Doing Business In Mexico

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Mexico is a developing country located in the southern region of North America. Mexico is a country with about one hundred and twenty million individuals, making it a great candidate for IKEA to spread into. Mexico has the fifteenth largest nominal GDP and the eleventh largest by purchasing power parity. (wikipedia , 2015)The Mexican economy continues to grow at a moderate annual rate of growth of 2.4 percent as the economic recovery lost steam during the first half of 2015. (worldbank.org, 2015) Moderate growth during the first semester of 2015 in Mexico has been attributed to weakness in industrial production in the U.S., a further drop in the volume of oil production reducing annual GDP growth by about 0.4 percentage points and financial …show more content…

When conducting business in an international country you must always worry about political risks. There are many macroeconomic risks when considering conducting business in Mexico. Mexico could raise taxes against businesses at almost any time to generate money for their government. Another macroeconomic risk that applies in Mexico is the cartel situations in that country; it is as if they are in a civil war. Problems may arise for business like IKEA any time there is conflict amongst individuals from the same country. Another macroeconomic risk IKEA may look at may be the devaluation of the Mexican peso. Since the price of the peso is considerably cheap compared to the American dollar, the products IKEA sells may be too expensive for the un-wealthy individuals to purchase. Another form of political risks that IKEA must be aware of are the microeconomic risks involved in conducting business internationally. Microeconomics examines the impact that economic choices made by individuals, businesses and industries have on resource allocation and the supply and demand of goods and services in market economies. (what is economics?) With that being said IKEA would not have much to worry about since the only business that will be done is the selling and marketing of their products. In Mexico government corruption is very popular. Mexico ranked one hundred and three out of one hundred and seventy five, with a score of thirty five out of one hundred. Corruption in the government is done by the cartels that are committing many crimes on daily basis. Although the corruption may not affect a business like IKEA directly, they will be affected indirectly. Corruption could affect a business because the individuals that corrupt the government in Mexico

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