1. Comparative National Analysis
Mexico - Venezuela
(Home – Host)

2. Political Environment
Mexico
Venezuela
Form of
Government
Federal Republic
Federal Republic, Socialist state
Legal System
Civil law system with US constitutional
law theory influence; judicial review of
legislative acts.
Civil law system based on the Spanish civil
code
Role of the
Military
Consists of the Army, Air Force and Navy
Branches. Their role is to protect citizens
and enforce laws.
Consists of the Army, Air Force and Navy
Branches. Their role is to protect citizens
and enforce laws.
Level of
Terrorism
Actual terrorist acts in Mexico are very
minimal, but they have drug cartels and
revolutionaries to be concerned with
Actual terrorist acts in Venezuela are also
minimal. However, the country is
notorious for its sex trafficking and forced
labor problems.

3. Political Stability in Venezuela
Mexico vs. Hugo Chavez
Venezuela’s former president, Hugo Chavez, has had ups and downs when it comes to his
foreign relations with Mexico. He, however, settles his disputes. For instance, he and
Mexico’s former president, Vicente Fox (2000-2006), had a dispute in Argentina in late
2005 that strained the diplomatic relationships between the two countries. The two
leaders decided to remove their respective ambassadors up until August of 2007. The
relationship between these two countries was again strained when Chavez nationalized
the assets of the Mexican company, CEMEX. Chavez’s reasoning was, according to WSJ
authors Cordoba and Millman, that:
Mr. Chávez had blamed the cement companies for shortages he said were
hampering government efforts to solve Venezuela's housing crisis. Among
other things, Mr. Chávez charged them with exporting cement rather than
producing it for local use.
At that time, Chavez’s popularity declined due to high inflation, widespread shortages of
basic foods, and his inability to control a wave of violent crime.
Source: De Cordoba, Jose, and Joel Millman. "Cemex to Fight Venezuela's Nationalization Effort." The Wall Street
Journal. The Wall Street Journal, 20 Aug. 2008. Web. 26 Sept. 2013.
<http://online.wsj.com/article/SB121912914668252587.html>.

4. Economic Freedom
Two of the most important factors that we have to consider when addressing national differences between
countries are the competitive environment and the nature of the government in those areas. The negative
attributes of these factors in a repressed economy such as Venezuela, would negate the success of an
MNC. Unlike Mexico which has a fairly high level of privatization and democracy, as the graph below
shows, the CEMEX plants in Venezuela had to consult the government with regards to all their decision
making. Instead of selling cement on the basis of demand and supply as is done in Mexico, the
government dictated the quantity of cement that they will produce for both domestic and international
markets. It was this that led to CEMEX’s inability to resist the decision that the Venezuelan government
made to nationalize their organization. The Venezuelan government saw the competitive advantage that
CEMEX was achieving by offshoring its production as a threat to Socialism. With no economic freedom in
place, CEMEX could do nothing but surrender one of their most profitable International operations.
Source: Economic Freedom Scores of World Countries (http://www.heritage.org/index/visualize). The Heritage Foundation).

5. Social Environment
Indicator
Mexico
Venezuela
Literacy rate, adult total (%
of people ages 15 and
above)2007
93
95
Poverty headcount ratio at
$2 a day (PPP) (% of
population) 2006
12.9
4.9
Labor participation rate,
female (% of female
population ages 15+) 2006
42
51
Labor participation rate,
male (% of male population
ages 15+) 2006
82
81

6. National Culture
Hofstede’s 5D Model
90
80
70
60
50
40
30
20
10
0
Mexico
Venezuela
PDI
IDV
MAS
UAI
81
81
30
12
69
73
82
76
Source: The Hofstede Center. (http://geert-hofstede.com/mexico.html)
*LTO has not been researched in both countries
LTO

7. National Culture - Analysis
Mexico
Venezuela
• With the score of 81, Mexico is a
hierarchical society. This means that
everyone in the society has a place and that
the power inequalities are accepted.
• Low individualism score (30): a collectivist
society where family and group setting is
more valued.
• High masculinity score (69), where
competition and success is highly praised.
• Mexico scored an 82 in the UAI dimension.
This means that its society has a high
preference to avoid uncertainty.
• Both countries have similar culture and
values, allowing CEMEX to operate without
much trouble or difficulties.
• Venezuela also scored at 81 which means
that it is also a hierarchical society.
• Low individualism score (12) shows how the
country values the group group over
individual
• The high masculinity score (73) is evident
when Hugo Chavez nationalized industries
without much criticism from Venezuelan
people. High masculinity indicates that the
society is driven by
competition, achievement, and success.
• Like Mexico, Venezuela also prefers to avoid
uncertainty with the score of 76.
• Citizens are proud of their country and
cultural heritage

8. Technological Environment
Mexico
Level of
Technology
As measured by patents and
publications, technological performance
is low, but is continuing to grow. Mexico
saw a 17.2% increase in patent filings
between 2010-2011.
Venezuela
Venezuela’s level of technology is similar
to Mexico’s (see infrastructure below).
Availability of
Technical
Skills
Low level of human capital.
Moreover, emigration reduces the
number of graduates that enter the
domestic labor force.
Just like Mexico, Venezuela also a low
level of human capital. Inadequately
educated workforce is one of the top 10
business constraints in Venezuela.
Transfer of
Technology
Level is very high. There is a high rate of
foreign ownership of domestic inventions
(61% in 2001-03) and of international coinventions (45% in 2002-04)..
Venezuela welcomes new innovation and
technology. The country’s internet users
per 100 people is increasing according to
data provided by The World Bank (12.6 in
2005 and 25.9 in 2008).
Gaps in physical infrastructure inhibit
technological innovation.2
Venezuela also lacks physical
infrastructure. Source of electricity is the
second highest business constraint in the
country.
Infrastructure

9. Business Environment Constraints
The graph below illustrates the economic conditions that MNC’s are most concerned about when they are
considering doing business in Venezuela. When you compare these conditions with those of Mexico,
CEMEX should have known that there was a high probability that they would eventually encounter
operational difficulties. Factors that are significantly detrimental to MNC’s such as crime, disorder and
political instability in Venezuela are higher than Mexico’s. It is evident that CEMEX was enticed by the
“opportunity” of maximizing on profits by taking advantage of the low regulations and taxes that existed
in Venezuela. The “threat” that the Venezuelan government was always unstable proved to be a
determining factor that contributed to the shift towards socialism. CEMEX became a victim to the
socialist regime that is now prevalent in the host country of Venezuela while business was still booming
at home in Mexico.

10. References
De Cordoba, Jose, and Joel Millman. "Cemex to Fight Venezuela's Nationalization Effort." The
Wall Street Journal. The Wall Street Journal, 20 Aug. 2008. Web. 26 Sept. 2013.
<http://online.wsj.com/article/SB121912914668252587.html>.
Hodges, Nathaniel B., John Ricotta, Eric Wallis, and Shelley Favre. "Mexico: PELT Environment
Page." Mexico: PELT Environment Page. N.p., n.d. Web. 01 Oct. 2013.
<http://onken.com/classroom/interculturalmanagement/mexico/mexico_pelt.html>.
"Internet Users (per 100 People)." Data. N.p., n.d. Web. 01 Oct. 2013.
<http://data.worldbank.org/indicator/IT.NET.USER.P2>.
"Labor Participation Rate, Female (% of Female Population Ages 15 )." Data. N.p., n.d. Web.
01 Oct. 2013. <http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS?page=1>.
"Labor Participation Rate, Male (% of Male Population Ages 15 )." Data. N.p., n.d. Web. 01 Oct.
2013. <http://data.worldbank.org/indicator/SL.TLF.CACT.MA.ZS?page=1>.
"Literacy Rate, Adult Total (% of People Ages 15 and Above)." Data. N.p., n.d. Web. 01 Oct.
2013. <http://data.worldbank.org/indicator/SE.ADT.LITR.ZS?page=1>.
Mexico. N.p.: OECD, n.d. PDF. Web. 01 Oct. 2013.
<http://www.oecd.org/sti/inno/41559276.pdf>
"Poverty Headcount Ratio at $2 a Day (PPP) (% of Population)." Data. N.p., n.d. Web. 01 Oct.
2013. <http://data.worldbank.org/indicator/SI.POV.2DAY>.