Even tough Mexico is the suggest consumer of bottled water per capita in the world; its industry lack of solid competition and seems to be fragile against T NC of the global market. However, the tourism is one of the most important kinds of revenue for the country and with its proximity to the American market in terms of trade exchange. We will use the United States as a type of benchmark as well as showing their competitive advantage in this industry and try to extract the key success factor the Mexican government needs to improve.This report will not only provide insights about the competitive factors of the two countries at a agronomic level, but will also provide short recommendations and analysis which leads to the Phase II. I. Macroeconomic environment of the United States Even though the United States has the highest GAP in the world, actually twice as much as the China, with around $14 trillions (Table). According to the Global Competitiveness report of 201 2, the United States has lost two positions and is now ranked 7th most competitive country in the world.
The key to our success-?as it has always been-?will be to compete by developing new products, by generating new industries, by maintaining our ole as the world’s engine of scientific discovery and technological innovation. It’s absolutely essential to our future. ” -?President Barack Obama, November 17, 201 0 The United States has been the superpower of the 20th century. This wide territory of 9,826,675 sq. Km possesses a large amount of strategic resources such as coal, uranium, oil, gold and natural gas.All of these raw materials lead the US to a successful industrialization in all the sectors. Indeed, companies had at their disposal all the resources they needed and were able to grow rapidly in the domestic market.
This is still the case today. (CIA) Domestic companies have access to large market. Even though the distribution of wealth in the US remains unequal according to the GIN index, the US has the one of the highest GAP per capita in the world. (Table) It has reached the edge of the Innovation, by developing impressive clusters.The Silicon Valley, veritable influence of the US worldwide in matter of high technologies, has brought to the companies, strong graduates from Stanford University, suppliers and improved the flux between companies. As a result, the US productivity increased over the years and it is still by far the most productive country in the world. The added value per person in the US is around $63, according to the key indicators of the labor market (ILL, 2007). Furthermore, the commercial policy of the US contributes to its economical efficiency.
Indeed, the US is one of the major players when it comes to sign multilateral agreements. It tends to reduce the barriers of trade. The NONFAT for example contributes to the development of infrastructure through Mexico, the United States and Canada. As a result, the US is the third largest exporting country (Contrasted, R. 2010).
All of these factors make the United States so attractive for foreign direct investment. 1. 1 . The Bottled Water industry The LOS is the largest bottled water market. The US market accounts for around 23% of the $163 billions global market value.Americans are the biggest consumers Of bottled water with 31 ready to drink billions liters. The growth of this market is currently going down, with a slow growth of 1 % since 2008.
There are different reasons to understand this trend (Remuneration, 201 2) First of all, the quality of the tap water in the United States is quite the same as the classical bottled water. Fortified by the income coming from the sprayer, the water treatment infrastructure of the US is one of the most developed in the world.Furthermore, the quality of the bottled waters is sometimes bellowing the federal standards. (NRC, 1999) The US market is divided into two kinds of companies. The large multinationals such as Nestle, DEANNE, Pepsi and Coca-Cola, which generates more than 95% of the sales and the very small companies (less than 10 employees) which generate less than $10 millions. (BIBB) We can see on the table that producing a bottle of water in the US is not that expensive but some supporting related industries should be improved. 2.
Recommendations for the US companies “Promoting foreign direct investment is an important opportunity to accelerate our economic recovery. ” President Obama, June 2011 The Foreign Direct Investment is stimulated by diverse macroeconomic factors such as the GAP, GAP per capita and also by the political stability of a country. The US is the country, which receives the more FAD in the world; even tough some other countries recently have increased their FAD considerably in term of growth.The overall quality of the infrastructure in the SIS is really good and don’t need to be improved anymore whereas in emerging countries everything has to be done (MIT UNIVERSITY, 2011 In order to attract more Fids, the US should focus on innovation to captivate the foreign investors by sustaining their domestic companies.
Adapting their foreign policies by making new trade agreements could do it. They should particularly focus on new relationship with regional partners. Then, the SIS government should focus on a specific area they want to develop.For example we can see that the major part of the Fids go to certain regions whereas the LISA has a great territory with lots of possibilities. (Yippee, S. 2011) . Macro-economic Environment of Mexico Mexico has a free market economy in the trillion-dollar class with a population estimated to 116,220,947 habitants. Its economy is a mixture of modern and out dated industry and agriculture, more and more dominated by the private sector, which receives increasingly higher amounts of FAD (CIA 2013).
Just as the United States of America, the United Mexican States are a federation composed of 31 free and sovereign states that form a union that exercises a degree of jurisdiction over the principal Federal District and the other states. Each state is allowed to have its own constitution and congress; TTS citizens elect by direct voting a governor for a 6-year term, and also representatives to their respective unicameral state congresses for three-year terms.The Federal District, which has Mexico City as capital, is a special political division that belongs to the federation as a whole and not to the state itself, and as such, has more limited local rule than the nation’s states The states are divided into municipalities, the smallest administrative political entity in the country, governed by a mayor or a municipal president elected by its residents by plurality (Political Constitution of the United Mexican States, 2007). Business regulations are enforced by the government, which also means they have an immediate impact.The rules and regulations can be very different between the different states and provinces. Therefore the regulations require the coordination of 3 levels of government, federal, State and municipal as well as the support of the legislative and judicial bodies as well as key stakeholder such as notaries (Schwab, 2012).
This means that it is faster and easier to conduct or start up a business depending on where you are in the country. Some states are more open to new business and foreign impasses investing in the local cities and improving the infrastructure and living standard of the people in the town.In the past decade, recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. This has allowed Mexico to lead the global manufacturing hub offering world-class facilities and modern infrastructure. With increasing efforts on technological innovations to improve communication channels and software system, Mexico is becoming one of the most attractive locations to manufacture product or relocate service operation.
Transportation routes continue to improve as Mexico invests heavily in new container ports and the modernization of airports and railroads (NAPS, 2012). Since the implementation of the North American Free Trade Agreement (NONFAT) in 1 994, Mexico share of LIST imports has increased from 7% to 12%, and its share of Canadian imports has doubled to 5% (CIA 2012). Mexico has free trade agreements with over 50 countries including Guatemala, Honduras, II Salvador, the European Free Trade Area, and Japan – putting more than 90% Of trade under free trade agreements.