Challenges That May Be Faced in the New Environment

Challenges That May be Faced in the New Environment

The country chosen for the bank branch to open up in is Mexico. A significant emergence of

large business organizations have been established in the Mexican economy and many of them

are global or multinational businesses. These organizations conduct business with other foreign

organizations, especially when it comes to importing of raw materials as well as exporting of

manufactured goods. Mexico has a strategic location and the market has seen growth and

sustainability by the influence of the United States of America. It is also an influential trading

partner with the countries in Latin America. (Blake, 2009)

In spite of its strategic location and economic favors that Mexico may have, Mexico still has

its many investment challenges involved with it. Some of these challenges are the fact that there

are variations with regard to such key factors involving its culture and literacy levels. Regarding

these challenges stakeholders need to consider the social, ethnic, cultural, and educational

challenges which come along while pursuing investments into the Mexican market. (Kingstone, 2011)

Cultural challenges

The Mexican culture is very forward in holding family values and traditional values in high

regard. The women for example from typical Mexican families are more concerned with the

household duties primarily. The majority of them would not even consider working outside the

home commercially, especially if the husband or male members of the house were able to

provide adequately for the family. Another noticeable traditional family value is that children

who are from a family with higher income remains in their families or live at home longer than

say young adults would in the United States of America. This means when the male spouse is

financially stable, the women and children and young adults choose to stay out of the workforce

for gainful employment unlike American households. These traditions can hinder organizations

when it comes to a vibrant work force, and this type of situation can also inhibit innovation. (J.C. Hamilton, 2012)

Ethnic and Social Differences

While the majority of the American society is mostly cosmopolitan, the Mexican society is

mostly made up of mestizos. Over half the Mexican population, 60 percent of Mexicans are

mestizos, this highlights that when dealing with Mexican society it is a necessity to understand

their ethics and social norms and this is not always easy to do for a foreign investor. An

organization could very well lose clients by disregarding the etiquette, and then the bank has to

spend adequate resources and time into solving such challenges. (Kingstone, 2011)

Educational Characteristics

Unlike the United States of America in Mexico there are states where the literacy rates are

extremely low. This is especially the case in were Native Americans constitute the majority of

the population. Regions that make up these poor literacy rates are in Oaxaca, Guerrero, and

Chiapas. In highly urbanized areas of Mexico the literacy level is much better and reaches 97

percent in some areas. This factor indicates that in terms of literacy, Mexico is not an equal

society. Since this unequal level of education exist in Mexico it causes the labor market to not be

competitive and again this factor can hinder and deter the level of innovation in organizations. (Blake, 2009)

Legal and Political Systems

Every country has its own legal and political systems. Mexico is very similar to the united

States of America with its legal and political systems. Both countries political systems are made

up of the federal presidential systems. The president in both countries is the head of the state and

the government, and the countries both have multiparty electoral systems. Both nations consist of

three arms of government which make up the executive, judiciary, and legislature. These

similarities show that with regard to the legal and political systems being the same that the bank

will not be faced with investing challenges in this aspect. (Nicholls, 2013)

Government Intervening in Private Sector

According to the Mexican constitution it is a capitalistic economy where the government

does not interfere with the private sector, so it’s supposed to be void of political interference. But

corruption and political influences do run rampant in Mexican business operations. An example

is the organization of Wal-Mart has been accused in the past of offering bribes to Mexican

officials in the government to help speed up or obtain the operation license needed as well as

other favors pertaining to help start up business.