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I) Executive Summary
A) There is a formidable task of starting a business in foreign territories. Like all
formidable things, there is a way to conquer it. There are many steps to
incorporating a corporation in Mexico. All it takes is time and money. First you
have to register the name of the company to the Meixcan government. It is a way
to register the company for taxes. Our product is a pipe that is attached to the
water receiver as a way to receive clean water. At first we plan to sell to the most
populated urban area of Mexico City. Our target market would be the households
that the city contains. We plan on establishing two factories. One would be in the
United States for headquarters. We would also have a factory in Mexico that deals
with all the labor, so its cheaper. We would also pay higher than the minimum
wage of Mexico in order to make things fair and just for our workers. We also
have a philantrophy of donating our product to the poorer people of the country.
We could also donate to a local charities if the people in the poorer locations do
not have sinks to put the Neptuno product in their sinks, because they do not have
it. Our product aims to target a small percentage of the target market we have. It is
because we do not expect our company to have a big impact on the first year,
because we are a foreign country on new land. As the years progress, we would
expect to expand to not only Mexico City, but also all of Mexico. There are many
start up cost for our business. They all vary in price. We plan to sell our products
for a reasonable price. Through trial and error, we can expand our business.


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II) Introduction
A) Our company, Origin.Inc, is an American-based Corporation that focuses on innovating
and producing. The most recent creation, a water filter called Neptuno, is a specialized
line of water filters that will be sold to the general public for personal use. Neptuno, has
been created to filter water efficiently while also being cost-effective for the middle and
lower wealth population. The target country, Mexico, has a population (as of 2012) of
120.8 Million people, with 31 states and the state of Mexico having the highest
population of 15 Million. It was chosen for its high rank as one of the most polluted
countries. Not only will selling the product to Mexico provide a high market, it will also
bring a nationwide decrease in deaths caused by pollution. As for trade regulations there
are two contributors: NAFTA and The Secretariat of Health (SSA). NAFTA allows for
no trade tariffs to be placed on goods traded within North America; SSA requires an
advance sanitary import authorization or notification of sanitary import, on any
goods which may be used to affect health in any way.

III) Analysis of the International Business Situation
A) Economic, Political, and Legal Analysis of the Trading Country
1) Mexico is predominantly a free market trade economy. A free market trade economy
is in place when the government or any other authority has no control over the supply
and the demand of a country. Supply and demand is basically the economic model of
price determination. The country also has one of the highest GDP in the world with
its spending ranging up to the trillions. The currency of Mexico is the Mexican peso
and about twelve of it makes up one US dollar. About fifty-one percent of the
population in the country lives under the poverty line. The poverty line is roughly

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people that live under two dollars a day. The major trading partner of Mexico is the
United States in terms of exports (75%) and imports (50%). This will make it easier
to deal with the country, because both countries are accustomed to trading with one
another with ease. The main reason why Mexico has grown to be the 13th largest
economy in the world was because of the diversification of the economy which
allowed the country to attract foreign investors around the world. One of the first
actions that allowed Mexico to move with the economic juggernaut of United States
was forming a pact with it and Canada to form NAFTA. Some major investments
include General Motors which gave the country $120 million in order to form a
Mexican SUV, and Coca Cola which gave the country $50 million in order to move
its product to Mexico. Since NAFTA, many American and Canadian Products moved
to Mexico and many Mexican products moved throughout its northern neighbors as
well such as the famous Takis in California
2) Mexico is a fairly democratic country. It uses the presidential election system, and
also has a congress. Its government system is fairly similar to the United States. The
executive power is exercised by the executive branch, which is headed by the
President, advised by a cabinet of secretaries that are independent of the legislature.
Legislative power is passed upon the Congress of the Union, a two-chamber
legislature comprising the Senate and the Chamber of Deputies. Judicial power is
exercised by the judiciary, consisting of the Supreme Court of Justice of the Nation,
the Council of the Federal Judiciary and the collegiate, unitary and district tribunals.
Mexico was known for being a corrupt country with rigged elections. As the years
passed the corruption level of Mexico started to decrease mainly because of the trade

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agreements with other countries. A higher standard of living brought the corruption
levels down of the country. Mexico undertook regulatory actions to make it among
the top improvers in business regulation. This includes obtaining electricity to
become easier by increasing the efficiency of the utilitys internal processes and
streamlining the procedures for obtaining a new connection. Some other regulations
such as trading across borders becoming easier by implementing an electronic single-
window system. Mexico also has many major tariffs in many foreign countries
besides it northern neighbors. These tariffs are there to protect the industries that
Mexico has.
3) Starting a business in Mexico is a very quick process of only fifteen days, but a very
expensive process. Having a business based in the US has a really great advantage
when it comes to doing business in Mexico. First of all the two countries are both
under the NAFTA(North American Free Trade Agreement). It either lowers or
completely eliminates tariffs between the two countries. Unlike the United States, the
laws of Mexico are codified. Our business would be under the code of Sucursal de
sociedad extranjera which means branch of a foreign corporation. Some of the major
laws include the requirements for starting the business. Another major law is that the
branch in Mexico has to have a parent company. If there is no parent company then
our company does not fall under the code of Sucursal de sociedad extranjera. Our
parent company would be Origin Inc. which is located in the US.
B) Trade Area and Cultural Analysis.
1) We will be selling in Mexico and targeting both middle and upper income markets.
Mexico is one of the hottest places in the world. The average temperature is 72

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degrees Fahrenheit. The country is also very humid, which means that even though it
is raining it is still very hot. The Mexican population will always be drinking water
and other liquids in order to rehydrate themselves from the loss of water from sweat.
Our prices will be established to fit both and the quality will be appreciated by both as
well. Our product sells in poor regions will be made to the organizations and program
that dedicate itself to improving the sanitation and maintenance. Mexico has 32 states,
and we plan to focus on the capital Mexico City. We chose that particular state,
because of the concentration of people. People are exposed to many diseases caused
by bacteria that are usually found in the unsanitary tap waters. Tap water is used to a
point where they its only used for washing a showering. Our product is used to help
people drink tap water confidently without getting diseases and saving money when
they are low on income.
2) We plan on selling to the whole city of Mexico City. We plan our target market to be
people that make 32,500 and above. We do not care about the gender or age, but our
company has one strict requirement. The person buying our product has to have a
house. Now let us break down what our potential market is. There are 8.8 million
people living in the country. We would only like to include people that are included
in the middle or upper class. The upper class is about 1.7 percent while the middle
class is 39.2. This brings the population that we would want to find to be 3.6 million
people to sell to. The requirement again requires the buyer to have a house. The
average person per household in Mexico City is 4.1 people. This furthers lowers the
target market to 900,000 thousand houses. Although it was reduced multiple times,
the target market is huge enough to make a lot of profit off the one single city. Our

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main competitor is water bottle companies. One statistic specifically states that the
Mexican people waste %10 percent of their income off the water bottle. So it they are
making 32,500 Mexican pesos a year, on average they will waste 3,250 pesos on it.
Our main advantage is that our product will only needed to be used one time a year
for a very low price. It will not only save them a substantial amount of money, but
also have purer, cleaner water to drink.
3) Our company is based on the United States and Mexico is in agreement with the U.S.
under NAFTA which is the North American Free Trade Agreement which allows us
to trade freely without paying extra taxes. The location where well be selling it
includes the urban humid areas, but we initially plan to start with one factory in
Mexico City. We chose that place, because it has one of the biggest populations in the
world. It is also because it is where the air and water are most polluted. That means
that the tap is also polluted. This is
IV) Planned Operation of the Proposed Business
A) Proposed Organization
1) Origin Incorporated was type of ownership will be founded by. Justin Diza, Zach
Borja, and Ricky Hernandez. No matter how poor people are the mission statement of
the company is to supply the items necessary for clean water. We know that our
neighbor in the south does not have the luxury of getting clean tap water out of the
sink, so it is our companys duty to supply the country with items that can help them
get clean water.
Our company is a corporation, because we believe that it is one of the easiest
ways in order to start a business abroad. There are many advantages and

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disadvantages in owning a corporation. The biggest advantage in owning a
corporation is limited liability which means our assets are protected from debt. A
corporation also has a lot of deductions or reductions when it comes to taxes. Finally
when the original owners die there can be new people to extend the business without
any complications. There are also many disadvantages when it comes to owning
corporations. There are many fees and cost more than starting a sole proprietorship or
partnership. The steps for starting a corporation are a very long and tedious process.
Finally a corporation is more regulated than the two other types of ownership.
We want to move our company to Mexico, and there are many tedious steps in
order to start it. First we have to authorize our company and draft the deed of
incorporation with the notary online. This process is free and takes one day, because
the process is done online. Then our company has to sign a deed of incorporation,
register for a Tax Registry number, and file the online deed with the registry of
commerce. The price is 10,000 Mexican Pesos with registry fees and takes two to
three days. Then we have to register with the Mexican Social Security institute. It can
take up to a day and does have no charge. Next they have to register with a tax
administration in order for company to get taxed. Then our company notifies the local
government for mercantile establishment. Our company plans to establish our
distributing warehouse in Mexico City Region and plan to expand when we gain
enough money. Finally once we complete the steps, our company needs to register
employees with the national business information registry. The price depends on how
many employees you bring from the foreign country.

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Our company has a set numbers of employees to begin with, but as we make more
profit we plan to expand even further. For administration the three of us; Ricky,
Justin, and Zachary plan to be the brains behind the whole operation. Our main job is
to ensure that everything is flowing along smoothly. We need to make sure that the
freight workers deliver everything correctly. We need to make sure that builders and
constructors are not messing up with original plan design. As the smarts behind
operation we also plan to be the financial brains behind the company. We need to
make sure we are maximizing our products, but also having enough money to treat
our employees well. Since our company has a chance of getting sued, then for legal
issues we plan to begin with one lawyer to help us defend the integrity of the
company.

Figure 1: Organizational Structure of our company (Head Honchos)

Our initial employee count includes 26-30 people total. The factory itself will
initially be of a small size (which may be expanded onto at a later time) with a mere 3

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rooms which operate towards the creation and shipping of the product. The factory
consists of a factory floor with 2 assembly lines (with 7 workers manning each
assembly line), and 2 shipping centers, one for importing parts, and one for exporting
the product. We plan to have a factory located at the outskirts of Mexico City, so it is
within reach of the retail stores in the city so it can be distributed to it. About 14 of
the 26 people will be hired to work on the production of our product. Those people
will work at the assembly line in order to increase production. There will be seven
people in each assembly line. Four of the seven people will be assembling the actual
Neptuno product, while 3 of the seven people will fuse or weld the products parts
together. There will be 8 people that are involved with importing/ exporting. 2 people
will be moving goods from assembly line. 2 people will be on loading to transports. 2
people will be offloading from transports. Finally 2 people will be moving goods to
assembly. At most we would need 2 security guards to keep surveillance of the
factory.

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Figure 2: The simple Basic design of our factory in Mexico
B) Proposed Product
1) The product, Neptuno, is a specialized water purifier that has been created to fulfill
the needs for our decided target market. A brief synopsis as to the products
functionality: Unclean water first enters the front portion (at a quick speed due to it
already being directed in that direction) and makes its way through the multiple
stages of the purifier. The first level catches any initial debris; the second level does
the same but catches whatever was missed by the first level. The third level is where
the actual cleansing of bacteria, chemicals and other undesirable compounds occurs,
they all get absorbed by the activated carbon; the fifth layer does the same to
cleanse the water of anything else that remains. The final sixth level deposits any

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necessary minerals for the human body into the water. There are also mesh screens
between each level to separate each individual level and prevent any mixture of
purification materials. Figure 2 displays the design of the purifier.
2) Neptuno will be produced in Mexico in factories situated near to urban locations
decreasing the transportation time allowing for larger unit distribution at a larger rate.
At a minimum there will be one transportation vehicle, but at a later date once growth
has been achieved, more vehicles will be added per factory. Each transport costs
$25,000. Neptuno will be transported to twenty stores (to start) each receiving 35
units per week ending up with each getting 140 units per month. In all, there will be
close to 3000 units sold per month in the first month. However, problems with
transportation include: maintenance issues, drug cartels and possible thefts. And
because transportation is occurring within the country, there is no requirement for any
types of documentation except for the proof of acquirement which will ensure that
each shipment has been received.



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Figure 3: The basic layout of our product
C) Proposed Strategies
1) Items will be manufactured in the United States and will be relatively low costing to
produce each. Materials will be purchased in the U.S. as well and the finished product
will be imported to Mexico; therefore, costs of production will be in U.S. dollars, but
it will be sold in Mexican pesos. Both countries are involved in the North American
Free Trade Agreement (NAFTA) and this will allow us to import and export freely
without having to pay any tariffs or quotas. We will be selling in wholesale to retail
stores, hardware shops, and home appliance stores as well as selling to non-profit
organization and other philanthropy groups that focus on improving the standards of
living, sanitation, and health of the citizens. It will cost approximately $60 to make
the product. There are also separate cost for our insurance, salaries of employees,
appliances, interest, utilities and rent which will be later covered along with the other
cost in chapter five.
V) Planned Financing
A) Basic Financials
1) Of course not all things come free. There are many costs into starting private, abroad
businesses. It can be split into many sections. For our salaries we plan to allocate
75,000 dollars to the 30 workers in Mexico. Their wages are larger than the national
average of the country. The rest of the salaries would go the rest of the workers in the
United States. For insurance we plan to base it only on two major things. Those two
are insurance and natural causes. Why our company chose those two things was
because, according to a study those are the two important causes of a profit loss in a
manufacturing and retailer based company. The average cost of premium insurance in

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Mexico is half of the United States, so we would expect one insurance quote to be
$365 or 4500 Mexican Pesos. Because we would want to cover two things we would
need to purchase two insurances which would double it to $730 or 9500 MXN. The
good thing about this is that the price is basically set for the whole year once we get
our quote. We also plan to advertise around the place, since it is cheaper we would
expect the advertisements to be at max 5,000 spending spree on advertising. We plan
to rent a factory. Factory renting is an average of 3,800 dollars a month. We plan to
have a not too big of a factory. We plan to have a basic telephone line that not only
connects the American and Mexican places, but also a place for our buyers to call our
place. For appliances the company we plan to have a truck with the cost of 25,000
dollars. The appliances required besides the truck: two assembly lines ($510 each),
four metal containers ($1800 each), six pallet racks ($300 each); the total cost coming
up to $10,020 not counting the truck. The product that we are selling will cost $65
dollars or 845 Mexican Pesos, which is an equivalent to a video game. It cost about
40 dollars or 520 Mexican Pesos to build the product. So for each product we sell, our
company would make $25 dollars or 325 pesos. We plan to sell within the thousands
within the establishment of the city, because of the high target market that we have
evaluated which is 900,000 homes. Finally we plan to donate some of our products to
the poorer people that cannot afford it.

B) 12 Month Plan.
1) The company isnt planning on targeting all of 900000 in our target market. We
estimate that it would only reach %5 of all target market. That is about 45,000 houses.

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After doing all of the estimations, we would expect it to reach less than what we
would expect.
C) Future Plan (Multi- Stage system)
1) After the business has grown to achieve a high level of awareness by the population,
we will expand into another state and begin operations there. Beginning with building
a factory near to urban areas to allow for easy accessibility and quick transportation.
This will continue until each state in Mexico has Neptuno established into it. The is
the short term plan however, the long term plan affects everything on a much larger
scale. A larger version of Neptuno, called Poseidon, will be implemented into the
water systems of individual towns, cities and other businesses, it will be able to purify
large amounts of water. Poseidon will be purchased by either the governments of the
cities or by business owners who will be asked to pay a maintenance fee monthly to
ensure its continuous functionality working as insurance to secure Poseidons
efficiency and productivity. By selling Poseidon in the future, the profits will increase
highly with each sale and a steady income will be granted to us with each month, and
this amount of gain can only increase as more and more are sold. Our philanthropy is
that we plan to give away $2500 worth of water and Neptuno every year to people
and regions in Mexico who are in bad conditions in hope to help the unfortunate
population in the area while also spreading awareness of our business and product,
We hope to establish Neptuno and Poseidon everywhere to give safe drinking water
to everyone who needs it regardless of income.



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VI) Bibliography
A) Sources
1) The Average Size of Households in Mexico in 2010." GeoMexico the Geography of
Mexico. N.p., n.d. Web. 07 Jan. 2014.
2) "Mexico." OECD Better Life Index. N.p., n.d. Web. 07 Jan. 2014.
3) "Bottled-Water Habit Keeps Tight Grip on Mexicans." New York Times. New York
Times, n.d. Web. 7 Jan. 2014.
4) "Starting a Business in Mexico - Doing Business - World Bank Group." Starting a
Business in Mexico - Doing Business - World Bank Group. N.p., n.d. Web. 07 Jan.
2014.
5) "Trade Barriers in Mexico." GlobalTrade.net. N.p., n.d. Web. 07 Jan. 2014.