1. In this week’s forum you will provide a brief installment on Political Risk. Please post a strong, thoughtful paragraph to the question – what are the central risk factors of your team’s foreign target market?
2. After watching Ghemawat’s TED talk, provide a brief, thoughtful paragraph addressing these two questions – Now that you have a rather comprehensive understanding of globalization, Ghemawat says – not so fast …. we are not as global as we all think. From his talk, first, what fact/data surprised you? And secondly, why do we seem to insist that we are really ‘global’ at all?
Here is the link – enjoy: https://www.ted.com/talks/pankaj_ghemawat_actually…
3.Leslie Chang spent two years with Chinese factory workers – mostly young women. In a thoughtful paragraph or two – is there really a ‘race to the bottom’ or are these women moving up? Be specific in your response.
Leslie Talk: https://www.ted.com/talks/leslie_t_chang_the_voices_of_china_s_workers
peer 1 discussion 1
Currently, Mexico’s Political Risk Yearbook grade sits at a B for financial, direct investment, and export despite High turmoil. The Five-year mark lists Mexico moving towards a moderate turmoil country and remains steady at a B grade.
Central risk factors of Mexico are as follows:
Pandemic management- President Andres Manuel Lopez Obrador’s (AMLO) handling of the pandemic and the related economic difficulties on the Mexican people. The current administration was slow in its action to fight the pandemic and chose austerity programs.
Economical- Although mismanagement of the pandemic affected the country, the economy is showing signs of a strong recovery, with the second quarter performance boosted by strong US demand. Despite the lack of a significant stimulus component in the 2021 budget, which increases last year’s actual spending by just 4.3%, real GDP growth will be held to less than 5% this year.
Inflation- Demand pressures, higher commodity prices, and the increased cost of manufactured goods due to the supply-chain issues will sustain inflation above 5%.
Unemployment- the response to the pandemic has contributed to a weak recovery from household spending and business investment. It is predicted that it might be several years before the loss of jobs in the formal sector is regained.
Public opinion- although most of the president’s policies on social issues are approved by his people, his handling of COVID-19, the economy, domestic security, and corruption is felt that he does not have these crucial factors under control.
peer 2 discussion 1
The political risk in Mexico has some challenges despite authorities’ ongoing efforts to tackle corruption and reduce crime; measures of political stability are still currently below acceptable averages. Ironically, there was deadly violence during the 2021 campaigns where “close to 100 political figures were assassinated including three dozen candidates for office” (Political Risk Yearbook: Mexico country report, 2021). Yet the former Mayor of Mexico City and now President of Mexico, Andrés Manuel López Obrador, no longer has the majority to approve changes and relies on support from the other parties to move initiatives forward. The political ongoing challenges may impact regulatory changes that are threatening Coca-Cola’s pocketbook. Higher imposed sugar-tax regulations are pushing down consumer demand and slowing growth in a valuable market.
One of the challenges of doing business in Mexico is not having guidance to navigate the regulatory and administrative system. The short-term aspect of the manufacturing sector is positive, with direct growth investments forecasts of risk to international business is low and the aspect of exports also shows low risk. The medium-term outlook, five-year period “remains somewhat challenging because of the absence of a stimulus after the 2020 Pandemic, threatening the soundness of the business environment. The key economic forecast for the past four years sees the Real GDP growth rate at -.03% while inflation is forecasted to grow, again as part of the lack of foundational support when borders were closed, and trade continues to be impacted by the supply chain issues on a global scale. The United States accounts for about 74% of exports and 50% of imports. The two countries are tied closely together. Due to the fact the law in Mexico provides little of a framework on standard payment terms, it can take 40-50 days on average for payment but delays up to 30 days are also expected (Mexico Country Risk Report & Analysis, 2021).
Coca-Cola has operated in Mexico for 88 years. One of the country’s largest employers generates more than 90,000 direct jobs and 800,000 indirect jobs (citation here). On a per-person basis, Mexico consumes more Coke than any other country in the world, twice that of the U.S. (Corbishley, 2020). Mexico is also home to independent bottler Coca-Cola FEMSA, which bottles and distributes roughly one out of ten products sold in the world, making it the second-largest Coca-Cola bottler globally. Mexico is as important a partner to Coca-Cola as the firm is to Mexico. Coca-Cola franchises operations to distributors, and two of the largest global distributors are in Mexico. So, the political risks are even more relevant as Coke’s second-largest bottler, Arca Continental will be the first Mexican bottler to acquire Coca-Cola territory in the U.S. the company had been facing a challenging time as a result of the macroeconomic weakness in the region. The company is no stranger to the dynamics of doing business with Mexico, where 48% of the Latin American $90 billion dollar beverage market is held currently. (How has Coca-Cola turned around its fortunes in Latin America, 2021). Coca-Cola has not shied away from maintaining or growing its Mexico investment but must watch the impact of pressure being placed on the president due to the health concerns of the nation as the number one consumer of sugary beverages in the world.
Sources:
Corbishley, N. C. (2020, July 26). Coca-Cola is confronted by Big Problem in its second-largest market. for once, political connections failed. Oct 1 is the date. Wolf Street. Retrieved November 9, 2021, from https://wolfstreet.com/2020/07/26/coca-cola-confronted-by-big-problem-in-its-second-largest-market-for-once-political-connections-failed-oct-1-is-the-date/.
How has Coca-Cola turned around its fortunes in Latin America? Nasdaq. (2017, December 14). Retrieved November 9, 2021, from https://www.nasdaq.com/articles/how-has-coca-cola-turned-around-its-fortunes-latin-america-2017-12-14.
Mexico Country Risk Report & Analysis: Euler Hermes USA. Mexico Country Risk Report & Analysis | Euler Hermes USA. (2021). Retrieved November 9, 2021, from https://www.eulerhermes.com/en_US/resources/country-reports/mexico.html#link_internal_1.
Political risk yearbook: Mexico country report. PRS Group, Inc. Liverpool, N.Y. (July 2021). Retrieved from http://search.ebscohost.com/direct.asp?db=bth&jid=QH5&scope=site.
peer 1 discssion 2
From his talk, first, what fact/data surprised you?
From Ghemawat’s talk, what surprised me most was the overestimation of the accurate figures for the information flow: Phone calls, Immigrants, Direct Investment, Exports (to GDP). People overestimate the numbers at least two to three times over.
- Phone calls across borders- 2%
- Immigrants moving across borders- Population accounted for the first generation at 3%
- Direct Investment- as of 2010, foreign direct Investment, almost 10%
- Exports to GDP ratio- official statistics indicate above 30%, but that number is skewed and sits around 20%
We are not as “globalized” as we think, despite all the articles, books, and documentaries that say so. This changed my belief of just how globalized we are; we are just getting started.
peer 2 discussion 2
“Organization, is this view that national borders really don’t matter very much anymore, cross-border integration is close to complete, and we live in one world”.
There are many people in the world who feel that there is no longer a need to organize by country. They believe that because of globalization, crossing borders is much more difficult than when people lived in smaller communities where it was easier to identify with others. But they may be wrong. This view may be incorrect due to the fact that there are still differences in cultures, food preferences, and social customs among countries which still cannot be ignored or easily changed overnight.
This view is not only limited to the lower class. Companies that have a global presence also believe that there is no longer a need for the nation-state. These companies prefer cross-border areas over national borders because of competitive advantages. They want to reduce costs, especially in transportation and communication.
Companies think that countries want to keep up with their neighbors which will move them further apart at the same time when they are trying to achieve economic recovery. They also think that migration from one country to another will reduce jobs in a country which will increase unemployment.
Why do we seem to insist that we are really ‘global’ at all?
We live in a global world. We are aware of things all over the world on a daily basis. It’s come to a point where we have become desensitized to it because it is so common in our culture. When the news of something tragic occurs, people are talking about it all over the globe immediately on their social networks. A new gadget is trending worldwide within days of its release. People are influenced by trends all over the world, even though they may not be aware of their origins.
Tradition in marketing is important in representing the brand in a local way. Marketers use this to their advantage in order to best serve their consumers. The truth is that people are more likely to believe that they are buying the product from their neighbor’s kitchen table than someone sitting on a luxurious chair overlooking Central Park. A good example of this is the hamburger versus the Big Mac. McDonald’s is known for its global marketing strategy, but it still uses local marketing methods to put a real face on its brand, and this works.
The challenge is to keep globalization in balance with local markets. As technologies become more and more sophisticated, there will be less and less need for local marketing strategies; for example, if the story-telling piece of local specific ads will be replaced by a one-second video on YouTube.
And secondly, why do we seem to insist that we are really ‘global’ at all?
I believe we tend to overestimate figures, especially since technology and social media have a hand in influencing our views. We consume viral articles, read popular opinion books, focus on the topic, and believe how globally saturated we are becoming. What we fail to see is the absence of facts and factual data. “Globalogne.”
The trend and popular opinion have swayed us into believing we are globalized because they see it as the future. But I think that although some things are more globalized than others, we are still not there. As Ghemawat stated in the talk, once we learn and realize the facts, we may realize we are not as global as we thought. We are only at about 10-20% globalized.
This cannot be more relevant today with social issues, immigration, the pandemic, and foreign aid. We have a responsibility to “Avoid overstatement so that it reduces/reverses fears about additional integration.”
peer 1 discussion 3
I believe that there is a race to the bottom, as far as government is concerned. Most governments who manufacture are in the race to be more competitive, gain an advantage and reduce costs on the macro side of China’s economy. However, when you look at the individual laborer, in this case, the young Chinese women that Leslie met and interviewed, they are genuinely “moving up.” Their race is for self-improvement, however, an entirely different goal.
In the United States, we rarely think of where the products we desire originate from. We help exploit the labor with each purchase that comes from China. It does not cross our minds that they are oppressed and that the desire for the goods is the cause. However, the women themselves have a different opinion of their labor. Factory life to the Chinese worker is a better life than the farm life at their homes. They choose to leave home, earn money, learn skills, and see the world outside their homes. What they are producing is not a thought in what they do, and it is immaterial to their goals. What they make is not the point; what they learn and how they change from it is what matters. “These women are self-motivated, self-driven, and resourceful, and what they want most is to learn.” So as Marx states, “Alienation of the worker from the product of their labor” is valid in this case.
Source:
Chang, L, (2012). TEDGlobal 2012- The voices of China’s workers. Retrieved from https://www.ted.com/talks/leslie_t_chang_the_voice…
peer 2 discussion 3
“Karl Marx saw this as the tragedy of capitalism, the alienation of the worker from the product of his labor. Unlike, say, a traditional maker of shoes or cabinets, the worker in an industrial factory has no control, no pleasure, and no true satisfaction or understanding in her own work”(4min, 22 sec).
Karl Marx saw this as the tragedy of capitalism, the alienation of the worker from the product of his labor. Unlike, say, a traditional maker of shoes or cabinets, the worker in an industrial factory has no control, no pleasure, and no true satisfaction or understanding in her own work.
In a way, it’s even worse now because now those workers are generally those without college degrees who have been educated enough to work with computers but not enough to do anything meaningful after leaving school. This is a problem with a glorified past of agrarian societies. This isn’t a simple issue. The point I wanted to make is that you can’t define people as workers and non-workers. The people Marx talked about were the property owners, the business people, and yes, the factory owners. In modern times that is not what capitalism requires. In fact, in most capitalist economies today most of the job creators are everyday people who work from home for themselves. They are small business people or self-employed. Without them, there would be no job for anyone else.
People who start corporations are workers too, they just have more money than most people. Really successful CEOs come from the ranks of engineers and factory workers just like everyone else. They rise to the top because of hard work, brains, and education. You can give them a lot of credit for their success, but you cannot take away the idea that they are the ones who create wealth and jobs. Without them, don’t most of us would not have a job? The most successful people I know went to school, got an education from someone else’s money, and took risks that sometimes ended badly with the goal of building something better. In most cases, it ended very well for them.
Labels are not always useful. Capitalism is a combination of several factors, most of the things we can’t control.
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