Managing Diversity in Mexico

By Daniel Wells,2014-03-03 21:38
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Managing Diversity in Mexico

    Mexico has a long established culture. Because of its cultural diversity, foreign investments are facing difficulties when entering Mexican markets. Our group’s report

    is to give a brief study of the management of diversity in Mexico. This report will provide a brief background to the Mexico, including references to its size, geography, racial and religious composition and key economic indicators. Key industries and businesses of Mexico will also be identified in the report. And the discussion of the ways in which diversity is managed in the Mexico will also be identified in the report. And the inference of whether managing diversity varies between Shanghai and other parts of China will also be concluded in the report. The report is divided into three parts, and the first part is the brief background, key industries and business of the Mexico.

    Firstly, the size, geography and key economic indicators of the Mexico will be introduced in sequence.

    Turning to the size, Mexico covers almost 2 million square kilometers (over 760,000 sq mi), and Mexico is the fifth-largest country in the Americas by total area and the 14th largest independent nation in the world. Turning to the geography, Mexico is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of Mexico. And for the key economic indicators, with an estimated population of 111 million, it is the 11th most populous country and the most populous Hispanic country. Mexico is a federation comprising thirty-one states and a Federal District, the capital city. After rapid economic, social and technological growth beginning in the 1990s, Mexico is now both one of the world's largest economies and one of the fastest growing economies in the world, with a stable growth rate of 7.6%. As a regional power and since 1994 the first Latin American member of the Organization for Economic Co-operation and Development (OECD), Mexico was firmly established as an upper middle-income country, and in 2009 Mexico surpassed the World Bank’s high income economic threshold to become a high income country. Mexico is considered a newly industrialized country and an emerging power. It has the 13th largest nominal GDP and the 11th largest by purchasing power parity.

Secondly, the Race and religious composition will be introduced.

    Mexico is ethnically diverse, and the constitution defines the country to be a multicultural nation. Mestizo (mestizos) accounted for 91.7%, Indian 7.8%, white, black and white mixed race people (mulattoes), and the black and Indian mixed race (Sambo people) accounted for about 0.5 %.

    Mexico has no official religion. The last census reported, by self-ascription, that at least 82.8% of the population is Christian. Roman Catholics are 76.5% of the total population, 47% percent of whom attend church services weekly. In absolute terms, Mexico has the world's second largest number of Catholics after Brazil. About 6.3% of the population is Protestant, of whom Pentecostals (1.4%) are the largest group. There are also a sizeable number of Seventh-day Adventists (0.6 million people). The Jehovah's Witnesses are 1.1% of the country's population. The Church of Jesus Christ of Latter-day Saints claims over one million registered members as of 2009. About 25% of registered members attend a weekly sacrament service although this can fluctuate up and down. There are eleven Temples of the Church of Jesus Christ of Latter-day Saints in Mexico.

    The presence of Jews in Mexico dates back to 1521, when Hernán Cortés conquered the Aztecs, accompanied by several Conversos. There are now more than 45,000 Mexican Jews. 3.1% of the population reported having no religion. Islam in Mexico is practiced by a small population in the city of Torreón, Coahuila, and there are an estimated 300 Muslims in the San Cristóbal de las Casas area in Chiapas. Mexico's Buddhist population currently makes up a tiny minority, some 108,000 according to latest accounts. Most of its members are of Asian descent, while people of various other walks of life have turned toward Buddhism in the recent past. Automotive Industry is the most important industry for Mexico economy. In 2007, it

    thbecame the 8 car producer in the world. Furthermore in 2008, 1,661,406 vehicles were produced in Mexico.

    GM, Ford & Chrysler started operating in Mexico since 1930s, and then VW & Nissan built plants since 1960s. In 2007, 1 out of 7 cars sold was made in Mexico Electronics Industry had grown enormously within the last decade. In 2007, it became the largest TV producer. Till 2008, it surpassed China and South Korea and became the largest smartphones producer. Lanix, Mexico's largest electronics company has seen great success in designing high technology products with high end companies

     such as Foxconn, Sarmsung, and Sonypurchasing Lanix components and contracting

    them with manufacturing and designing sensitive systems.

    Energy Industry is wholly state-owned. Energy production in Mexico is managed by state-owned companies. Mexico is the sixth-largest oil producer in the world, with 3.7 million barrels per day. PetroleosMexicanos (PEMEX) had the market value of $415.75 billion in 2006 with sales of $86 billion/year. Natural resources are the "nation's property" (i.e. public property) by constitution.

    Tourism is another important industry in Mexico. In terms of the 2008 Travel and Tourism Competitiveness Index (TTCI), which is a measurement of the factors that make it attractive to developing business in the travel and tourism industry of individual countries, Mexico reached the 57th place in the world's ranking Transportation Industry is also served proactively in Mexico. The paved-roadway network in Mexico is the most extensive in Latin America at 116,802 km (72,577 mi) in

     2005; 10,474 km (6,508 mi) were multi-lane freeways or expressways,most of which

    were tollways. Being one of the first Latin American countries to promote railway development, the network, though extensive at 30,952 km (19,233 mi), is still inefficient to meet the economic demands of transportation.

    For the second part, the discussion of the ways in which diversity is managed in the Mexico will be reported.

    As Mexico is a country which has a long history and typical culture and custom, managing business in Mexico can be a critical issue for foreign investors. The power distance, uncertainty avoidance, leadership style, and attitude to responsibility are different from other countries.

    Just compared with the US, which is neighbor to Mexico and having various amounts of joint ventures and multinational companies in Mexico, culture in business is extremely the opposite.

    First, the U. S. has values representative of small power distance and Mexico is characterized as large power distance, where inequalities can grow, according to the research by Hofstede in 1983. In addition, compared with the US, the uncertainty avoidance in Mexico is low while the US has high uncertainty avoidance. What’s more, Hofstede pointed out that the US leaders in the US culture focus on the needs of individuals who are paid attention to their self-interests in turn. However, in Mexico,

    which is a highly collectivist country, leadership will be more effective in the form of arbitrary behaviors by the leader. And finally, the Mexico employees tend to avoid the responsibility when working in the company.

    Thus, managing diversity becomes a necessity of daily operation for joint ventures or multinational companies in order to make companies run fluently. According to a case study done by Gordon and Williams in 2001, which is about a successful joint venture between a U. S. and Mexican companies, it was noted that cross-cultural friendships began to develop as a result of recognition that there were shared values between the cultures with respect to work ethic and attitudes concerning work and quality. The companies interviewed for the case study reflected that mutual respect developed can result from obvious interest by parties from each culture toward the other culture, leading to a motivation to become cross-culturally competent. Another research done by Rajagopal in 2006 indicated that the important variable for managing diversity caused by cross-cultural setting of joint ventures and multinational companies in Mexico is trust. Mexico is generally considered to be a low-trust culture and it is commonly agreed that collectivist societies tend to be low-trust cultures. Mexicans prefer not to speak out independently but remain interdependent with a group which is also a symptom of low trust. This made most of the joint venture and multinational companies in Mexico improve trust when started business since the success of cross-cultural context in Mexico is dependent on trust. In addition, the study done by Rajagopal also pointed out that the preference of autocratic command made Mexicans accept the idea that whatever will be, and it is a truth that Mexican employees will not challenge the decision made by their superiority. This factor makes joint ventures and multinational companies in Mexico adopt high power distance and autocratic leadership style to Mexican employees.

    One example of the managing diversity in Mexico is the MTC of Delphi, which is one of the subsidies of GM (General Motor).

    In Delphi Mexico, human resource managers are trained at the corporate in the United States and one of their functions. They work to identify needs through the PBP (Personal Business Plant), which is related to global roles and specific training for

    each employee. The aim is to close the gap between the needs of the position and the skills of the person on arrival at the company. Internal and external training programs are formulated to this end, as well as academic furtherance programs. An average of 90-100 hours’ training is offered to each employee (more than 200,000 hours a year). The Delphi Mexico agreed that it is important to capture the complexity of coordination processes in global corporations which are multi-plant, multi-division and multi-technology. From this perspective, MTC’s function is not only to design new processes and products, but also to coordinate the accumulation of Delphi business units. In addition to the activity of developing new processes and products, MTC fulfills intra-company functions at a regional level in the areas of administration, finances, engineering support and coordination.

    Other methods are also used in the joint ventures and multinational companies for management of diversity, taking the examples of other U.S. companies in Mexico. In Mexico, the idea that the CEO and the workers are all part of the same group is not well developed. Therefore, the natural tendency is to think of owners and workers as two distinct and often opposing groups. Nevertheless, it is believed in the company that the traditional suspicion of workers toward management will be reduced as a result of openly attempting to establish personal relationships with the workers. Thus, the walkthroughs enables this process. Once the walkthroughs becomes daily, and an expected occurrence, the workers will see that the immediate reaction is to call maintenance to correct the problem and this is corroborating evidence of the company’s concern for their comfort. An additional benefit to the walkthroughs is the creation of trust. Creating trust with the managers is an easier task that is achieved mainly through careful attention to fairness and explanations of major strategies. Once trust is created, there is a natural tendency to perceive from the worker they are part of their group, further enhancing the collectivist tendencies.

    As Mexico has a good piece of construction of media, the proliferation of television in Mexico with re-runs of hit shows in the US has no doubt mediated the convergence and the mental deprogramming. Also the internet is available to almost all Mexicans if not through a home computer through affordable cyber cafes. Therefore, Americans

    and their social and professional culture are more easily accepted by Mexicans, which makes the teaching of modern management practices easier. Mexican employees learned and adapted more easily due to convergence of the cultures. In conclusion, our group suggests that the important of method for management of diversity in Mexico is to develop trust.

    Since Mexico is a highly collectivist country, its tendencies do not appear to have been affected to a great extent through convergence. The useful strategy for those companies is to convince employees that they are part of a group constituted by the organization and that the employees are as much stakeholders in the outcome of the business as are the stockholders. And in order to achieve this standard, the strategy should be assisted by the development of trust.

    Uncertainty avoidance is still a strong tendency due to the bleak prospects for most citizens who are on the lower end of the socio-economic spectrum. However, employees can be shown that their plight can be improved if they have the will to try. But for them to believe someone who is from another culture and on a much different point on the socio-economic continuum there must be a high degree of trust. For the third part, the inference of whether managing diversity varies between Shanghai and other parts of China will also be concluded in the report. Comparing with the Mexico practice, China is a country with large area and large population especially having a long history of its culture. Since China opened its policies in 1980s, there are different kinds of companies such as multinational companies, state-owned corporations, and family-run or individual companies. According to Hofsteds’ four culture-dimension theories, China is typically and

    obviously a country of high power-distance and collectivism, which is reflected in the management of all these organizations. For example, in the state-owned companies, their management is still more or less influenced by the government policies and interference. In the marketing economy, while most of the family-run businesses enjoy more freedom and are more flexible in their management, profits in these companies are their first concern and interest. They put the demands of the job before the needs of the individual; put the expertise and standards of the employing organization first;

    monitor and control the exchange and accessibility of information and opinion. Therefore, these companies are the dominant part of the Chinese market with their own characteristics.

    Compared with the other parts of China, Shanghai is an international metropolis. In Shanghai, there are not only state-owned companies, family owned companies, but also more multinational companies, with personnel from different part of the world. These companies and these talents come from all over the world of distinguished culture. They turned out to be quite different in their management because of their culture differences. Chinese businesses have such characteristics:

    1. Values and principles are more important than money and expediency.

    2. Before the business meeting, the presenter will have the afternoon tea

    and general greetings.

    3. The host will charge the meeting from start to the end.

    4. Chinese are stick to the best decision when they think it is the best.

    5. The response is very important.

    The vast number of multinational companies in Shanghai brings to the various cultures, such as the European countries are more open than the domestic companies, which means that they stimulate and encourage a full and free exchange of information and opinion. The multinational companies in Shanghai often come with a big firm, so the system and procedures are tight and clear, which is opposite from the small firms in China. Although they are focus on the profits as the top criteria, they put more efforts on the staffs’ individual development. Skill training and human resource management are the key elements of the staffs’ development. Moreover, the sustainable development is also concentrated by them. The global brand images of these multinational companies are concerned as great elements of them. However, the multinational companies may have some influences on domestic companies that calls for an integrated module. This kind of integration has both the domestic management culture and foreigner principles. The foreigner talents can bring the foreign management module to the domestic companies. However, in other cities in China, the Chinese are conservative; it is hard for them to accept the foreign

    management style. The human resource department is ignored in Chinese companies, which the foreign companies regard it as a big event of the firm. In Shanghai companies, although the management style is conservative, the foreign human resource management has been regarded more and more. Moreover, the powers of Chinese executives are bigger than the foreign companies. The authority is much more important in Chinese than in foreigners, which means that the power distance is greater than other foreigner companies. In most multinational companies in Shanghai, the executives are less empowered; the authority is separated to many other departments in order to avoid simple decisions and wrong directions. The foreigner serving principles are “people oriented”, in most conservative companies, they only

    focus on the profits regardless of the services, which is not good for the sustainable development. In Shanghai’s multinational companies, the customers come from all over the world, it can be impressive for them to feel the “people oriented” service principle from foreign companies. For instance, the Wal-Mart Company has an integrated culture in Shanghai. First of their principles is respecting. They regard the employees as the biggest poverty of the company. Second, encourage co-work and communication in the work. Every staffs are available to give the recommendations, which is different with Chinese conservative organizations. Third, the training system for the employees is concerned as an important element of Wal-Mart. Better understanding the culture of the organization to achieve the goals together is the principle of Wal-Mart. The flat-style and team work initially, for example, the Shanghai Volkswagen Company-“Shanghai Volkswagen” is a typical multinational company run by Chinese. The “people oriented” system is original from the Volkswagen culture. They utilize the domestic management style and promote with the foreign principles; the strict Chinese management style combines with the foreign human-based management, the domestic skills combined with the high-technology equipments. Shanghai Volkswagen which has lead to the success of “Shanghai Volkswagen”.

    To sum up, the goal of multinational company is to localize and combine the foreign management style with the local status. With the open policies of China and the WTO, Shanghai as an international metropolis and other cities will have more opportunities

to have a better corporation in the future.


Zhang G. 2007, 'Competitive Industries of Mexico', Venture in Mexico

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