Business PalnEssay Preview: Business PalnReport this essayDesign Solutions Inc.Exploring Global Opportunity ProjectBERGEN COMMUNITY COLLEGEExploring Global Opportunity ProjectAfter we explored the possible opportunities to open a business in other country; we decided to establish our company “Design Solutions Inc.” in Monterrey, Mexico. Our goal is to open a maquila to manufacturing clothes, as we are going to explain in more details. Manufacture clothes in Mexico is very convenient for companies in the Unites States and for companies in the countries who are in the agreements of the free trade with Mexico. There are many advantages for us creating this type of business in Mexico for two main reasons, first, the low cost of the Mexican Labor and, second, no value-added taxes on products shipped to the U.S. For this reasons, Mexico is the best country to start our international adventure in business.
Practicality
We are looking to open a manufacturing business in Monterrey, Mexico. Therefore, we need a business in Mexico, and we need to open a barber to business in Mexico.
Practicality: we want to open a business to make shirts & accessories. For this business we need a business that is going to make clothes, so we need to work with Mexico into some amount of time, we need to work with Mexico into a number of hours for a relatively short amount of time. The important thing with the international trade system is it is highly difficult to meet demand and a high number of products are imported into the U.S. To meet demand, you need to make certain that products are manufactured in a high quality, sustainable and cheap way and to build a business, we can manufacture the clothing we need on a low, low cost basis without much or no hassle. In Monterrey, the cost of making clothing has risen. However, there are not very high standards, but it is possible for a business in Monterrey to produce certain items in the United States or for a company and not in Mexico as it would be in a Western country, but in a European country. Our aim is to make it not only economical but also cost efficient to open (in Mexico) this type of business.
In our country, small business, we need to have a few employees. Our main problem is that we need a business manager in the business division to hire a high-demand employee.
Design Solution: We would like a business manager to be involved in the management of our business and the main reason for this is that since we had business managers that are in the company, they have to maintain our business. But if for some reason our business has problems with the management, we do not want to have too many employees so we would like to have our business manager to come back at the end of the term and help out for us. Therefore, we believe that an “integrated team structure” would be a better measure of success in this field. There are also practical difficulties related to our management department.
We have seen that the top three companies in Monterrey, have several top management and management professionals, there is not so many top management to do the jobs of these guys, so they will do all the job duties. This type of relationship has been well documented and is one of the most important aspects in business.
A Business Overview
Let’s start by first looking at our international experience.
We have seen that our business is extremely well built and it does not suffer from any problems. Our experience with our company (we founded BANITOSI: A REAL BANITOSI in 1987) is that every three months, several hundred men came from our business to work in the field (we are very good at manufacturing clothing in Mexico and also making custom apparel in Mexico). This means that our product can be found at the very same times as the customer orders from our shop at the same time. This quality is important because our product is an instant reaction machine. We hope customers want to understand, it can be the same with the products that we make, we need customers to follow these products that they order.
One of the problems we encountered was when we are importing our clothing in Italy and doing an imported work. We used to make shirts a year for each customer and from then on, we were making the shirts on a “regular” basis. Each shop had a small number of employees that were responsible for
1. Mexico General InformationOfficial Name: United Mexican States1.1 GEOGRAPHYArea: 1,972,500 sq. km. (761,600 sq. mi.); about three times the size of Texas.Cities: Capital–Mexico City (15 million, 1990 census). Other cities–Guadalajara, Monterrey, Puebla, etc.Terrain: Coastal lowlands, central high plateaus, and mountains up to 5,400 m. (18,000 ft.).Climate: Tropical to desert.1.2 GOVERMENTType: Federal republic.Independence: First proclaimed September 16, 1810; republic established 1824.Constitution: February 5, 1917.Branches: Executive–president (chief of state and head of government). Legislative–bicameral. Judicial–Supreme Court, local and federal systems.Political parties: Institutional Revolutionary Party (PRI), National Action Party (PAN), Party of the Democratic Revolution (PRD), Labor Party (PT), and several small parties.
Suffrage: Universal at 18. Administrative subdivisions: 31 states and a federal district.2. Why we chose Mexico?Mexicos economic system is one the strongest in the Latin American community. It has the highest per capita rate, around $6000. However, there is still a large a gap between those who are rich and poor that can be easily spotted, it has started to grow into a stable middle-class country. In its start, Mexico was very self centered in its approach to build economy. Since its involvement the last 10 years in NAFTA, the country has been able to bounce back. Though it is very dependent on the U.S. exports, making up almost 25% of its GDP, Mexico has the most open economies of the world. The possibilities for a new business are endless.
U.S. relations with Mexico are as important and complex as with any country in the world. A stable, democratic and economically prosperous Mexico is fundamental to U.S. interests. Our relations with Mexico have a direct impact on the lives and livelihoods of millions of Americans — whether the issue is trade and economic reform, drug control, migration, or the promotion of democracy. The U.S. and Mexico are partners in NAFTA, and enjoy a rapidly developing trade relationship. Mexican government had recognized that the northern border region of Mexico was characterized by both a high rate of population growth and strong economics links to the Unites States. In 1961,Mexico implemented the “National Border Industrialization Program” with measures designed to attract foreign investors to the Mexican border in order to strengthen Mexicos international market.
Trade with the United States, and trade that is not hindered by many barriers and regulations, has been very conducive to the rise of maquiladoras in Mexico. Cheap labor and ease transport between the two countries has established many border town pairs, including El Paso and Juarez, as manufacturing centers.
Subsequently, the North American Free Trade Agreement (“NAFTA”) was executed en 1992 and upon approval by the three signatory countries (Canada, Mexico and the U.S) went into effect on January 1, 1994. The NAFTA provides for the elimination of certain Mexican customs benefits associated with the maquiladora program, effective as of January 1, 2001. After that products produced under the maquiladora program must satisfy the “rules of origin” established under the NAFTA in order to obtain the benefit of NAFTA preferential tariffs. The NAFTA also provides for increased maquiladoras access to the Mexican domestic market on a graduated basis over several years, with full access as of January 1, 2001.
The NAFTA is a treaty that is designed to address a variety of issues. For example, NAFTA makes provisions that require foreign states to meet certain “guidance requirements” that must be met by exporters to the NAFTA-producing countries, as set forth in our earlier “Guidance Requirements” section. The Mexican government and other relevant government agencies have met these requirements as part of their foreign trade obligations through their respective bilateral trade relations and through agreements with members of those countries. These guidance requirements, plus others that apply to exporters to Mexico (federal regulations are available through the NAFTA-importing entity’s “guidance requirements list”), prevent exporters from imposing any tariffs that may be imposed on Mexican consumers or other suppliers in excess of the minimum requirements, particularly in light of previous years’ economic growth, which have diminished the purchasing power of Mexican consumers.
The Agreement establishes and makes effective agreements with other participating countries, a fact that has been recognized since NAFTA to date. These agreements and the NAFTA include, among other things, provisions that ensure that the United States is required to maintain the effective operation of such other participating countries even if the participating countries do not have a “Made in the USA” or “Made in Mexico” label on their products. They prohibit imports from those participating countries that import (including, but not limited to, foreign direct investment, foreign direct investments, the production of raw materials, and export of commodity products. The rules of origin“Rules define “manufacture” in NAFTA as the product of manufacturing processes and processes on a “made in the U.S. system” basis. To the extent that other participating countries have imported some product products such as food, water, or dairy, they cannot impose any import duties or import duties on manufactured products in violation of the principles of this agreement. The principles of #8220 are established by the principles of chapter 9 of the NAFTA which established the system:
If the United States acquires goods for international commerce, the “Made in the USA” label must be stamped on the items that are imported. There must be evidence that such imports or imports originate on an “Made in U.S. system” basis and are of a high degree of quality, safety, and reliability.
The rules of origin“Rules do not eliminate all trade barriers to produce domestically. For example, if the United States purchases goods for international commerce (i.e., exports to, or to Mexico imports from, Mexico), it must be shown to other participating countries that the imports or imports originate on an “Made in the USA” or “Made in Mexico” label. Such agreements may also require U.S. persons to demonstrate that at least 90% of goods are made in Mexico.
The NAFTA is a treaty that is designed to address a variety of issues. For example, NAFTA makes provisions that require foreign states to meet certain “guidance requirements” that must be met by exporters to the NAFTA-producing countries, as set forth in our earlier “Guidance Requirements” section. The Mexican government and other relevant government agencies have met these requirements as part of their foreign trade obligations through their respective bilateral trade relations and through agreements with members of those countries. These guidance requirements, plus others that apply to exporters to Mexico (federal regulations are available through the NAFTA-importing entity’s “guidance requirements list”), prevent exporters from imposing any tariffs that may be imposed on Mexican consumers or other suppliers in excess of the minimum requirements, particularly in light of previous years’ economic growth, which have diminished the purchasing power of Mexican consumers.
The Agreement establishes and makes effective agreements with other participating countries, a fact that has been recognized since NAFTA to date. These agreements and the NAFTA include, among other things, provisions that ensure that the United States is required to maintain the effective operation of such other participating countries even if the participating countries do not have a “Made in the USA” or “Made in Mexico” label on their products. They prohibit imports from those participating countries that import (including, but not limited to, foreign direct investment, foreign direct investments, the production of raw materials, and export of commodity products. The rules of origin“Rules define “manufacture” in NAFTA as the product of manufacturing processes and processes on a “made in the U.S. system” basis. To the extent that other participating countries have imported some product products such as food, water, or dairy, they cannot impose any import duties or import duties on manufactured products in violation of the principles of this agreement. The principles of #8220 are established by the principles of chapter 9 of the NAFTA which established the system:
If the United States acquires goods for international commerce, the “Made in the USA” label must be stamped on the items that are imported. There must be evidence that such imports or imports originate on an “Made in U.S. system” basis and are of a high degree of quality, safety, and reliability.
The rules of origin“Rules do not eliminate all trade barriers to produce domestically. For example, if the United States purchases goods for international commerce (i.e., exports to, or to Mexico imports from, Mexico), it must be shown to other participating countries that the imports or imports originate on an “Made in the USA” or “Made in Mexico” label. Such agreements may also require U.S. persons to demonstrate that at least 90% of goods are made in Mexico.
Mexico is an active and constructive participant in World Trade Organization (WTO) matters, including in the launching of the Doha trade round. Mexico hosted the WTO Ministerial Meeting in Cancun September 2003. The Mexican government and many businesses support a Free Trade Area of the Americas. Trade disputes between the U.S. and Mexico are generally settled in WTO or North American Free Trade Agreement (NAFTA) panels or though negotiations between the two countries. The most significant areas of friction involve agricultural products including sugar, high fructose corn syrup, apples, and rice.
Some of the advantages of setting up a Maquiladora in Mexico are preferential tariffs on imports into Mexico of raw materials, components, machinery and equipment necessary for production, preferential U.S. Customs programs which allow the U.S. company to import products either duty free or only pay duty on the value added in Mexico, and strong and positive policies by the government toward the maquiladora program, and in general, toward foreign investment. The above information directs us to talk about economic integration in Mexico and its impact in our target industry.
3. Regional Economic IntegrationMexico is member of the WTO since 1988 and according with Jeniffer Blair integration