Mexico Case Study

Mexico and Businesses: More than just Political Risk?
Ikea is a Swedish company that provides furnished products throughout the world. Ingvar Kamprad founded it in the year of 1943. Its furniture is self-assembled thus allowing the company to reduce its expenditures and offer customers low prices in return. When segmenting a market, IKEA usually focuses on age, income level, and lifestyle. It aims to attract young, underprivileged individuals who look to buy furniture for the first time. An example of this would be college students; they are often confused, doubtful, and looking for something cheap. IKEA currently operates in twenty-seven countries including Korea, China, Sweden, and Netherlands amongst many others (IKEA.com). Although it is

Corruption has been and still is one of the most prevalent issues in the country. Mexico ranked 103 out of 175 countries in the Corruption Perception Index, a ranking that determines how corrupt a country’s public sector is (Estevez, 2014). The drop, compared to last year’s rankings, is the result of bribery, the most common type of corruption. Many corporations find the process of getting permits and licenses exhausting and unnecessary and as a result, end up paying bribes for them. Corruption can get in the way of IKEA’s operational effectiveness because the process meant to be automated is altered and thus faulted. In countries where corruption is part of the system, more employees are then needed to amend the mess of everyone

Understanding and tracking competitors allows IKEA to learn from their competitors’ mistakes. It is also an opportunity for them to learn about strategies that have worked for their competitor(s) and apply them to their own business. Learning from competitors also leads to the discovery of new opportunities in the market; firms often find new markets for a product or service through competitors. IKEA’s competitors include Wal-Mart, Amazon, Ashley Furniture Store, and KIKA. Wal-Mart earned impressive revenue of $485 billion in 2015. The company serves 27 countries, including the U.S and Mexico. Wal-Mart strengths include experimenting (with little or no risk), demanding lower prices from suppliers, achieving economies of scale, using resources more effectively, and earning more profits. One of Wal-Mart’s weaknesses, however, is the number of lawsuits-- related to labor-- that it continuously faces. Former employees have accused the company of mistreatment and discrimination. These accusations have hurt Wal-Mart’s reputation over the years; individuals are now thinking twice before accepting a job at Wal-Mart. Another weakness is Wal-Mart’s high employee turnover; the necessity to train employees is high and thus costly (SWOT Analysis of Walmart, 2015). Amazon, on the other hand, is a company whose main focus is e-commerce. Amazon’s strategy is