Expatriation

In general terms, expatriation means voluntary renunciation of citizenship of one country for the
citizenship of another (http://www.businessdictionary.com/definition/expatriation.html). In
business terms, expatriation is a process through which a company sends one or some of its
employees from the home base to look after the firms international operations.

Exptriate
An expatriate is a person who is sent to foreign countries to look after a firms international
operations. In Business terms, an expatriate is an employee who his sent from his home country
to abrod for professional purposes (http://www.mbaskool.com/business-concepts/humanresources-hr-terms/6708-expatriate.html). All the expatriates need special training, are supposed
to enjoy expatriate premiums, both monetary and non monetary. It can also be difficult because it
requires staying away from home and family for quite a long time and can cause culture
shocks.other than that, it is great opportunity for career development.

PESTLE Analysis:
PESTLE analysis is a macro environmental framework to understand the political, economic,
social and technological factors that can affect a business. It is also a strategic tool used for
analyzing the business environment.
Political Analysis:
Political factors are related to rules and regulations and the government policies to influence a
business positively and negatively.
The government policy of Mexico can be characterized as Federal Constitution Republic. It is a
federation comprised of 31 states and a capital that is the federal district. Though it is a federal
republic, the ideologies are not strictly followed. There are high levels of corruption. According
to Transparency International, Mexico ranks at 35 in the corruption index as of 2015. This means
that there is high corruption in the country. Even the elections do not meet the anti-corruption
standards.

The country is a hub for FDI because it has eased up the foreign investment policy and opened
doors for new investors. The ease of doing business in Mexico ranks at 38 as of 2015
(http://www.tradingeconomics.com/mexico/ease-of-doing-business). The country also has 11
free trade agreements with 44 countries which also include Canada and EU. Mexico is also a
member of NAFTA which gives an added advantage to the country to do extensive trade with
USA. In 2012, Mexico had 78% of their exports only in the USA (Investment in Mexico 2014,
KPMG) and the trade between UK and Mexico was around $32 billion
(https://www.gov.uk/government/publications/exporting-to-mexico/exporting-to-mexico). The
corporate tax rate is also favorable at 30% which is lower than countries like India, Japan, Brazil
etc countries (https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-ratesonline/corporate-tax-rates-table.html)
However, Mexicos economic stability is highly linked with the US economy. As most trade is
done with USA, if the USA faces an economic shock, it is going to hurt Mexicos economy. The
country is also affected by violence by the criminal organizations especially in the border areas.
Violence involving drug dealing is also a major concern for the government as it creates a
negative image to the foreign companies.

Economic analysis:
Since the economic and political reforms in the late 1990s, Mexicos economy has just boomed.
Mexico is the worlds 15th largest economy and World Bank analysts predict that it will be the
worlds 5th largest by 2050(https://www.gov.uk/government/publications/exporting-tomexico/exporting-to-mexico).
The annual GDP of Mexico is $1294.69 billion as of 2014. In the world of economic recession,
Mexico has maintained a stable GDP growth rate since 2014 with a growth rate of 2.60% as of
the 1st quarter of 2016. (http://www.tradingeconomics.com/mexico/gdp-growth-annual).
Mexico is a good place for business as there are a huge number of skilled and young labor
forces. The labor cost is also comparable to the Asia-based manufacturing. The unemployment
rate in Mexico is 3.8% which is relatively low
(http://www.tradingeconomics.com/mexico/unemployment-rate). Inflation rate is also steady as it

never went over 3% in the last 1 year. Now the inflation rate is 2.60% as of April 2016
(http://www.tradingeconomics.com/mexico/inflation-cpi).
The industry and service sector are the biggest contributors to the Mexican GDP. As of 2014,
agriculture contributed only 3.5% to the GDP. Whereas, industry and service sector contributed
33.8% and 62.7%, respectively.
(http://www.investopedia.com/articles/investing/090315/emerging-markets-analyzing-mexicosgdp.asp)
Tourism is also a potential sector of income for the country. Mexico has 33 world heritage sites
according to the UNESCO. (http://whc.unesco.org/en/statesparties/mx)
Mexico is one of the top exporters of vehicles. It ranks as the 7th largest light vehicle producer
globally. (http://www.automotivemeetings.com/mexico/index.php/en/automotive-industry-inmexico). It is also the largest silver export country in the world
(http://investingnews.com/daily/resource-investing/precious-metals-investing/silverinvesting/10-top-silver-producing-countries/) . Mexico also exports oil, electronics equipment,
medical equipments etc.
Social analysis:
Mexico is the 10th highest populated country in the world with a population of 128,621,854 with
a growth rate of 1.27% as of 2016 (http://www.worldometers.info/world-population/mexicopopulation/) . Of the total population, the median age is 27 years. So, the country has always
been an youthful country. The average life expectancy is 77 years
(https://prezi.com/s_rge0vhaft4/pestel-analysis-mexico/) . This indicates the development of
medical technology in the country.
However, there are 9 children for each adult. By 2050, there will be as many as people under 20
years as there are adults of 65+.This will have a big impact on the market trends. As of 2014, the
rate of fertilty is 2.29 children per women
(http://www.indexmundi.com/mexico/total_fertility_rate.html) . Which means that now there is
a booming market trend for children products like diapers, toys etc. But, by 2050, when the
median age will be 42, there will be a dramatic shift in market trends. Then, health related

products will have big market demands for living better and longer
(http://bigthink.com/disruptive-demographics/mexico-the-graying-of-north-america).
About 78% of the total population now lives in the urban areas. But that does not give a clear
picture of the going inequality among the urban lifestyle and rural lifestyle. There is a huge
wealth gap in mexico. The richer 20% of the population earns 13 times as much as the poorer
20% (http://www.oecdbetterlifeindex.org/countries/mexico/) . This inequality can also be found
in terms of geography. Salaries are nearly 3 times higher in the north than in the south as the
south is mostly rural areas and agriculture is the main employment sector there (MarketLine,
Mexico: Country Profile Series: In Depth Pestle Insights (2012): p. 61..).
In 2010, about 46% of the total population lived in poverty. But people living in extreme poverty
have decreased from 10.6% to 10.4% (http://www.worldbank.org/en/country/mexico/overview) .
Womens contribution to the economy has played a major part here. Now, more than 45% of the
women work outside (http://www.cfr.org/mexico/mexico-makes/p30098). Though traditional
gender inequality and stereotypes are still present in Mexico, even after that, percentage of
women working outside has doubled in the last 30 years. Feminist movements, education,
economic needs etc are the major reasons behind it. Though, maternity is still a hurdle in
womens career development. As stated before, one Mexican woman has at least 2 children. This
is one reason that affects womens career development. Another reason is, women working in
formal sectors get only 12 week of paid maternity leave (OECD, Haciendo lo Mejor Para las
Familias: Mxico/Doing Betterfor Families: Mexico (2011)) .
However, mexico has a very large working age population as 65% of the total population is 1564 years old (MarketLine, Mexico: Country Profile Series: In Depth Pestle Insights (2012): p.
4..). It has also been stated before that the median age is 27 years. So, it is an attractive hub for
the investors as production needs young hands.

Technological Analysis:
Mexico has exponentially grown in the technological fields. It is one of the largest producers of
vehicles. According to World Bank, Mexico is Latin America's largest exporter of hightechnology goods such as aerospace, pharmaceuticals, scientific and electrical machinery. The
high-technology goods accounted for $40.7 billion exports in 2012
(http://www.marketresearchreports.com/countries/mexico). Mexico is also the biggest producer

of flat-screen TVs in the world (http://www.npr.org/sections/money/2012/11/30/166180397/whymexico-is-the-worlds-biggest-exporter-of-flat-screen-tvs).

The use of internet is also growing fast in Mexico. Currently 45% of the population uses internet
(http://www.internetlivestats.com/internet-users/mexico/) . The rate has doubled in the last 8
years. That is why the e-commerce sector in Mexico is growing large. Between 2011-2016, ecommerce sales in Mexico have increased up to 3 times (http://www.thepaypers.com/casestudy/javier-vallaure-allpago-exploring-the-growing-mexican-ecommerce-sector-/755633). In
2011, Microsoft opened its first technology center in Latin America and it was in Mexico with a
view to help software developers
(http://latino.foxnews.com/latino/espanol/2011/10/05/microsoft-opens-tech-center-in-mexico/) .
Currently, Mexican government is putting great emphasis on nanotechnology and biotechnology
as mexico has issues of high toxicity and use of hazardous materials that impact the environment.
The country also has an extensive transport system that may help the businesses for flexible
production. There are 227,481 miles of roadways and 1714 airports in mexico
(http://www.nationsencyclopedia.com/economies/Americas/Mexico-INFRASTRUCTUREPOWER-AND-COMMUNICATIONS.html) . (https://www.cia.gov/library/publications/theworld-factbook/rankorder/2053rank.html).

Environmental Analysis:
Mexico has one of the most diverse weathers in the world. The northwestern part and the
northern inland are drier than the rest of the country
(www.gtu.ac.in/ABP/.../760%20MEXICO%202-.pdf) . It is the second country in the world
ecosystem and 4th in overall species (https://www.academia.edu/7251075/Mexico_market?
auto=download) . 170,000 square kilometers in mexico are considered as protected natural areas
(https://www.academia.edu/7251075/Mexico_market?auto=download).
Mexico has high levels of pollution and use of toxic materials. This happened mostly because of
the industrializations and lack of management to control pollution. In 2013, Mexico City was
ranked as the 26th most polluted cities in the world
(http://www.numbeo.com/pollution/rankings.jsp). This is the reason Mexico has passed a

comprehensive climate change regulation in 2012 with a set of goals like reducing the use of
carbon dioxide by 30% within 2020, producing 35% of total electricity through renewable
energy by 2024 (http://www.nature.com/news/mexico-passes-climate-change-law-1.10496).
They also have made a list of hazardous materials and if any industry chooses to use any of
those, it should take permission prior to using.

Legal Analysis:
Mexico is very flexible for new business entrants. The startup process is very simplified as no
minimum capital is required. The launching process takes less than 10 procedures. But on down
point here is that the licensing process is very costly
(http://www.heritage.org/index/country/mexico).
Auditing rules are also very strict in mexico. Companies that have a gross revenue exceeding
MXP 34,803,950, assets more than MXP 69,607,920 or have at least 300 employees must submit
a special report to the Mexican tax authorities to verify if the auditing was properly performed
(www.gtu.ac.in/ABP/.../760%20MEXICO%202-.pdf).
Labor laws are very strict in mexico. Under mandatory profit sharing rules, all employers are
bound to distribute 10% of their pre-tax income to the employees
(http://www.mexconnect.com/articles/13-doing-business-in-mexico-general-legal-businessentry-issues).
Private investment in the energy sector is one of the key reforms to enhance the economic
growth. Mexico has passed laws that for the first time in 78 years foreign and private oil
producers will be allowed to do business in Mexico. This sector was previously monopolistic
(http://www.forbes.com/sites/doliaestevez/2014/08/14/after-79-years-of-nationalism-oil-richmexico-welcomes-foreign-capital/#1427a11a8cb2).