The most widely used forms of advertisement media in Mexico are television, pay TV services,
Mexican radio, newspapers, magazines and the internet. Major players are preparing to offer
their customers a range of media and communication services with the advantage of one supplier
and one bill as the communications and media markets in Mexico are beginning to open up.

Television in Mexico: Like most of the countries in the world television is a huge advertising
media in Mexico also. Various shows including news, soap operas, sports, game shows, reality
shows, talk and gossip shows, as well as an abundance of U.S. programs dubbed into Spanish are
available there.

At present, cable is the most common restricted T.V service in Mexico. Satellite T.V service is
also available in Mexico but is less popular amongst locals. People who usually visit the country
mostly use satellite T.V.

17

Radio in Mexico: Mexican radio offers a substantial assortment of programming, from news,
television shows, rock and popular music in English and Spanish, territorial Mexican music,
classical music, and so forth.

Newspapers in Mexico: Circulation of Mexican newspapers is small compared to more

developed countries, and most don't make a considerable measure of commotion about their real
readership numbers.

Magazines in Mexico: From weekly news magazines to monthly fashion and other specialized
publications, there are a number of interesting publications. In spite of these relatively few
people read magazines in Mexico.

Access to internet in Mexico: Internet is readily available in most parts of Mexico, with about 5
million active Internet accounts in the country (The Media in Mexico). An open internet policy
is operated by the government of Mexico where access to any internet sites or internet companies
has not been censored to date for any sort of political reasons.

Total size of the Market and Market Potential:

The size of the bottled water market in Mexico for the year 2012 has been shown in the below
graph. It also provides a forecast of the year 2015. According to Statista, The bottled water
market in Mexico is projected to grow to 13 billion U.S. dollars by 2015; making it the worlds
largest. Mexico also had the biggest per capita bottled water consumption worldwide in 2014.
(Bottled water: market size in Mexico based on sales 2012 and 2015)

18

Worlds largest consumers of bottled water are Mexicans, both in individual small bottles which
are 1.5 liters or less and in garrafone which are large 20 liter bottles. In 2008 sales totaled a
whopping $5.8 billion. Water conveyance in the nation has been broadly privatized by the
disassembling of publicly managed municipal water infrastructure and packaged water being
relied as the only safe source of drinking water. Most households in Mexico buys bottled water
in large 20 liter garraphones. This fact proves that tap
water has been replaced by privately owned bottled
water. This is why Mum drinking water has a good
potential in the Mexican market for bottled water.

Target Market and Demographics:

Since our product is a necessary item for day to day
consumption we will be targeting both male and
Typical 20 Liter garrafone

19

female consumers. For a product like bottled water, gender can be disregarded and hence the
profit making opportunity of the company increases.

Studies suggest that Mexicans with income of $60,000 or more are 35% more likely to purchase
bottled water (Salazar). Researchers from the Medical College of Wisconsin found that Latinos
and African Americans are more likely to give bottled water to their children and spend up to
twice as much of their household income on bottled water (Lee, 2011). So these groups are more
likely to purchase our bottled water.

The older and the younger generations are other demographics that are relative to the
consumption of bottled water. The older generations are more traditional in thinking. They did
not grow up with the bottled water concept so they seek a more natural source of water such as
tap water. Younger generations on the other hand have been born into the culture of bottled
water. They are more active in their day to day activities, know the importance of drinking water
and seek a more convenient and nutrition filled option for their overall health benefits.

Cultural Insights Summary:

The culture of Mexico has undergone a tremendous transformation over the past few decades and
it varies widely throughout the country. Many Mexicans live in cities, but smaller rural
communities still play a strong role in defining the countrys collective vibrant community.

Mexico is dominated by the religion Roman Catholicism and Bangladeshs main religion is
Islam. Muslims who are the followers of Islam tend to keep in mind that the products they are
exporting or importing are Halal meaning it is prescribed by Muslim law. So we chose to
introduce a product where we do not need to be concerned about this factor. The official
20

languages in both countries are different but English is widely used in Mexico and that will play
in our advantage.

Both Mexico and Bangladesh have passion for sports. It is this feature that we are willing to
exploit as we all know that drinking water during and after sports is highly recommended and
MUM will provide that ease to carry the bottle without any trouble.

However, the Mexican business etiquettes and Bangladeshi business etiquettes differ quite a lot.
Men and women function differently in both the countries, for example, in Mexico women will
shake hands with both men and women but in Bangladesh women will only really be met within
business contexts and even so, it is best to wait to see if a hand is extended before doing so.
Therefore, people sent to Mexico, men or women, must be trained and have full knowledge
about their business culture and ethics. Communication is a big part of conducting business. The
communication etiquettes are similar in both the countries. Another similarity between the
countries is how business meeting are conducted. It is quite flexible in Mexico as well as
Bangladesh, although, due to traffic problems, meetings are held a bit more flexibly in
Bangladesh. So while attending a meeting, the participants have to keep in mind the fact that
Mexicans are not flexible by the same amount Bangladeshis are in business meetings.
Mexicos communication process which is done orally is quite parallel with that of Bangladeshs
oral communication process, preferring to talk about in details about personal lives in business
place and avoiding topics such as religion and politics. So a representor from Bangladesh will
feel comfortable administering his duties in Mexico. There are very few differences in nonverbal communication between these two countries. The only point that one has to keep in mind
is that the way males and females interact in Bangladesh is not the same in Mexico. Mexicans
put less emphasis on gender differences. So sending a female to do business without proper
training will be inefficient.

21

Figure: Comparison of Geert-Hofstedes Cultural Dimensions

As we can see there is quite a lot of similarities between Bangladesh and Mexicos Hofstede
cultural dimensions. This clearly indicates there is a high probability of getting profitable results
by doing business in Mexico from Bangladesh.
While the globalization of businesses may carry us closer to universal standards for work, there
is a clear and present need for organizations to acclimatize to diversity. By incorporating cultural
aspects into everyday business, companies will have the competitive advantage to become
successful global players.

Cultural Dimension of doing business in the country:

Major religions, ethnic make-up and languages:
Roman Catholicism is the dominant religion in Mexico. About 82.7% of the people follow this
religion. About 8% of the people are Protestant, Pentecostal etc. 4.7% of the people are
irreligious, 2.7% are unspecified and 1.9% follows other religions like Jews, Buddhists, and
Hindus etc.

22

Irreligious; 5% Unspecified; 3% Jewism, Budhism and Hindu; 2%

Protestant, Pentocostal etc.; 8%

Roman Catholic ; 83%

Roman Catholic

Protestant, Pentocostal etc.

Irreligious

Unspecified

Jewism, Budhism and Hindu

The largest Ethnic group in Mexico, which is 60% of the country, is the Mestizo who is a
mixture of Spanish and Indian ancestry. 30% of the population is Amerindian, 9% white and 1%
other.
Spanish is the official language of Mexico. Over 100 Indian languages are also spoken all over
the country. English is widely understood by educated people and in urban areas. Some other
most widely spoken language in Mexico are Nahuatl, which has almost 1.4 million speakers,
Yucatec Maya, which is spoken by over three quarters of a million people, and Mixtec, whose
speakers amount to about half a million.

Major Sports, recreation:

The major sport in Mexico is association football, followed by boxing. Mexicos national sport is
Charreria. Baseball is the most popular sport in the Northwest and Southeast regions. Basketball
and bullfighting are also highly popular and appreciated.
The recreation of the people of Mexico varies depending on money. People usually prefer
staying at home and watching television. They also listen to varieties of Mexican music
including pop and foreign music. They also like to watch movies.
23

Youngsters usually play video games, hang out with their friends, attend parties or play outdoor
games like soccer or basketball.
Many people prefer relaxing to parks or plazas during their free time. Those who can afford
prefervisiting their relatives or friends or traveling to different places.

Beliefs, values, customs and behaviors, role of family:

Mexican people put a high value on hierarchy and structure in business and family matters. They
are very much conscious about their responsibilities to immediate family members and extended
family such as cousins. There is strong connection among the family members. A part of values
and customs of the country is to make the visitors feel comfortable. For Mexicans, family comes
first and their profession comes second. Men are the bread winner and the women take care of
the household. Mexicans prefer to settle down in one place and be near family. Generally, ideas
are regarding masculinity.
The beliefs, values, customs of the Mexicans match with our culture. But one thing that is
changing in our culture is that today along with men, women are also in the work sector and they
are also contributing for their family.

Unique business customs, etiquette and practices:

The business practices and etiquette of one country doesnt follow the business practices and
etiquette of another country. To do business in one another country the exporting country needs
to have some knowledge about the host country.
In order to do business in Mexico we need to practice or follow some etiquette:
Mexico Behavior:

Men shake hands upon meeting and leaving. They wait for a woman to be the first to
offer her hand.

24

Women may shake hands with men and other women. Many times a woman may pat

another woman shoulder or forearm, or kiss on the cheek.

Conversation takes place at a physical distance. Stepping back may be regarded as
unfriendly.

Punctuality is not rigid because of the emphasis on personal obligations. The best time for

appointments is between 10:00 am and 1:00pm; late afternoon can be a second choice.
The traditional form of business entertaining is business lunches, rather than dinner. It
may last for three to four hours. Lunches are an essential part of business to establish a

personal relationship
Working breakfasts are also popular. It starts between 8:00 or 8:30 am at the hotel and

lasts for two hours at the most.

While giving flowers it should be kept in mind that yellow represents death, red
represents cast spell and white represent lift spells.

Relationship and Communication:

For business success right connection is important.

It is nearly impossible to change the first impression.
The initial meeting is generally with someone of higher stature. So it is important that the

delegates include an upper level executive.

After the initial meeting, the senior executive may not attend the meeting or be visible.
It is important to demonstrate trustworthiness, sincerity and integrity for building

relationship.
Mexicans prefers to know their business partners personal background, family and life
interest.

Business Dress:

Men should wear conservative dark color suit. A white shirt is more formal and should be

worn in case of more formal meetings.

Women should wear a dress, skirt, blouse or classic suit. Basic classic colors are gray,
navy, white and ivory.

Business Meeting Etiquette:

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Business appointments should be made at least two weeks in advance and be reconfirmed

one week before the meeting.

Although Mexican business associates may be up to 30 minutes late but it is better that

the opponent arrives timely for meeting.

Mexican business associates might run behind schedule but the opponent business partner

shouldnt appear to be irritated.

Meetings may be postponed with little advance warning.
Initial meetings are formal.
All writing materials should be available in both English and Spanish.
Agendas are not common. If they are given, they are not always followed.

Business Negotiations:

Since Mexicans are status conscious, an executive must always be in the negotiation

team.
There should be an interpreter if the opponent business associates cannot speak in

Spanish
Several meetings are required to come to an agreement.
Face-to-face meeting is preferred over telephone, letters or e-mail.
One must have patient as negotiation and decisions takes a long time.
Best offer shouldnt be given first as negotiation includes a fair amount of haggling.
An attorney shouldnt be included on the negotiation team

Business cards:

Business cards are exchanged during introduction in a meeting.

While doing business with the Mexicans it is advisable to have one part of the business

card in Spanish.
Business cards should contain both professional and educational qualifications.

Giving gifts:

Giving gifts to business executives is not required. Small items with company logo for
initial visit are appreciated.
Secretaries appreciate gift and gifts should be given on a return basis.
Gifts made of silver shouldnt be given as it is associated with trinkets sold to tourists.

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Unique aspect of oral and non-verbal communication:

Oral Communication: In case of oral conversation, Mexicans are very forthcoming about their
families and private lives; and they expect others to do the same. Mexicans like to know the
process of goods in different countries to compare with theirs, so no one should feel offended to
that. Mexicans prefers avoiding the word No in their conversation and expect the same from
others. While in a conversation with the Mexicans, topics relating to politics, religion, MexicanAmerican war, illegal aliens should be avoided.

Non-verbal Communication: The following key-aspects should be remembered

Men shouldnt put hands in their pocket as this is considered rude.

The O.K. gesture with the thumb and index finger is considered vulgar.
Religious profanity is very offensive in Mexico.
Putting hands on hips signifies that one is making a challenge.
Eye contact is less direct, so looking at others to intently should be avoided.

Hofstedes model of Cultural Dimension:

One of the most famous studies of how culture relates to values in the workplace is Greet
Hofstedes Cultural Dimension. Through Hofstedes cultural dimension we can relate Mexicos
culture with other cultures and see how its going to affect our business.

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Figure: Geert Hofstedes Cultural Dimensions in Mexico

Power Distance: Power distance dimension focuses on the fact that less powerful member of the
organization and institutions consider themselves to be treated unequally and vice-versa.
Mexico has an intermediate score of 81. So Mexico ranks very high on power distance and is a
hierarchical society. It means that members of less powerful positions accept that they are being
treated unequally in case of money and power.
Individualism vs. Collectivism: This dimension focuses between the relationship of the
individuals and his or her fellow members. It focuses on whether peoples self-image is defined
in terms of I or We.
Mexico is considered as a collectivistic society with a score of 30. So this culture prefers
working in groups. In Mexicos culture loyalty is paramount and they over-ride most other
societal rules and regulations. There is strong relationship among the group members.
Masculinity vs. Femininity: This dimension focuses between gender and work roles.

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Mexico experiences a higher degree of gender differentiation roles. This country scores 69 in this
dimension. Significant portion of the society and power structure is being dominated by the
males. Here men and women have specific jobs.
Uncertainty avoidance: This dimension focuses on how the society deals with avoiding risks
that may occur in the future.
Mexico scores 82 in uncertainty avoidance which indicates that the society has a low level of
tolerance for uncertainty. Strict rules, laws, policies, and regulations are being adopted and
implemented in order to minimize or reduce risk. This society prefers to control everything in
order to eliminate or avoid the unexpected and is very risk averse.

Market Entry Mode:

Direct Exporting:
The method to enter the Mexican market for Mum will be Direct Exporting. The export
business will be handled by the parent company which is Partex Beverages Ltd. This simply
indicates that no production facilities in Mexico.
The market size of bottled water is large and growing in Mexico. So the number of units be
exported to Mexico will be a big one. A new department within the domestic structure namely
Export Department will be set up to work for this new market in Mexico. This department will
work along with production management and the sales company in Mexico. Since Mums
biggest competitors in Mexico are also foreign companies with strong backbone Mum has to find
a way to minimize its cost. It can be done with direct exporting. In this method Mum is simply
using its domestic production facilities. The export department will also work with the R&D
department to develop the product if asked by the Sales Company set by Partex in Mexico.

The sales company will be established in Mexico staffed by both Bangladeshi & Mexican
employees for the purpose of marketing goods and proving services regarding customer feedback
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or complain. This is actually an overseas office of Partex Beverages Limited of Bangladesh. In

no way it will be any independent company. A basic job of this office is to receive exported
goods from home and assure custom clearance properly every time a shipment is made. Vital
operations include promoting Mum in the market and establishing a strong supply chain system.
It is important to understand that a big chunk of bottled water sold throughout Mexico is done by
chain super stores. The sales company will work intensively to make sure Mum is available on
the shelves of these super shops within the reach of customers. This sales company will also
work with the local wholesalers to supply bottled water to local groceries. The key to success
will be maintaining very good communication with the export department at home. Sales
company will routinely do market research and send demand forecasts to the export department
at home in order to maintain good balance in the business.

Rationale:
Having said these, the question could arise that why Mum wont go for other entry modes. Well,
Mums biggest competitors will be companies that are from USA and France. For example Cecil
is a concern of world famous Coca-Cola Company. These companies have strong cash flow and
a good experience of how to kick-out new entrants from the market. To stop new entrants these
big companies commonly just drop the price. Now if Mum puts a huge investment, sets up
production facilities, acquisition, and wholly owned subsidiaries then it will be tough for them to
maintain a good cash flow and may not reach at break-even point within a desired timeline.
Eventually Mum will fall behind. To prevent such a scenario direct exporting is considered as the
safest entry mode.

On the other hand, to establish a product with distinction, firms are required to act within the
host countrys market environment. Thats why direct exporting is chosen instead of indirect
exporting.

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Finally, Mum is the leading bottled water sold in Bangladesh that has a very good reputation of
maintaining safety & purity among Bangladeshis. So it has very good prospect of getting a good
market share in Mexico where water safety is a big issue, in a short period of time if it focuses on
safety concerns while promoting the brand. Once that goal is achieved, the company can restructure its entry mode according to the markets demands in the future.

Entry Strategies of other MNCs:

Coca-Cola: Fomento Econmico Mexicano, S.A.B. de C.V. (FEMSA) is the one who
franchises Coca- Cola into Mexican market. Starting from packaging, labeling, marketing all
have been done by their innovative way. Day after day they started to increase the machine line.
They also started to introduce new brand of Coca-Cola.

Coca-cola has been proved very successful in the Mexican market. Mexico is the number one
consumer of coca cola in the world market with an average of 225 liters per person.

Current Scenario: But the sad thing is that its business not going well for some reasons.
One, it has temporarily suspended its operation in the capital of the embattled state of
Gurrero after the following attacks on its employees and trucks.
And the other is the government imposed a 10% tax in the sugary drink which results in
6% dropped in their sales in 2014.

3M: 3M entered into Mexico in 1984. It decided to transfer some of its manufacture to
Ciuadad Juarez and made an agreement with Edumax. In next two year they established
their building and warehouse and started with their medical products and then year after they
started to expand their business.

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From then now on 3M Edumex is successfully running their business in Mexico. 3M

Edumex has obtained the following certifications for quality: ISO 9001, ISO 13485, and TS
16949. At present time, 3M Edumex has on approximately 2,600 employees with 3 buildings
dedicated to manufacturing and one warehouse in El Paso, TX.

Summary:
Interesting Facts:
During our research we came across certain interesting facts about Mexico. Chocolate corn was
introduced to the world by Mexico. The charreria or its English translation that is Rodeo is one
of Mexicos favorite sports. The O.K gesture with the thumb and index finger is considered
vulgar. Mexico is the highest consumers of bottled drinking water. This is the fact that inspired
us to do the project on exporting Mum water bottled in Mexico. All the households in the country
use 20 liter garrafones. These are delivered to all the households.

Key Challenges:
The culture will be a great challenge for us doing business in Mexico since it is very different
from our own. Though large amount of Mexicans speak the English language but knowing
Mexican language will help us in doing business. So learning their native tongue will also be a
challenge. Also the local brands and big international brands will pose a challenge in terms of
pricing our product.
Drug related violence that often spikes between cartels and the government will also pose a
threat of doing business in the country.

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