Global Organization Issues

March 2, 2004
MEXICO PRESENTATION DUTIES: Tentative presentation outline

Part 1- Introduction: introduce group and outline events of the training session

Part 2- Speaking responsibilities:
Each member will speak for 3-5 minutes on each of our areas of research, to share info on Mexico.
You only need to be an expert in your area.

Part 3- Show class the Website (Rob)

Part 4- Presentation (Shawn- technical/bus. plan, overall view of our competition strategy)

Part 5- Presentation (Oona- overcoming cultural differences; cultural artifacts, money, accuracy(hands on)

Part 6- Presentation (Mike- learning activity/manufacturing process training, possibly? (FUN!))

Part 7- Conclusion, questions, etc.

Group members are responsible for these components by March 15th:

All Members- Emailing Rob your research & cites by end of Spring break- March 15th at latest (ALL MEMBERS)

Eva needs all this info in ASAP to write the paper.


Shawn- Creation of business plan for chosen business; Creation of written training session
Oona- Organize Research/Paper writing/ Cultural Issues; Materials for training packet
Michael- Breakdown of the soccer ball/sporting good manufacturing process; Technical Issues & Viability, Manufacturing, overall product creativity & direction; Activity section of training presentation- hands on, fun.
Rob- Proj. Organization/ Management; Website for both project & training
Eva- Paper Writing with Oona; Responsible for final written paper

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MEXICO GROUP Chose soccer ball manufacturing as field for project.

1) Manufacture this product(s) in Mexico using our trained American team and trained local labor
2) Market, distribute, sell this product(s) in Mexico
3) Export this product(s) to America and other countries, for marketing, distribution and sale

Spalding Soccer Balls (an example)
Anyone know anyting about the soccer ball manufacturing process and raw materials required?


Thanks!
Rob Ziruolo
ciscorob5@aol.com

(239) 410-6031
http://www.ciscorob.com/global/


Mexico - Project Outline Links


VIII. Business Resources - Shawn

IX. Web Design - Rob
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VII. Select An Entry Mode - Oona
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MEXICO TEAM ASSIGNMENTS
Rob- Proj. Organization/ Management; Website for both project & training
Michael- Technical Issues & Viability, Manufacturing, overall product creativity & direction; Activity section of training presentation
Oona- Research/Paper writing/ Cultural Issues; Materials for training packet
Eva- Paper Writing with Oona; Responsible for final written paper
Shawn- Creation of business plan for chosen business; Creation of written training session
ALL MEMBERS: Send info w/ cites to ROb for your research sections

MEXICO GROUP PROJECT TIMELINE
Jan 20
Group creation, agreement formed & submitted- DONE!
Jan 27
Agreement on business; Soccer: DONE!
Feb 3
Research & Development of your section - 25% done- DONE
Feb 10
Research & Development of your section 50% done - DONE
Feb 17
Research & Development of your section - Assembly of components should be 75% done
Feb 24
Website, Training kit, training activity, paper to final completion stages
Mar 2
Project due to group for peer review. We all look at everything to find weaknesses (content and grammar), and make adjustments
Mar 9
Spring Break. Drink and be merry.
Mar 16
Final assembly of project with corrections made
Mar 23
Project due to instructor
Mar 30
Assemble 20 employee training kits. Practice the fun/activity part of the presentation
April 6
We present training session to the entire class
   
  I can be reached anytime at 239-410-6031 or ciscorob5@aol.com if any problems arise. Good luck!
-Rob Ziruolo


I. Country Information & Background- Rob

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Start section 1,

Country Information and Background

Geographic location/ Neighboring countries and bodies of water- Middle America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and the US and bordering the North Pacific Ocean, between Guatemala and the US

Population Stats:

Population and population density- 104,907,991 (July 2003 est.)
Population: 100,294,036 (July 1999 est.)

Age structure:
0-14 years: 35% (male 17,987,500; female 17,289,875)
15-64 years: 61% (male 29,610,813; female 31,216,342)
65 years and over: 4% (male 1,873,986; female 2,315,520) (1999 est.)

Population growth rate: 1.73% (1999 est.)

Birth rate: 24.99 births/1,000 population (1999 est.)

Death rate: 4.83 deaths/1,000 population (1999 est.)

Net migration rate: -2.84 migrant(s)/1,000 population (1999 est.)

Sex ratio:
at birth: 1.05 male(s)/female
under 15 years: 1.04 male(s)/female
15-64 years: 0.95 male(s)/female
65 years and over: 0.81 male(s)/female
total population: 0.97 male(s)/female (1999 est.)

Infant mortality rate: 24.62 deaths/1,000 live births (1999 est.)

Life expectancy at birth:
total population: 72 years
male: 68.98 years
female: 75.17 years (1999 est.)

Total fertility rate: 2.85 children born/woman (1999 est.)

Literacy:
definition: age 15 and over can read and write
total population: 89.6%
male: 91.8%
female: 87.4% (1995 est.)

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Nationality: noun: Mexican(s)
adjective: Mexican

Religions: nominally Roman Catholic 89%, Protestant 6%
Languages: Spanish, various Mayan, Nahuatl, and other regional indigenous languages
Literacy:
definition: age 15 and over can read and write
total population: 89.6%
male: 91.8%
female: 87.4% (1995 est.)

Ethnic groups: mestizo (Amerindian-Spanish) 60%, Amerindian or predominantly Amerindian 30%, white 9%, other 1%

Currency- Guide to mexican currency

Transportation- Automobiles are the main mode of transportation in Mexico City. To address the problems of air pollution and traffic congestion, the authorities have launched car-free day campaigns. In addition, efforts have been made to establish auto-emission inspection and control systems. The main public transportation systems in the city are buses and subway trains. The subway system was constructed with French technology in 1968 when the Mexico Olympic Games were held. Some subway stations exhibit remains of an ancient city, which were discovered during construction work. http://www.nsca.gr.jp/english/mexico/

complete list of gov't bodies

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Form of government- conventional long form: United Mexican States
conventional short form: Mexico
local short form: Mexico
local long form: Estados Unidos Mexicanos
Government type: federal republic operating under a centralized government Administrative divisions: 31 states (estados, singular—estado) and 1 federal district* (distrito federal); Aguascalientes, Baja California, Baja California Sur, Campeche, Chiapas, Chihuahua, Coahuila de Zaragoza, Colima, Distrito Federal*, Durango, Guanajuato, Guerrero, Hidalgo, Jalisco, Mexico, Michoacan de Ocampo, Morelos, Nayarit, Nuevo Leon, Oaxaca, Puebla, Queretaro de Arteaga, Quintana Roo, San Luis Potosi, Sinaloa, Sonora, Tabasco, Tamaulipas, Tlaxcala, Veracruz-Llave, Yucatan, Zacatecas

Independence: 16 September 1810 (from Spain)

National holiday: Independence Day, 16 September (1810)

Constitution: 5 February 1917

Legal system: mixture of US constitutional theory and civil law system; judicial review of legislative acts; accepts compulsory ICJ jurisdiction, with reservations

Suffrage: 18 years of age; universal and compulsory (but not enforced)

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Main industries and locations within country- The main industries of Mexico City are manufacturing and commerce. The metal products, textiles, foodstuffs and publishing/printing industries are flourishing. The Mexico metropolitan area is home to 75% of all domestic companies in the textile industry, and more than 47% in the rubber/plastic and publishing/printing industries.

 

Capital City - Mexico City (Mexico City's climate is temperate year round, though it can get a little nippy at night from November to February. During this period, because of thermal inversion, air pollution is often at its heaviest. You can generally count on April for ubiquitous lilac-colored jacaranda blossoms coupled with nice temperatures. Though the city will sweep you up at any time of the year, the holiday periods of Semana Santa and Christmas to New Year's are particularly jovial, busy times to visit. Many Mexicans do their holidaying in July or August.) http://www.lonelyplanet.com/destinations/north_america/mexico_city/facts.htm Mexico City, the capital of the United Mexican States, is the center of the country's politics, economy and culture. Situated in the middle of the nation at an altitude of 2,200 meters above sea level, the city possesses a mild climate throughout the year. In the rainy season from May through October, there are sudden showers in the evening.
Mexico City, which was built by the Spaniards on the ruins of Tenochtitlan, the capital of the Aztec empire nation, boasts of a long history and multi-layered culture.
http://www.nsca.gr.jp/english/mexico/

 

Relevant history- In 1325, the nomadic Aztec tribe established the capital of Tenochtitlan, where Mexico City is currently situated. Over a relatively short period of two hundred years, they conquered surrounding tribes and built an empire.
In 1519, Spanish conquerors led by Hernan Cortes came to the Aztec empire nation and took full control of Tenochtitlan on August 13, 1521. After reducing houses and palaces to ruins, Cortes built a new city on the site. However, having flourished as the political center during the Aztec era, Mexico's unique culture was handed down to the colonial days. It is often said that you can hardly discuss Mexico's important historical matters without taking Mexico City into account. Since its independence from Spain in 1821, Mexico City has seen many changes of political power.
http://www.nsca.gr.jp/english/mexico/
On December 21, 1970, the Basic Law on Federal Districts was promulgated. Under the law, Mexico City was divided into 16 administrative districts and designated as the federal capital where the three powers of legislation, administration and judicature are concentrated.

Design of flag and what symbols represent- Flag description: three equal vertical bands of green (hoist side), white, and red; the coat of arms (an eagle perched on a cactus with a snake in its beak) is centered in the white band

Mexican Holiday Calendar- http://www.mexonline.com/holiday.htm

End section 1,
Country Information and Background

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II. Cultural Patterns & Variables- Oona
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Cultural Patterns & Variables
Hofstede
Power distance is the level of acceptance by a society of the unequal distribution of power in institutions. Mexico ranks high on power distance. Mexican business culture value expectations are respect status roles and top-down hierarchical structure.
Uncertainty avoidance refers to the extent to which people in a society feel threatened by ambiguous situations. Mexico ranks high on uncertainty avoidance. Mexican business cultures resist change.
Collectivism is where a culture has tight social frameworks, emotional dependence on belonging and a strong belief in a group. Mexican workers prefer collectivism because it values the good of the group, family or country over individual achievement. Value expectations are shared responsibility, moral obligation, paternalistic management, and harmony.
Masculinity refers to the degree of traditionally "masculine" values like assertiveness, materialism and lack of concern for others. Machismo is the sharp role differentiation based on gender. Machismo and prestige are important characteristics of the Mexican culture.
Trompenaars
Particularism approach puts the first obligation on relationships and is more subjective.
Affective is the focus on the emotional orientation of relationships. Mexicans would openly express emotions even in a business situation.
Diffuse oriented cultures have a spillover from work into personal relationships and vice versa.
Styles of negotiating, decision making, & leadership
Styles of negotiation are as follows:
Emotional sensitivity valued, emotionally passionate, great power plays; use of weakness, loyalty to employer, face-saving crucial in decision making to preserve honor; dignity, execution of special interests of decision expected, condoned, argumentative when right or wrong, passionate impatient with documentation as obstacle to understanding general principles, impulsive, spontaneous decision making, what is good for the group is good for the individual, personalism necessary for good decision making.
Most managers find that the management style that works best there is authoritative and paternal. Paternalism is expected; the manager is regarded as el patron, or father figure, whose role is to take care of the workers as an extended family.
Levels of general trust in people - 35%
Values and Attitudes
Emphasis placed on materialism vs. relationships - Mexican workers place family or country over individual achievement. Family is of central importance; loyalty and commitment to the family frequently determines employment, promotion, or special treatment for contracts.
Hard work vs. leisure - Mexican workers allow time for socializing and appreciating their cultural artifacts, buildings and so forth.
Cultural taboos (alcohol, literature, etc.) For the most part, Mexican workers expect that authority will not be abused but rather that it will follow the family model where everyone works together in a dignified manner according to their designated roles.
Attitudes toward time (Importance of schedules & Importance of efficiency) Mexican people are very warm and have a leisurely attitude toward time. Mexicans have a polychronic time system because they will many times put an important conversation ahead of being on time for a business meeting.
Attitudes toward work - Mexican males value work only in its ability to fulfill their culturally imposed responsibilities as head of household and breadwinner rather than to seek individual achievement.
Strong vs. weak work ethic - Mexicans will strive to work, but the managers are expected to be the authority and all power rest with them. For the most part, if not told to do it, the workers won't do it. Nor will they question the boss or make any decisions for the boss.
Opportunity for success and reward - Given that getting ahead is often associated with outside forces than with one's own actions, the motivation a reward system becomes difficult to structure in the usual ways.
Impact of technology- for those who can afford it, cellular phones aide in the communication between farmers and workers. Local malls offer the use of Internet at a low price.
Attitudes toward cultural change - Mexican border facilities have boomed, and many of those jobs are now high tech, bringing training and a higher standard of living for many Mexicans.
Acceptance of traits from other cultures
Attitudes toward foreign companies Latin Americans have a high-context culture because they expect others to understand unarticulated moods, subtle gestures, and environmental clues resulting in misunderstanding.
Impact of international companies on local culture
Manners and customs
Appropriate behavior, speech, and dress
Suitable circumstances for conducting business Mexican workers need more communication, more relationship building and more reassurance than US employees. Mexican workers are now motivated with higher wages because they highly value the enjoyment of life. Many companies in Mexico provide recreational facilities like a picnic area, a soccer field and so forth.
Important customs (folk and popular) Mexicans are very proud and patriotic; respeto is important to them and slights against personal dignity are regarded as a grave provocation. They like to take time to celebrate birthdays and anniversaries. This will increase loyalty and effort.
Gift-giving customs - Bonuses are expected regardless of productivity. In fact, it is the law to give Christmas bonuses of 15 days pay to each worker. Fringe benefits are also important because most Mexicans are poor. Benefits are also important because they help to manage family related issues. They are positive motivators for employees to at lease show up to work.
Business cards
Social structure
Prevalence of nuclear vs. extended family
Importance of gender roles& business opportunities for men vs. women (be specific about the role of women in society and business)
Classes of the society - Companies must understand the local infrastructure problems and can provide a bus to minimize absenteeism and tardiness. The also can provide onsite health care facilities for workers and their families, nurseries, free meals and even small loans in crisis situation.
There is a burgeoning middle class in some areas, and there are other areas where extreme poverty and environmental pollution prevail.
Rigidity of social strata & the potential for mobility (upward and downward) Mexican business culture value expectations are respect status roles and top-down hierarchical structure.
Religion
Dominant faiths and belief systems
Main religion - Christianity
Others-Roman Catholic - 89%, Protestant 6%, other 5%
Influence on cultural values - generally speaking, many Mexican workers doubt their ability to personally influence the outcome of their lives. They are apt to attribute events to the will of God, or to luck, timing or relationships with higher authority figures.
Influence on business practices/product offerings - For many, decisions are made on the basis of ideals, emotions, and intuition rather than objective information.
Personal Communication
Main spoken languages/Official language - Spanish, Mayan, Nahuati
Languages of large ethnic groups - Spanish
Key traits of body language (personal space, gestures, etc.) Face to face interaction is best for any kind of business. Mexicans often speak loudly and rapidly. They speak with their hands and have no problems with close spaces. This makes them a high-contact culture. Mexican employees and managers also use object language. Managers are advised to take time out to show appreciation for surrounding architecture, which is prized by Mexicans.
Education
Literacy of general population
Literacy - age 15 and over can read & write
Reading literacy - 422
Average level of educational attainment
Average level if schooling - 7.2
Influence of brain drain (pro or con)
Selecting an entry mode

 

III. Political and Legal Analysis- Michael


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Political and legal analysis

1. Political risk - any government action or political related event that would affect the profitability of the company negatively in the long-run. (Text Book)
2. The political risk level for Mexico is a 3 out of a 1 to 5 scale with 5 being the lowest relative risk (Text Book)
3. allegations of embezzlement, financial statement fraud, kickback schemes, sexual harassment, stalking, computer hacking, theft of intellectual property, anonymous threats, ethics violations, corruption, civil rights violations, workplace violations, workplace violence, wrongful death and other internal misconduct (www. Ipsaintl.com/includes/newsroom/pr_07_08_02_pr.cfm)
4.
5. -adaptation
a. equity sharing
b. participative management
c. localization of the operation- suit local tastes
d. development assistance- firm has control of infrastrucuture
-dependency and hedging
a. input control - control over the materials
b. market control - control distributors
c. position control - subsidiary management positions
d. staged contribution strategies - increase contributions to host nation as company grows (Text Book)
6. Legal system - regulations to help company comply in host country (Text Book)
7. mixture of US constitutional law and civil law system (http://www.odci.gov/cia/publications/factbook/geos/mx.html#Govt)
8. Similarity of home and host nations legal systems are basically the same with the supreme court justices and them using a mixture of the US constitution and civil law. (http://www.odci.gov/cia/publications/factbook/geos/mx.html#Govt)
9. Mexico has the highest level incidence of intellectual property violations (www.netamericas.net/Researchpapers/Documents/ Ortiz%20Mena/Ortiz-Mena1.PDF)
10. Tri-National Intellectual Property Committee, comprised of representatives from government, private industry, industry associations, non-governmental organizations, the legal community, and universities. (http://www.natlaw.com/intelpro.htm)
11. -Federal Taxes:
1. Taxes on income, including a minimum tax based on assets held;
2. Value-added tax;
3. Import and export taxes; and
4. Payroll taxes, social security premiums, mandatory retirement savings system, and contributions to the National Workers' Housing Fund.
-Local taxes:
1. On real property;
2. On salaries; and
3. On acquisitions of real property. (http://www.solutionsabroad.com/d_taxesmexico.asp)
12. International relations and general relations
NAFTA (Text Book)

IV. Economic Analysis - Eva


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http://www.odci.gov/cia/publications/factbook/geos/mx.html

Economic system

Link between culture and economic system

Type of system (centrally planned, mixed, or market)

Level of economic freedom

Economic development

GDP and GDP per capita

Country classification (developed, newly industrialized, or developing)

Economic transition (if in transition from central planning)

Quality of managerial expertise

Capital availability

Cultural issues

Environmental degradation

Financial markets

Performance of the nation’s stock market(s)

Exchange rates with key currencies and recent trends

Presence of currency controls/restrictions

Influence of exchange rate on business activity

Affect of inflation

Impact of exchange rate on exports and imports

Level of external debt

V. Trade and Investment Analysis - Shawn


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Role of trade in economy:
Importance of trade to the nation (trade as % of GDP)
-GDP was only a mere .9% in 2002 and trade as % of GDP is 27.3%
Main exports and volumes/Main imports and volumes
-Crude Oil, Manufactured goods, and Machinery
Main trading partners
-US, Canada, and Japan
Trade dependency
-$160 billion in exports and $168 billion in imports (Pretty even considering)
National competitive advantage:
Factor conditions (basic and advanced)
-Variety and cost of labor/ Tax savings and Overhead savings with land use
Sophistication of demand
-Skilled Workforce
Government support or lack thereof
-Government is a big proponent of industrialization
Government's intervention in trade:
Cultural motives
-Create a better economy for the people
Political motives
-Be a respected player in the export business and have a respected economy
Protect jobs
-Top 12 labor force at 39.8 million people employed
Response to "unfair" trade by other nations
-90% if trade is free trade
Economic motives:
Strategic trade policy
-Utilize NAFTA and WTO trade agreements to ensure economic success
Trade Restriction:
Tariffs
-Phasing out current tariffs with other trading countries
NAFTA provides for the elimination of Mexican tariffs on 5,900 categories of imports from the United States and Canada (mostly machinery and intermediate goods), representing more than 40 percent of Mexico's overall trade.
Quotas
-Phasing out current quotas with other trading countries
International organization involvement:
WTO membership
-Member of this organization since 01/01/1995 to facilitate trade
Foreign direct investment (FDI):
FDI inflows and sources
-USA, Japan, Canada
FDI outflows and destinations
-USA, Japan, Canada, EU, South America
Government policy instruments and FDI
Host countries: restriction (NAFTA limits restrictions)
Ownership restrictions
Performance demands
Host countries: promotion
Financial incentives (Tax Treatment Advantages)
Infrastructure improvements
Home countries: restriction
Differential tax rates
Sanctions
Home countries: promotion
Insurance
Loans
Tax breaks
Political pressure

VI. Market Potential - Eva


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http://www.odci.gov/cia/publications/factbook/geos/mx.html

Identify basic appeal

Suitability of climate

Absolute product bans

Access to materials

Access to labor

Access to financing

Measure market or site potential

Measure current sales

Quality of workforce

Quality of inputs

Quality of infrastructure

VII. Select An Entry Mode - Oona

 

This must be decided prior to completion
Exporting
Direct exporting
Indirect exporting
Contractual entry modes
Licensing
Franchising
Management contracts
Turnkey projects
Investment entry modes
Wholly owned subsidiary
Joint venture
Strategic alliance
Factors to consider in cooperation
Goals of each party
Each party's commitment to common goals
Trustworthiness of potential partner
What potential partner brings to the cooperative arrangement
Strategic factors in entry mode selection
Cultural environment
Political and legal environments
Market size
Production and shipping costs
Level of international experience
Information taken from International Management and data taken from
http://www.nsca.gr.jp/english/mexico/.


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Exporting

Direct exporting

Indirect exporting

Contractual entry modes

Licensing

Franchising

Management contracts

Turnkey projects

Investment entry modes

Wholly owned subsidiary

Joint venture

Strategic alliance

Factors to consider in cooperation

Goals of each party

Each party’s commitment to common goals

Trustworthiness of potential partner

What potential partner brings to the cooperative arrangement

Strategic factors in entry mode selection

Cultural environment

Political and legal environments

Market size

Production and shipping costs

Level of international experience

VIII. Business Resources - Shawn


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Human resources:
International staffing policy:
Polycentric staffing- local managers are hired to fill key positions in their country
Recruit and select human resources:
Consider culture shock and reverse culture shock
-There will be a culture shock for the Mexicans having an American company to work for and a culture shock for American employees working on foreign soil
Training and development needs:
Need for cultural training
-Significant need for cultural training and a plan has been developed that will subject the American employees to Mexican culture well before the departure.
Compensation of employees
American employees will get there current pay plus benefits for accepting the foreign assignment. Host nationals will receive fair market price for factory work. This wage will not have any relation to American wages.
Legally required benefits:
Managerial employees
Bonus and tax incentives (Will receive bonus based on a successful start of the factory in Mexico. They will be measured by a variety of performance objectives and paid accordingly)
Parental leave
Number of vacation days (No vacation will be allowed during the assignment)
Hardship or "combat" pay (Every 6 months the employees can fly home for a week of rest and relaxation)
Non-managerial workers
Labor-management relations
Presence of labor unions
More than 90 percent of production workers in industrial enterprises employing more than twenty-five workers belong to labor unions. Relatively few craft or professional workers are organized.

IX. Web Design - Rob
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X. Overall Assembly/Organization- Michael/Rob
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Note Dumps : Back to top

 

Why Mexico? 1. Cost 2. Availability of cheap unskilled labor,
Goal: Choose a company that would benefit from NAFTA allowances, in a move/new branch opening in Mexico?

http://www.nationmaster.com/country/mx - Very useful bank of business info, everything from business to cultural, etc.
Lots of numbers we can use. Also it allows for comparison/rankings with all other countries

Some popular mfg industries in Mex include Textiles, Autos, Steel,

Here's some info on NAFTA/imports/exports

CIA MEXICO INFO- official info

Useful Links : Back to top

http://www.nationmaster.com/country/mx

http://www.nsca.gr.jp/english/mexico/

Eva suggests http://www.odci.gov/cia/publications/factbook/geos/mx.html
CIA Factbook

Mexico News, weather, classifieds

Mexico Labor laws

 


Training packet for emplolyees should include the following materials:

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Website created by Rob Ziruolo for FGCU class MAN 6607 Group Project, Spring 2004

Ooma oonareyna@earthlink.net

Eva evadeyo@earthlink.net

Shawn mcgoffs@comcast.net

Michael mjmerves@eagle.fgcu.edu

Rob Ciscorob5@aol.com

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