Wednesday, May 31, 2023

Specialization and the New Mexican Economy

Our opportunity is to leverage the benefits of the Gulf and strengthen our capabilities to provide high-value service to tourists.

Specialization is a concept that was proposed more than a century ago by Adam Smith in his treatise “The Wealth of Nations”. In this lesson, The Economist explains to us how stopping multiple tasks as part of a process and devoting ourselves to a single task will make us more efficient and thus society more prosperous and more competitive. Which means we can do more with less.

Over the years this concept was carried over to different industries and in a way gave birth to the idea of ​​segmentation. Large industries such as the hotel industry have managed to develop great brands across the globe thanks to the fact that their market place is clear. Nowadays it is easy to identify a hotel for a family, for a business trip or for a higher income. What happens when the government, compelled by market law, enters various sectors under the pretext of national security and distorts the market?

In recent years, we have seen how the government, through security institutions, has intervened in many areas such as customs, public works construction, distribution of medicines, administration of ports, airports and soon the Maya train. The only thing that happens is that the efficiency does not reach the level and other sectors suffer the consequences.

For example, if the customs of a country like Mexico with many free agreements and many integrated production chains are transferred to naive elements of government. Learning time will mean delayed delivery, increased costs and ultimately an increase in the price of the finished goods to the consumer.

What’s more, if you consider that these personnel are removed from their primary tasks such as security, we can see why crime rates have increased in some areas and various agricultural products have also experienced a significant price increase. has suffered. An example of the lack of proper attention is the case with customs at airports where National Guard personnel do not speak English and foreign tourists are frustrated when checking luggage.

This situation can be transferred to companies that are currently moving away from specialization and are focused on diversification. For example, Uber, one of the most successful companies in the technology bubble, has branched out from its primary business, transporting people, into the food delivery business and now also the financial business through its credit cards. This is due to the primary focus on the movement of people whose marginal contribution tends to zero and then comes diversification from economies of scale, i.e. if Uber already carries people, it has diversified it into packages and food. Done with, it already knew the routes.

Similar changes can be seen in Mexico, such as those carried out by TV Azteca Corporate, which includes the Electra department store, and the banking firm Banco Azteca. However, the three smaller respective regions allowed the company to expand throughout the republic. The common denominator is consumer consumption and offering loans to increase consumption with higher interest rates in relation to the market.

If this is seen in people, then in today’s time it is common for a person not to have a single job. Various platforms allow a person to be a teacher, lawyer or office worker in the morning and work teaching classes, delivering food or transporting people in the afternoon without any difficulty. This combination accounts for more than half of the households in Mexico, allowing them to obtain incomes that exceed the cost of the basic food basket.

It is in the Mexican economy that we find evidence of how specialization works on a macro level. In terms of exports, 76.2% goes to the United States, 3.68% to Canada, and 2.07% to China. Regarding their origin, 8.76% are cars, 6.49% are spare parts and 6.39% are computers. Then there are fifteen products that represent at least 1% of exports.

Regarding imports, the United States sells to us 70.4%, China 9.91% and South Korea 4.38%. In respect of electronic products 19.6%, equipment and mechanical parts 16.3% and oil and minerals 9.5%. Fourteen other products represent at least 1%.

Once again, these statistics show us the contradictions of the Mexican economy. On the one hand, with only 2 free trade agreements around 80% of commercial exchanges would be regulated, but we would have at least 25 different products to consider when choosing industries to support or strategic planning. When comparing the Mexican economy with that of the United States, we see that the neighbor needs at least 15 countries to account for 70% of its trade and only one product accounts for more than 5% of its trade (oil). represents. In the case of China, 25 countries are required to unite to represent 75% of exchanges, and only 12 products have more than 1% of their market.

The conclusion is that while the battle against globalization seems to have been lost, higher living standards are achieved today when we are able to get the best at the best prices. Countries with the best quality of life have access to products from all over the world and can market their products all over the world. This trend can penetrate companies of all sectors.

It is a challenge for a modern hotel on the Mexican coast to be able to receive an older tourist coming for an extended period during the winter, then to receive young university students in the spring during their “spring break”. Strengthen yourself again. Reinventing yourself to participate in the local market that is on vacation during the summer.

We are entering an era that requires unprecedented business flexibility, which promises to push companies to their limits to focus on new products and services. This is a time when being the best at something is not enough, you have to diversify and compete in many different scenarios, only then companies in this sector will be part of the new economy.

I take this opportunity to suggest reading the book The One Thing by Gary Keller, which concludes that focus is the foundation of success. Our opportunity is to leverage the benefits of the Gulf and strengthen our capabilities to provide high-value service to tourists.

World Nation News Desk
World Nation News Desk
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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