Business security and globalization issues that Mexico face - Research Paper Example

?  BUSINESS SECURITY AND GLOBALIZATION ISSUES THAT MEXICO FACE Success of a business in every country depends on the security conditions. If a country has high security and good business environment all international business set their branches in that particular country. So security plays a key role in success of a business. Presently many researches are being conducted on the countries having problems in relation to security issues. Mexico is also included among the countries that are subjected to risk and threats in relation to security. So, in order to study the various business risk of security Mexico was selected to identify the cause and preventive measures of these illegal activities. Security situation in Mexico is very primitive. There exist conflicts among forces. Due to this reason the security threats and risks in country have increased rapidly. Kidnapping, drug wars, killings and extortions have become a part of daily life. This is not only harming the citizens but as well as the business organizations. Security risk is also affecting international business of the country. It is creating a hurdle to strengthen good relationships with other states, due to insecurities associated with the country. Therefore, it is imperative to control the present situation of the country by implementing appropriate security measures In order to control the risk related to securities businesses should stay in touch with media coverage in order to be aware of the political situation of the country. Security measures should be implemented in all practices. Foreign direct investment should be promoted in the country to prevent risks and threats. New laws and regulations should be established, especially a monitoring system for the training and evaluation of security forces in Mexico. Table of contents S.NO. Description PAGE NO. 1 Abstract…………………………………………………… 2 2 Outline of security issues and threats…………………….. 4 3 1.1 INTRODUCTION………………………………………. 5 4 1.2 MEXICO 5 5 1.3 CULTURAL ISSUES OF MEXICO 6 6 1.4 SECURITY RISK AND THEIR IMPACT Political security………………………………………………………….. Global issues……………………………………………………………… Bribery and corruption…………………………………………………… Terrorist threat………………………………………………………. Organized crime………………………………………………………… Border threats………………………………………………………….. 7 7 8 8 9 10 7 1.5 RECOMMENDED SECURITY ACTIONS Security and tracking system…………………………………………. Foreign direct investment…………………………………………….. Assistance from security agencies…………………………………….. Evacuation plan………………………………………………………. Competitive management…………………………………………… State and local regulatory…………………………………………… 10 10 11 11 11 12 12 8 Conclusion……………………………………………………. 13 9 References……………………………………………………… 14 Outline of Security issues and threats Mexico being one of the best business sites is facing many problems in relation to security issues. The security situation in Mexico is fluid and there exist conflicts among security forces. This led to increase in threats and risk in relation to the insecurity in the country. Some of the threats and preventive measures in relation to the security are discussed below: 1.1 Natural threats Mexico is suffering from just one natural threat which has affected the business economy i.e. global issues. Global issues Country have initially suffered a downturn in the business economy due to the global issues such as falling international demand, remittances etc. this have negatively affected the business economy. 1.2 Technical threats Technical threats can arise due to default or mismanagement of system and procedures. Mexico has two technical threats which are discussed below: Political Security Country has instable political security. These exists conflicts in the security forces and violence among political parties is quite frequent. This harms citizens as well as corporate entities. There is a technical problem in their law and political system Border threats Border threats have increased very rapidly especially for the organizations who conduct transaction of transferring goods through borders. Some culprits are smuggling illegal drugs and other items through the vehicles of the companies. There is a lack of efficient management and security systems in the entities. This is creating a menace in the country. 1.3 Man- made threats Mexico is highly suffering from man-made threats i.e. people themselves are responsible for the present condition of the country. Some of the man-made threats in Mexico are discussed below: Kidnapping, killings and extortions have become part of daily life of people. Corruption is at high phase, which involves illegal practices and theft of goods. There is a global risk in relation to terrorist’s attacks in populated places such as shopping malls, business avenues, tourist places and public area. The main problem of Mexico is violence and crime. Violence in relation to drugs has increased rapidly. There is an increase in crimes, murders, firefights, and road blocks. All these are linked to drug wars. Crime and violence in relation to drugs cartel have increased the risk for business operating in the country. 1.4 Cultural issues However, in spite of these security issues, there exist cultural differences among citizens in relation to status, education, profession etc. there exist a sense of inequality among citizens. Companies are facing disabilities in relation to societal and social problems. Social status of Mexico is covered by poverty. Due to this reason many people are suffering from health care problems in the country. Around 30% of population is dependent on government for basic necessaries this shows that economic condition of Mexico is not stable. People are not only suffering from security issues but they are also many societal and cultural problems in the country 1.5 Preventive measures In order to control the present situation of the country, it is imperative to take the following preventive measures: Security and tracking systems Companies can use effective monitoring systems to control the illegal practices of transferring drugs through borders. Drug dogs, security checking inspectors or GPS systems should be used to ensure security. Foreign direct investment In order to prevent the present condition of the country foreign companies should spend more in Mexico and should include such processes which provides security to the company. This investment should be used to ensure security in relation to kidnapping, killings and extortion. Execution plans Execution plans should be conducted by the companies which are mainly operating on boarders. In this strategy employees should be given training to deal with diverse security issues. Security agencies Presently, one of the most prominent ways used by the companies to deal with this issue is to take the services of security agencies, though it asks for more cost but ensures security in businesses. This means outsourcing the risk to other companies such as SOS. State and local regulatory There is a lack of effective law and order system in the country. State should revise its laws and regulation in order to ensure security. Many measures can be used to make the conditions secure in the country such as there is biasness in the security forces, firstly it is imperative to implement a new and effective security management system. State policies and laws should be revised because there are many flaws in the system. Competitive management One of the main reasons of increase in cost and security risk is inefficient workforce. Inability to recruit the brightest and best managers is one of the hidden costs in Mexico which have led to increase in drug war. This analysis shows that Mexico is subjected to higher business risk in relation to security. Businesses are incurring high cost and are pursuing various security measures. Therefore, it is imperative that country should firstly revise its law and order system, then only it will be able to control these cultural and security issues. 1.1 Introduction Mexico is one the best business sites. It has provided many opportunities and growth to international businesses. It involves less cost of conducting a business as compared to other Asian countries. Though Mexico had promoted businesses in all aspects but it has negative aspects also, which are harming the working of business such as risk related to securities. Since 2007, more than 24000 people have been killed due to drug violence. Smuggling of drugs and goods is becoming quite common on borders which are increasing risk of trading companies that conduct operations on borders. Small businesses have also become security minded and they take precautions while travelling to Mexico, especially in border and capital regions. This shows that businesses are investing more on security in order to perform business in Mexico, which in result increases the cost and reduces profitability of the company (Dorfman Mark S, 2007). 1.2 Mexico Mexico is a federal constitutional republic of North America and is bordered in the north of United States. It covers two million square kilometers i.e. 760,000 sq mi. on the basis of this area it is the fifth largest country in America. Researchers identified that its current population is around 112 million and is eleventh most populated country in the world. Spanish is the most popular language in Mexico. This country comprises of thirty one states and one federal district which is a capital city. Mexico is one of the best business locations as compared to 112 cities in Europe, North America and Asia Pacific. Cost structures in Mexico are also low as compared to Japan and Germany. Investment companies opt for those countries that have good exchange rates and Mexico have always provided this room to the investment companies. Its cost competitiveness provides a wide range of future exchange rates. If Mexico currency is 20% against US dollar, then the cost index of remaining 85.3, this will be more than 14% lower than that of US benchmark. Mexico offers cost advantage to businesses and promotes foreign direct investment in the country. It provides extension and growth. But, presently many businesses are facing various risk subjected to business security. Corruption and other illegal act have increased rapidly in the country. Smuggling in the country has increased, which make transaction of cross border businesses very difficult. Ryder’s senior security manager have illustrated that smuggling in Mexico is not only linked with drugs but also of people. Kidnapping, killings and extortions have become a part of Mexico. This is not only affecting people but as well as businesses. Life in this country has become very uncertain. The corporate operating costs in relation to security have increased rapidly. Its cost has increased more than 3%, due to uncertain situation of the country. This cost of security is paid by public in the form of high prices of a product. Companies in Mexico had appeared to the American chamber of Commerce, due to the rise of insecurity in the country. Companies in Mexico are making them prepared in advance, so that in case if something happens they have a plan to control the situation. Therefore, it is imperative to identify the potential security risks and then implementing appropriate measures to control it (Rayburn Rosalie, 2002). 1.3 Cultural issues of Mexico People of this country share a common value system and culture, which is unique from other countries. However, there are many cultural issues and inequality in the country. There exists a widespread discrimination, unequal opportunity in education, income, employment and housing, prejudice etc. Companies are also at risk of disabilities and many other social and societal problems. The economic and social status of Mexico citizens is characterized by poverty. Research indicated that 25.7% of citizens are below the poverty line. Most of the families receive grant from government such as water, food, house and other assistance. The health care characteristics of citizens are mainly affected by their living structure and culture which results in common mental problems. Due to poverty and lack of medical care people have diseases of tuberculosis, chronic etc. most of this illness is related to working conditions and work performance. These medical conditions are also associated with extended use of drugs and alcohol mainly among youth. These health care and cultural conditions in Mexico cannot be ignored because this may lead to higher risk of permanent disability (Trevino Beatriz, 1991). 1.4 Business security risks, threats and their impact on organizations Businesses are subjected to many security risks while operating in Mexico. This has negative effect on organizations. Some of the threats in relation to security and their impact on organizations are discussed below: Political Security Federal district of Mexico is divided in three branches i.e. legislative, independent executive and judicial. President is mainly elected for a period of six years. In Mexico political demonstration occur frequently throughout the state. This can lead to confrontational, tense and violent conditions in the economy. This not only harms citizens but as well as businesses. In this case companies try to avoid monitoring local media and demonstration. Political motivated violence occurs frequently in many areas of the country such as Guerrero, Chiapas and Oaxaca. Businesses are caught up in these incidents. This insecurity is affecting not only organizations present in Mexico but overseas and international businesses are also having problems due to the political insecurity of the country. This is a technical threat because there is deficiency in political technique and system of the country (Dillon Sam, 1998). Global issues Mexico had initially faced global financial crises. It suffered due to global economic downturn. Business activities in this state fell by 6.1% in 2009 due to the issues of globalization such as falling remittances, falling international demand of Mexico manufactures mainly in US and outbreak of HINI influenza. This has affected business economy hardly and has suffered huge losses. These crises led to devaluation of Mexican Peso as compared to US dollar in 2009. However, despite these conditions unemployment in the country have increased by 5% and inflation rate in the country is quite stable i.e. 3.25%. Global risks are associated with natural threat. Companies cannot control this phenomenon, but can take preventive measures against it. Bribery and Corruption Bribery and corruption is illegal and is considered as an offence in all British and European countries. It is a man-made threat; people themselves are harming their own country citizens. In accordance with the laws of Mexico, organizations themselves will be liable of the practices of employees in case one does not have the nationally of UK or Mexican. However, corruption in Mexico is still at its phase. It may lead to threat in relation to theft of goods, illegal practices within the company premises etc. businesses should maintain close relationship with their staff as well as employees to reduce the threat of corruption. Numerous business operations are conducted in Mexico to provide businesses corrupt free practices. However, all companies should be aware with bribery legislations in order to make preventive measures in case of any uncertainty. Terrorism Threat In Mexico there are low terrorism threats. But organizations should be aware of global risk related to terrorist attacks, which can be any place such as business avenues, shopping malls, public areas and tourist places. It is a man made threat in order to create fear among people. Such practices may create threat in peoples mind and in result they will prevent to visit these places, which may harm the productivity of business sector. Organized Crime Violence and crime is the main problem of Mexico. Victims of this violence are the citizens as well as reputed organizations in the country. Violence in related to drugs among citizens and operations of organizations have increased rapidly. This is affecting companies’ goodwill and image. This problem of drugs mainly exists in the sates of Guerra, Sinaloa, California, and Nuevo Leon etc. there have been vast increase in murders, crime, roadblocks and firefights, all of which is linked to drug wars. This shows companies do not only have threat in terms of performance but as well the lives of their reputed heads and employees. There is a requirement of strict law and policy systems. These are man-made threat, some corrupt group are conducting organized crime in the country. (Joel Griffin, 2010). Kidnapping in urban areas of Mexico have increased rapidly. Victims are asked to make high payment for the release. This increases threat for organizations in case if they want to entertain some politician party or other business reputes in their country for the promotion of business. In case if something happens to them, then company itself will be liable for it. This has caused a main threat in various organizations. Border threats Threats in relation to borders have increased rapidly. It involves smuggling of drugs and goods on borders. Culprits are smuggling drugs through the vehicles that companies operate to transfer goods through borders. This had created a difficulty for companies to operate, mainly those who have main operations related to border transactions. Ryder’s senior security manager have illustrated that smuggling in Mexico is not only linked with drugs but also of people. Companies are facing high cost in relation to promote securities on borders. It is a technical threat because due to the lack of appropriate monitoring systems corrupt people get a chance to transfer drugs through border transactions (Borodzicz Edward 2005). Cartel Violence and crime through drug cartel activities have increased the risk of companies operating in Mexico. In accordance to a research 30,000 people have died due to drug related violence. Juarez, which is across the border is known for violence by rival cartels and have taken thousands of lives. It is a man- made threat .Organizations have criticized that every week their employees are being killed, raped or attacked. There is no security in the country. It is mainly done by members of cartel or corrupt members of government or police members, this risk range from murder to kidnapping of employees (Wyler Grace, 2011). 1.5 Recommended security actions In order to reduce the risk of doing business in Mexico, some of the security actions that organizations should take are discussed below: Security and tracking systems Companies should use tracking system to monitor their practices. Private security agents should be used in the company to monitor all the practices. This security system is essential for the companies that are subjected to threats and risk related to boarders. For instance, Ryder has incorporated a GPS system in all the trucks that transfer goods across the border of Mexico. Drug dogs and inspectors are used by the company to check every container. This company conducts 3000 border crossings in a week. In case if a load arise inspectors and drug dogs checks the truck three times before it passes the border. Foreign direct investment Many multinational corporations are facing threats of smuggling their goods. In order to prevent these foreign companies should spend more in Mexico and should include such processes which provides security to the company. This investment should be used to ensure security in relation to kidnapping, killings and extortions (Tim Padgett, 2010). Assistance from security agencies Companies in Mexico should take services of security agencies. They provide a surety that security measures are implemented efficiently. This means outsourcing the risk to be handled by other companies. It will be beneficial for the organizations and will help to reduce cost. Such as Milwaukee company having its operations in Ciudad and Reynosa and have its business on the border. It recently took the services of SOS International to provide a plan for a major development, for instance shooting of targeting employees who are involved in drug practices on border. Evacuation plans Companies should conduct an evacuation plan which means keeping workers in a safe room with all the facilities such as food and water. It involves giving training to employees to handle uncertain security conditions. When the threats are over then these employees are taken out and conduct operations of the company in a safe environment. This means that companies should make them prepared and spend money in advance, so that in case if something happens, they have a plan to control the situation. Competitive management Inability to recruit the brightest and best managers is one of the hidden costs in Mexico which have led to increase in drug war. Lack of competiveness is increasing security risk for companies. Therefore, companies should revise their management programs in order to have high level of management and qualified people in the organization. This will lead to biggest impact on the company’s environment and will help to increase competitiveness in the market (Villagran Lauren, 2010). State and local regulatory All business and citizens should comply with the rules related to registration, bribery, corruption and human rights, thereby assuring high quality of security management. A new security program should be implemented in the country, which should be free of hatred and biasness. These efforts will help to reduce uncertain situations, health diseases, poverty, and penalties and will promote business in the country. State laws and policies should be designed in such a way that it ensures prevention and detection of any violation being committed in the country and should take action against it. 1.6 Conclusion It have been noted that 58% of business are presently concerned of increasing risks related to securities in Mexico. Business executives are with the view that improvement in securities will take more than five years which is a long period. In order to cope up with this situation it is imperative for the organizations to take preventive measures, as discussed in the recommendations related to security issues. Businesses are with the view that grenade attacks , shootings, kidnapping, extortion and other threats is evading investment of foreign countries in Mexico (Farah Josephe, 2005). References Borodzicz, E. P. (2005). Risk, crisis and security management. West Sussex, England: J. Wiley & Sons. Retrieved November 4, 2011, from http://www.amazon.com/Crisis-Security-Management-Edward-Borodzicz/dp/0470867043/ref=sr_1_1?ie=UTF8&qid=1320368751&sr=8-1 Dillon, S. (1998, October 15). Security: A Growth Industry in Mexico. Latin American Studies. Retrieved November 4, 2011, from www.latinamericanstudies.org/mexico/ Dorfman, Mark S. (2007). Introduction to Risk Management and Insurance (9 ed.). Englewood Cliffs, N.J: Prentice Hall http://instructors.coursesmart.com/0136139450/chap01#X2ludGVybmFsX1BGUmVhZGVyP3htbGlkPTAxMzYxMzk0NTAvMQ== Farah, Josephe. (2005). The threat from Mexico. The word press. http://www.freerepublic.com/focus/f-news/1427593/posts Griffin, J. (2010, November 30). Drug violence impacting security for businesses in Mexico. Security Info Watch. Retrieved November 4, 2011, from www.securityinfowatch.com/drug-violence-impacting-security-businesses-mexico Rosalie, R. (n.d). New Mexico Business Representatives Discuss Homeland Security Strategy. Albuquerque Journal (NM), Retrieved November 4, 2011. Word document Tim, Padgett. (2010). Mexico's Calderon Needs to Listen, Not Just Lecture U.S. The New York Times. http://www.time.com/time/world/article/0,8599,1990176,00.html Trevino, B. (n.d.). Cultural characteristics of Mexican Americans: issues in rehabilitation counseling and services - Editorial News Articles, Magazine Back Issues & Reference Articles on All Topics. Retrieved November 3, 2011, from http://findarticles.com/p/articles/mi_m0825/is_n4_v57/ai_11676474/?tag=content;col1 Villagran, Lauren. (2010). Businesses grapple with Mexico security risks. The Associated Press http://www.dentonrc.com/sharedcontent/dws/news/world/mexico/stories/DN-mexsecurity_29bus.ART0.State.Edition1.26c2674.html Wyler Grace. (2011). The Mexican Drug Cartels Are A National Security Issue. The New York Times. http://articles.businessinsider.com/2011-06-13/politics/29966427_1_drug-cartels-powerful-criminal-organizations-drug-trade Read More