Trade Research Assignment 2 Essay

Demographic ComparisonMexico is located in North America whereas Chile is located in South America. According to current data, Chile’s current population is 18,660,032 and population growth rate 0.77%. CITATION Wor18 l 1055 (World Population Review) Mexico’s current population is 131,847,55 and population growth rate 1,20%. CITATION Wor181 l 1055 (World population Review) This information shows that we have a larger number of potential customers in Mexico. It is essential to analyse age structure in Chile and Mexico in order to understand what percentage of the population our target audience constitutes.

As our selected product is beer, our target audience is people who can legally drink. In two countries, the minimum legal drinking age is 18 which means that our target audience in these two countries is people who are above 18 years old. Age structure in Chile in 2017 is as follows: ages 0-14: 20.32%, ages 15-64: 68.6% and 65 years and older: 11.09%. Life expectancy in birth in 2016 in Chile is 79.52 years. CITATION Sta19 l 1055 (Statista) In 2017, around 26.67 percent of Mexico’s population were between 0 and 14 years of age, around 66.

48 percent between the ages of 15 and 64, and about 6.86 percent were 65 years or older. Estimated life expectancy in birth in Mexico in 2020 is 75.23 years. CITATION Sta191 l 1055 (Statista)In 2019, male population in Chile is around 49,4% with 9,225,529 people whereas female population is around 50.6% with 9,434,534 people. CITATION Cou19 l 1055 (Country Meters) In the same time, male population in Mexico is around 49.3% with 65,883,826 people whereas female population is around 50.7% with 67,709,269 people. CITATION Cou191 l 1055 (Country Meters) The societal classes in countries are also an important factor in order to analyze our target audience. The social class determines people’s behaviour toward imported products. In our opinion, people belonging the lower classes tend to buy local beers because of the price of products. The people in Mexico were divided on the basis of monetary power & control, status, and authority. The Mexico social hierarchy is divided into the followings:Peninsulares: The topmost social class, who were Spanish officials. They are the richest and most powerful social class in Mexico which can be part of our target audience. White Mexicans: These were descendants of Spanish people who got settled in Mexico and had families there born in Mexico which can also be a part of our target audience. Criollos: These were people of true Spanish plunge and were born in the America which can be a part of our target audience. Mestizos: These were people of mixed European & Indian descendants. Amerindians: These were the native descents (working class of Mexico). These were provided lower power, rights and even very low wages which may not afford buying beers regularly. Others: This category incorporated Afro-Mexicans and Asian-Mexicans along with several mixed races. CITATION Hie18 l 1055 (Hierarchy Structure)Chile’s social class structure can be divided into 3 class. In the upper class are members of the old landed aristocracy as well as a more recently wealthy group of industrialists, merchants, politicians, and military men which can be a part of our imported beer. Chile’s lower class consists of farm laborers, craft workers, factory workers and miners. This class may tend to buy beers regarding price of the beer. The middle class, largely urban, is extremely varied in incomes, occupations, and interests. It is composed of professionals, teachers and university professors, civil servants, many private employers, and some small merchants, industrialists, and investors which is suited to our target audience. CITATION Voy19 l 1055 (Buchot)Another demographic indicator that we are considered is ethnicities within the population. In Mexico, Mestizo consist of 62% of the population, predominantly Amerindians consist of 21%, Amerindian consist 7% and other ethnicities (mostly European) consist 10% of the population. CITATION Ato19 l 1055 (A to Z World Business) In Chile, white and non-indigenous people consist 88.9% of the population, Mapuches consists 9.1% and other indigenous groups (includes Rapa Nui, Likan Antai, Quechua, Colla, Diaguita, Kawesqar, Yagan or Yamana) consist 1% of the total population. CITATION Ato191 l 1055 (A to Z World Business)The close proximity between the exporting and importing countries, serves as a great advantage in terms of reducing the costs. Furthermore, our selected product is beer which has its life is not so long. Therefore, we chose Mexico and Chile which are relatively close to Canada in order to minimize transportation costs and facilitate delivery of the product. When we analyze these two countries, we can state that there are no geographical difficulties which will negatively impact the distribution of our products. Mexico is located in North America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and United States and bordering the North Pacific Ocean. CITATION Ato192 l 1055 (A to Z World Business) Chile is located in South America, bordering the South Pacific Ocean, between Argentina and Peru. Chile has 34 seaports which will affect positively the distribution. CITATION Ato193 l 1055 (A to Z World Business) Climate is also a factor which may affect the distribution of our product. In Mexico, climate varies from tropical to desert. Exporting our product to a region with tropical climate will not affect the packaging our features of our product. CITATION Ato194 l 1055 (A to Z World Business) In Chile, climate is generally temperate; desert in North, Mediterranean in central region, cool and dump in south. Exporting our product to the central region where big cities are located, the climate will not affect the features of our product. CITATION Ato195 l 1055 (A to Z World Business)Cultural ComparisonNegotiation styles differ between countries and affect business between these countries. Every country has their own negotiation style in which business need to pay attention in order to build healthy business relationships. Therefore, we should understand Mexican and Chilean negotiation techniques in order to ensure a favorable outcome for our company. Throughout Mexico, businesspeople value personal relationships in the negotiating process. However, the negotiation’s atmosphere may differ between regions. CITATION Ato196 l 1055 (A to Z World Business) In Mexico, senior executives make the decisions. To be successful with Mexicans, emotional arguments can be used on the grounds that emotional arguments are considered as persuasive arguments. Another point which is important in negotiating with Mexicans is to leave the room to bargain. CITATION Mau l 1055 (Platero) On the other hand, Chileans do not have business acquaintances, they have friends they do business. Therefore, to do business in Chile, we should:Build a relationship based on trust and respectBuild a strong and positive relationshipMake eye contact in a conversation and be formal in business meetings Communicate directly and be clear and give concise information Set meetings at least 2 weeks in advance and do not set meetings during holidays and weekends. CITATION Ato197 l 1055 (A to Z World Business)In order to accomplish our objectives, we should build strong and positive relationship with Chileans on the grounds that relationships based on trust and respect are key to success with Chileans. In Mexico, relationships and having connections are also important to be successful. Nevertheless, most negotiations start rather formally as the parties get comfortable with each other. Taking time for small talk should move things along and lay the foundation for productive negotiations. Mexicans from the south tend to prefer an informal atmosphere, which may not be shared by businesspeople from the northern regions. CITATION Ato198 l 1055 (A to Z World Business)One of the cultural factors that should be taken into consideration is the acceptance of foreigners and foreign goods by these two countries. If the resistance toward imported products is lower and people tend to try and accept imported goods in their personal life, there will be a positive atmosphere for foreign companies. In Mexico, consumer behavior has evolved over time as the country has become wealthier. While purchasing power of Mexican consumers has grown, they have become increasingly time-poor. As a result, many Mexicans are looking for good quality products that can help save time as well as money. The days of ‘transactions’ are no longer, with most consumers now seeking a ‘relationship’ with a business or brand. More than price, increasingly Mexicans look for convenience. As a result, customer service is a very powerful factor in an individual’s purchasing decision. Mexican consumers are considered to be largely brand loyal. CITATION San19 l 1055 (Santander Trade) Mexico has a positive perception of foreign goods as trade balance remains in deficit since 2007 and its increasing. CITATION Sta192 l 1055 (Statista)On the other hand, Chile is an attractive destination for investors, boasting an open market economy, well developed institutions that support financial growth and strong rule of law. The country has a positive disposition toward foreign direct investment (FDI), viewing it as key to sustaining Chile’s impressive economic trajectory over the last three decades. CITATION USD15 l 1055 (US Department of State) Chile has also a positive perception of foreign goods. It is essential to be aware of business customs and etiquette in order to understand and adopt the partner country’s culture. We can analyze business customs and etiquette for our two countries: Communication StyleIn Chile, honor is essentially important. To preserve face, your Chilean counterparts are unlikely to give you a direct refusal. Instead, they may tell you “maybe” or “possibly.” CITATION Ato1914 l 1055 (A to Z World Business)Chileans will appreciate your warmth and sense of humor; however, don’t be surprised if they are extremely serious and focused during meetings and negotiations. CITATION Ato1913 l 1055 (A to Z World Business)The Chilean conversational style can appear very close and intimate to foreign observers. CITATION Ato1912 l 1055 (A to Z World Business)Chileans stand approximately one to two feet apart while speaking. This is much closer than many North Americans and Western Europeans are used to. CITATION Ato1911 l 1055 (A to Z World Business)Chileans often touch each other’s shoulders, hands, and arms while they speak. This is true between men and women as well as between those of the same sex, and it is considered a sign of friendship rather than romantic interest. CITATION Ato1910 l 1055 (A to Z World Business)When addressing Chileans, stick to formal modes of address unless invited to move to a first-name basis. Typically, use Se±or (Mr.), Se±ora (Mrs.), or Se±orita (Miss). Professional and academic titles are not as commonly used in Chile as in some other countries, but some people may have strong feelings about this; when in doubt, ask your Chilean partners how they would like to be addressed. CITATION Ato199 l 1055 (A to Z World Business)Communication style in Mexico is also similar to Chilean style. Mexicans tend to be formal and professionals in first meeting such as using titles. After the business relationship has been established, the communication will be little more informal such as using first names. CITATION Ato1915 l 1055 (A to Z World Business)Many Mexicans are fluent in English whereas most business discussions take place in Spanish. CITATION Ato1916 l 1055 (A to Z World Business)Mexicans prefer face to face communications instead of e-mail, telephone, or fax communication. CITATION Ato1917 l 1055 (A to Z World Business)Indirect communication should be chosen when discussing sensitive or negative matters. CITATION Ato1918 l 1055 (A to Z World Business)Visitors should also pay attention to nonverbal clues, such as silence or hesitation, to detect whether or not their Mexican contact is truly in agreement with what is being said. CITATION Ato1919 l 1055 (A to Z World Business)Meetings and SchedulingIn Chile, first impressions are important; formal yet subdued attire is a winning combination. As personal relationships are essential, spend an adequate amount of time talking about things not directly related to business proposal is expected. However, this is an important step to build strong relationships based on trust. Numerous meetings before making a deal is the cultural norm in Chile. Being patient and allowing the meeting to unfold is important. Meetings should be arranged at least 2-3 weeks in advance and should not be settled during holidays or weekends. CITATION Ato1920 l 1055 (A to Z World Business)In Mexico, arranging meetings in advance is necessary, but businesspeople should always expect the unexpected. Changes in schedule are common, including last minute cancellations. Attire is an important aspect of making a positive impression, and it is imperative that your business attire is formal, conservative and of good quality. Greeting business partners with hand shaking and eye contact is important. CITATION Ato1921 l 1055 (A to Z World Business) GiftsIn Chile, giving gift is not a usual feature of business meetings, until the parties have gotten to know one another well. Expensive gifts may be seen an attempt to a bribery which is unacceptable. Little gifts from home country which are not available in Chile may be a welcome gift. Gifts should be opened immediately. CITATION Ato1922 l 1055 (A to Z World Business)In Mexico, the practice of gift giving is not deeply ingrained, and is merely a pleasant opportunity to offer something of small value to your hosts at the beginning of the negotiations. Bribery and corruption are ever-present issues in Mexico and you may be forced to respond to questionable requests. You should determine in advance how you will respond in these situations, so that your actions will be clear-cut and not open to misinterpretation. CITATION Ato1923 l 1055 (A to Z World Business)Implementing AgreementsChileans tend to follow strictly agreements. Contracts are mostly set down in writing, including all the aspects of the deal. Mexicans tend to spend a great amount of time going over general conditions of the agreement before getting into details. Business people should clearly identify which aspects Mexican company will benefit. Once written contract is signed, it is considered then as final. CITATION Ato1924 l 1055 (A to Z World Business)