Mexican Investors Harvard Case Solution & Analysis

Mexican Investors Case Study Solution 

Mexican investors:

Mexico consists of many economic sectors and always remains on the top of the other economy and plays a vital role in FDI among the emerging market. It is identified that the Mexican economy continued to expand at an annual rate of 2.5% through recent years. The Mexican investors have increased the resources for the business companies to process the business within the country and export the material out of the country to generate the revenues.

The economy has been growing rapidly in modern industrial and service sectors by introducing more private ownerships to encourage the investors for high revenues and expand the business globally. The investors expand the distribution channels and improve the service industry to acquire the effective results and outcome from the investors. Most of the companies in Mexico were not well classified and did not reach the mature stage for expansion in other countries.

It is determined that under the North America free trade Agreement (NAFTA), the Mexico have developed significant economics. The gross domestic production of Mexico is estimated $1.2 million in 2015. The GDP was consistently higher up to $2.2 trillion in 2015 and it is determined as 12% of GDP. Per Capital Income in Mexico is essentially lower than the United States. The investors have identified that Mexico did not have more population and resources to generate the revenues and get the results done through the trading.

The investor should increase the resources in Mexico to generate more income and minimize the trading risk. The reason behind the problem is that Mexico has paid various import taxes and transpiration cost which does not allow them to generate more income. It is identified that the Mexico is dependent on the United States as approximately 80% of their merchandise is imported from the United States.

Ford motors:

Ford Motors does not have any plan to move to Mexico because it is under the terms of the United Auto Workers contract that expires in 2019 before that the company does have any intend to move to Mexico. Mexicans do not have the production capabilities and resources for Ford Motors to produce in Mexico.

Furthermore, Ford does not find the specific market for their vehicles, and there were not sufficient competitiveness to acquire the resources and start the production.  The company was settled in the United Stated with Louisville assembly plant in Kentucky, where it employed the skillful labor and large production department with the occupancy of 4,700 people.

Mexican companies do to insure, transfer, or hedge the same risk:

To acquire the long-term growth and sustain the business in the competitive age, the companies should select the alternative to expand the business and to increase the investment to avail the other opportunity to generate the revenues. The business should be diversified to cover the major portion of trading and deals with the different states of the country.

The adoption of various international accounting standards by various companies and pension funds over the upcoming years would help the company to create transparency and comparability. The modification in the financial institution would help the state to make the economy stronger and reduce the unemployment rate. The government rules, policies, and the arrangement would also lead towards the uncertainty. The companies focused on the employees’ rights would improve the recognition, presentation, and discourse of employee benefit obligation to increase the employee rate.

Accounting volatility would be the market assessment, the company valuations which would ensure the capital, while the changes in the pension funding could affect the supporting company.

How should American investors manage their investment risk -- insure, transfer, hedge -- you mentioned gold, what else can they do?

Currency Risk:

Money issues are regularly a standout amongst the most vexing and minimum surely knew issues for financial specialists. This is particularly valid for Americans abroad and double subjects whose compensations and other pay sources are regularly designated in monetary standards other than U.S. Dollars (USD). The uplifting news is that seeing how to consolidate money contemplations into a sound legitimately, long haul venture technique is much simpler than caught on. In this case, we pull back the misty cover of "money risk" that mists speculation and budgetary arranging choices for Americans abroad. We draw a couple of a straightforward rule that all financial specialists can use to guide decisions around money group of funds and speculation. We then offer a reasonable guide on how and where financial professionals can go to build a universally differentiated, multi-money venture portfolio. More data is given in the Currency Risk Management and Investment Portfolio Planning for American Expats Webinar.

Mexican Investors Harvard Case Solution & Analysis



Managing the Risk:

It is identified that the two most important basic strategies would help the investors to administer the investment risk and make the practical decision to minimize the uncertainty. The managing risks are a systematic risk and non-systematic risk.......................

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