4. Opportunities and Threats Opportunities and Threats from Government Actions McGraw-Hill McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. Slide 12-5 INTERNATIONAL MANAGEMENT 5/e Beamish, Morrison, Inkpen and Rosenzweig Threats Government Actions Opportunities Increase costs Reduce ROI Competitive disadvantage Increased competition Co-opt  Regulation   Taxation   Expenditure   Privatization   Consultation  Control competition Competitive advantage Subsidies, grants, customer Level playing field Influence policy

6. NAFTA

7. 1991 1994 1998 2003 2008 Negotiations Started NAFTA Signed Ratified I Schedule II Final

13. Textile

18. Mexico United States Pre-NAFTA Maquilla Networks Textile Mills U.S. Manufacturer Retailer U.S. Broker Assembly Plants (U.S. & Mexican Owned) Subcontractors Full-package networks (orders) Assembly networks (cut parts) Key

19. OMJC Wrangler Mexico Aalfs Wrangler de Mexico Post- NAFTA Full-Package Networks Retailer JC Penney Marketer Manufacturer U.S. Lead Firms -Retailers -Marketers -Manufactuers Kentucky-Lajat Siete Leguas Libra Textile Mills Textile Mills Full-package networks (orders) Full-package Manufacturers Joint Ventures/ U.S. Subsidiaries The Gap Textile Mills United States Key Assembly networks (cut parts) Assembly Plants/ Subcontractors

21. Table 5

24. Garment Workers in Los Angeles, by Race

25. SUPERMARKETS

36. Wal-Mart de México, SA de CV Supercenters (89), Supermarkets (48), Clubs (61), Warehouses (162) Wal-Mart, 62.4% 12,547 360 All major cities Direct, local distributors; importers Grupo Gigante, SA de CV Hypermarkets (61), Supermarkets (100), Clubs (3, closing 2/05), Warehouses (52), Gigante USA (8) Local 2,736 224 All major cities and California Direct, local distributors; importers Supermercados Internacionales HEB, SA de CV Hypermarkets (8), Supermarkets (12) US owned 801 20 Northern Mexico Direct, local distributors

37. 03/23/11 Typical Mexico Produce Distribution System Producer Wholesale Market Public Markets Grocery Stores Street markets Supermarkets Distribution Centers Middlemen

38. 03/23/11 International Distribution US Exporter US Exporter US Exporter

39. 03/23/11 Typical US Produce Distribution System Packer/ Shipper Chain Distribution Center Supermarket Independent Wholesalers Terminal Markets

42. HEB WalMart Hyper market 45,000 - 100,000 Almost a full line of merchandise and additional services. Super market 5000 – 45,000 Food items (perishables and dry goods) limited services, pharmacy. Mega market More than 100,000 Full line of merchandise and additional services such as a pharmacy. Hyper market 45,000 - 100,000 Almost a full line of merchandise and additional services.

46. 03/23/11 April First Store Opens Cifra 563 Wal Mart Stores In Mexico

47. 03/23/11 Wal Mart Mexico Sales Growth 6.1% 4.7% 4.8% % Net Profit/Sales 17% 15% 12% SALES GROWTH RATE 2002* 2001 2000 Year

49. Walmart Bodega Aurerra

50. Walmart Bodega Aurerra

51. Walmart Bodega Aurerra