MEXICO
ORGANIZATIONAL STRUCTURE

After talking with Mike Conwell about the organizational structure he encountered in his dealings with Mexico, I realized that the structure differs with the size of the corporation.  He said that there are companies in which the owner or the person who is at the top level is a humane person with values; treating his employees the same professionalism, which pervades the organization.  The owner typically shook hands with his employees and treated them with respect.

Conversely, in big corporations where hierarchy is heavily emphasized and the president lets everyone in the organization know he is in charge and that it is his way or the highway.  The president doesn’t even acknowledge most of the laborers in the organization.  Mike Conwell did say that this wasn’t necessarily the norm and that it depends on the humility and human values of the person at the top.  If the people at the top levels impose rigid hierarchical styles and divisions, then the subordinates followed suit.

The business structure that most foreign corporations are forming is referred to as an Maquiladoras.  This is a program which allows foreign companies to set up manufacturing operations in Mexico and import raw materials duty free, paying taxes on only the value added to the end product.  Historically, companies that have set up this type of organizational structure have elected to be near the border.  However, these corporations are experiencing a significant amount of turnover, in the 20% range.  Because of this exorbitant turnover, corporations are moving operations further inward.

Maquiladoras account for 45% of Mexico's exports, which represents a substantial amount.  Mexico's goverment has been proactively soliciting foreign companies to the country.  The growth rate of these maquiladoras has been in the double digits annualized.  With the cheap labor Mexico has to offer as well as the devaluation of the peso, companies are forming maquiladoras at an amazing rate.
 

Sources:  Mike Conwell Sr. V.P. Hibernia
Higuera, Jonathan J., “Why Maquiladoras Endure” www.hispanicBusiness.com
Deresky, Helen, International Management (Prentice Hall 2000) p499-507.