Futbol Mania is very concerned about issues that can arise from political or legal misunderstandings. We are providing the following information in order to educate our managers, customers, and stakeholders as to the political and legal environments of Mexico. Additionally, any legal, ethical, or political questions may be directed to our Human Resources Department.

Mexico Political Risk
Political risk is defined as any government action or political related event that would affect the profitability of the company negatively in the long run. The textbook rates the political risk level for Mexico as a 3 on a 1 to 5 scale with 5 being the lowest relative risk. The 2000 election of President Fox represented a change, for the better, in the political stability of Mexico. Investors and entrepreneurs around the world considered it a signal to the end of economic stagnation and corruption, and an invitation to participate in the Mexican marketplace (Salinas, 2001).

How to adapt to the political risk
The risk can be adapted to by using equity sharing, participative management, localization of the operation to suit local tastes, and development assistance where the firm has control of infrastructure. Dependency and hedging can be used to minimize the risk, by using input controls to control the materials, or market control to control the distributors. Position control can be used in subsidiary management positions or by use of a staged contribution strategy, which increases contributions to a host nation as the company grows (Deresky, 2003, p. 15).

Main Type(s) of Risk
Mexico has 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 (Intelligence at Work, 2002). Armed robbery in urban areas is a risk. Short-term opportunistic kidnapping is common. Visitors should dress down, and exercise care ("Mexico: Country Profile," 2003).

Mexico Legal System
The legal system is a mixture of US constitutional theory and civil law system. The home and host nations legal systems are similar with the use of Supreme Court justices. There is a judicial review of legislative acts. People can vote at 18 years of age. It is supposed to compulsory, but it is not enforced. President Vicente Fox Quesada was elected President in 2000 and is both the Chief of State and the head of government (The World Factbook Mexico, 2003).

Incidents of intellectual property violations
Mexico has the highest level of incidents of intellectual property violations (National Law Center for Inter-American Free Trade, 2004).

National enforcement of property rights
Mexico is a member of the Tri-National Intellectual Property Committee, comprised of representatives from government, private industry, industry associations, non-governmental organizations, the legal community, and universities (National Law Center for Inter-American Free Trade, 2004).

Level and Focus of Taxation
Mexico has Federal Taxes on income, which include a minimum tax based on assets held, value-added tax, import and export taxes. Payroll taxes include social security premiums, mandatory retirement savings system and contributions to the National Workers' Housing Fund. Local taxes are imposed on real property, on salaries and on acquisitions of real property (Solutions Abroad: The Expatriate On-line Community, 2004). Mexico's corporate income tax is 34% (Smith, 2003). The states are empowered to raise taxes and introduce and enforce state laws ("Mexico: Country Profile," 2003).

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