Seneca College

Universidad de Monterrey

COIL Project Proposal

Team name: Monterrey Maple Leafs

Instructors
Mrs. Alka Bhushan, LSO330NBA
Mr. Horacio Muela
Group members
Samia Mwalongo SC
Thipika Ananthanadesan SC
Urviksinh Zala SC
Jisha Rachel Shibu SC
Rashid Gibrán Elbahra González UDEM
Alejandro Bosque Vega UDEM
Adrián Rodríguez Castañeda UDEM
Luis Gerardo Mañueco Aldape UDEM

San Pedro Garza García, México

Toronto, Canada
November 10th, 2022
RESEARCH STATEMENT

How can OXXO successfully enter the Canadian market? What are some barriers it
could face?

1. INTRODUCTION - BRIEF DESCRIPTION OF WHAT YOU ARE ABOUT TO

DISCUSS

The following research intends to identify the main challenges in terms of

logistics and supply chain management that the convenience store Oxxo would face if
they chose to expand to Canada, and how are they different from the challenges that
they faced when expanding in Latin America?

Oxxo has established itself as the leader of the Mexican convenience store market, with
17,000 stores across the country, and over 3,000 in multiple latin american countries.
Oxxo puts an emphasis on their real estate division who scout locations for the
company, they also don’t buy their stores as they mostly rent all their locations in order
to increase their cash flow (Mexico News, 2014).

An important note to point out is that, as stated by Grand View Research (2022), the
global convenience stores market size was valued at USD 2.12 trillion in 2021 and is
expected to grow at a compound annual growth rate (CAGR) of 5.6% from 2022 to
2028. Convenience stores are becoming more popular since they offer everything a
consumer would need in an emergency and because they are well-stocked. Recent
technological advancements have opened up a plethora of opportunities for
convenience stores to do more with less store-level staff. “Many retailers are turning to
technology — specifically, WFM technology, to not only do more with less store-level
staff, but also retain the staff they do have” (Mastroberte, 2022).

2. REVIEW OF RELATED LITERATURE (Thipika + Jisha)

Titles Summary Notes

Convenience
Stores Market Size,
Share & Trends
Analysis Report By
Type (Cigarettes &
Tobacco,
Foodservice,
Packaged
Beverages, Center
Store, Low
Alcoholic
Beverages)

Oxxo stores are With 11,850 locations operating in ● opens more than
everywhere and Mexico and in Colombia, Oxxo is one 1,000 new stores
they continue to of the country's most prosperous every year
retailers and the largest chain of ● Is not a franchise
multiply convenience stores. In fact, each so it maintains
Oxxo location serves 759 clients absolute control
daily on average. Its success can be over products and
attributed to logistics, rented venues, services.
and an absence of franchises. Since ● has a real estate
Oxxo is not a franchise, most of its division
locations are run on a commission ● It rents the
basis. Additionally, it includes a real locations to save
estate division tasked with selecting money
optimal sites and formulating the
expansion plan in accordance with
population densities. Additionally, the
vast majority of its locations are
rented, allowing it to produce cash
flow without having to make a larger
initial investment. In addition, it
provides prepared meals and
snacks.

FEMSA’S 10-year The owner of the business ● already has the

goal: 10,000 new announced plans in 2021 to build plan to open in
Oxxo stores in roughly 10,000 more locations over other locations.
the next decade, bringing the total ● Can expand in
Mexico number of Oxxos to slightly under Canada to reach
30,000 by 2031. The article stated the goal of 10000
that 163 new Oxxos opened in the new locations.
third quarter of 2021 and that 431
new stores opened overall in 2021
with plans to create 1,000 more
stores in 2022.

Number of Oxxo The number of convenience stores ● In just 3 years,

convenience stores globally from 2017 to 2020 is shown there was an
worldwide from in this statistic. There were 16526 increase of 3032
2017 to 2020 convenience stores in 2017, while stores.
there were 17999 stores in 2018. It
quickly grew in 2019 to reach 19330
 stores. But there wasn't much of a
rise in stores in 2020 as it has at
19558 stores.

We finally have an According to FEMSA's quarterly ● So, the answer to

answer to the report on Financial Results, the the question: How
question: How parent company of the stores we many Oxxo’s are
many Oxxo’s are know and visit, Mexico has exactly there in Mexico?
there in Mexico? 19,997 OXXO stores. However,
there is an odd detail, and that ● Very Many!
number is most likely out of date, the
exact figure is up to the end of
September 2021, but FEMSA
estimates that they open one new
store every day. That means they will
almost certainly have over 20,000
stores open by the end of 2021.
They are the second-largest brand
on the continent, with over 20,000
locations.

Social The current study aims to investigate ● Free word

Representations of millennials' beliefs and associations
“Rounding Up” as a understandings of a CRM practice. method was
Cause-Related The free-word associations method tested on 300
Marketing Practice: was chosen and tested on 300 mexican
A Study of Mexican Mexican millennials. The findings millennials.
Millennials. state that, millennials understand the
purpose and nature of rounding up ● Results show that
and are willing to donate money millennials
through this practice. However, understand
millennials' mistrust of companies' rounding up as a
procedures and intentions. As a CRM practice but
result, businesses must implement its the companies
practices that increase awareness, they don’t trust.
transparency, and trust in their
rounding-up processes.

Emerging market This report is broken down into ● The draft studies
multinationals seven sections. It discusses Chinese Chinese and
report. and Mexican multinational Mexican
corporations and how institutions and multinationals
resources actually impact them. It from scratch.
discusses Chinese investments in
Latin America and Africa, as well as
Latin American social innovation. ● It suggests that
 In terms of entering the Canadian emerging into the
market, it is stated that there are Canadian market
several entry points for a Mexican is a good idea.
company in Canada. First, they must
conduct research on Canadian ● Using the help of a
consumers and businesses. Check distributor or sales
the applicable laws to ensure that the agent is the best
goods are legal in Canada. To enter recommended
the Canadian market, it is best to way to access the
form a partnership with a distributor Canadian market.
or sales agent.

A Multi-Phase
Method for
Euclidean Traveling
Salesman
Problems.

Analysis on supply This article discusses supply chain ● Supply chains

chains in Canada, challenges and the effects of these have been back
first quarter of 2022 issues on Canadian businesses. The on the spotlight
COVID-19 pandemic has reignited due to the
interest in supply chains and epidemic.
highlighted their strength and
resilience. Inflationary pressures ● Border tightening
were created as a result of and closing,
widespread global supply constraints restrictions on the
combined with pent-up consumer movement of
demand as the economy reopened. people and goods,
According to the survey results, business closures
businesses expect supply chain as a strategy to
issues to persist in the short term, control the spread
particularly when acquiring inputs, of the virus,had
products, or supplies both the potential to
domestically and internationally and disrupt supply
maintaining inventory levels. chains.
Furthermore, the vast majority of
businesses that anticipated supply ● It is foresee that
chain challenges expect the situation supply chain
to remain the same or worsen over issues will be
the next three months, and prevalent and
businesses have or plan to use a might even
variety of strategies to address heighten over the
supply chain issues. next three months.
Challenges in the Every year, the Canadian supply This year canada’s
Canadian Supply chain faces some logistical supply chain has faced
Chain challenges. The causes of these some major challenges:
difficulties range from unexpected
weather to government regulations Unexpected weather
and more. However, the Canadian conditions
supply chain has faced some
unprecedented challenges this year.
Many Canadian companies believe
that supply chain issues have gotten
worse as a result of delayed
deliveries, higher input prices, and
supply shortages. Truck freight is
frequently impacted in the winter by
unexpected, severe snowstorms.
These snowstorms, as well as other
unforeseen weather conditions, can
have a significant impact on the
speed with which products are
delivered. Inputs, labour, capital,
energy, and raw materials are all
examples of business costs.
Customers will soon feel the effects
of rising costs once businesses feel
them.

3. METHODOLOGY: PROCEDURES USED (Alejandro + Samia + Rashid +

Urvik)

The objective of this project was to answer the following question:

How can OXXO successfully enter the Canadian market? What are some barriers it
could face?
To answer this question we decided to use both quantitative data, such as: market
barriers, possible logistics and supply chain issues, and financial requirements. The
quantitative data that was collected was then processed and analyzed, we made sure
that it was relevant to the research question and removed any outliers that affected the
data. We mainly focused on logistics and supply chain data that would have the most
impact on OXXO´s success in entering the canadian market. It was important to
research OXXO´s existing supply chain and the way it needed to be adapted to
Canada, as well as possible competitors and other market variables.
However, we also needed to use qualitative data. It is important to consider cultural
differences between LATAM and Canada to evaluate if OXXO would be successful in
entering this market.
This is called a mixed methodology approach, and it is useful in this case because it
offers us a comprehensive and holistic picture of the researched topic.
The relevant variables that were recognized were OXXO´s success in prior international
markets and the ways that it could be similar to Canadian markets, as well as the
different regions in Canada and its cultural differences.
The team made sure that the researched data came from trusted news outlets, financial
institutions and other reliable sources.

The corporation sells clothes, accessories, and decorative products. The study team
questioned OXXO staff, customers, and market specialists regarding the company's
activities in Canada. The team also analyzed secondary sources like corporate reports
and news items for information.

The research will show how OXXO dominated the Mexican market. They include the
company's loyalty to its customers, agility in adapting to changing market needs, and
creative use of social media to create connections with clients.
A corporation may confront obstacles if it moves to Canada. It includes:
Even though English and French are official languages in Canada, there remains a
linguistic gap. Companies whose personnel don't know either language may require
assistance connecting with locals. Businesses in Canada must follow federal, provincial,
and municipal laws, which may be a hardship. Also, firms not accustomed to Canada's
regulatory system may have trouble (Pacheco-Valencia, 2020).
Canada's complex tax framework may hinder international enterprises working there.
Problems caused by cultural differences: Canada has many ethnicities and faiths.
Unfamiliar international enterprises struggle with Canadian norms
(Pacheco-Valencia,2020).
If a Mexican OXXO company were looking to enter the Canadian market, they may
employ the following research method.
The first step would be for the firm to choose its key research topic.
The company would next develop a plan to investigate these issues and collect the
necessary data. Polls, interviews, and focus groups with employees, customers, and
other stakeholders may be essential to do this.
It is the company's intention to gather and analyze the data in order to ascertain
whether or not the data can provide answers to the research questions. Finally, the
company would report its results to the appropriate parties, such as higher
management, employees, and consumers.
The Canadian economy is strong, yet certain places have substantial unemployment. It
may be difficult for foreign enterprises to enter the Canadian market.
 4. BODY: DISCUSSION OF THE TOPIC WITH REFERENCE TO YOUR
RESEARCH (Alejandro + Samia + Rashid + Urvik)

OXXO, a Mexican firm, has had consistent growth throughout its existence.
When it comes to doing business in Mexico, this firm knows what it is doing. It has been
around for a long time in Mexico. OXXO's close relationship with the Mexican
government positions it well in the country's challenging business environment.
Because of the high quality of its offerings, OXXO is confident in its potential in Mexico.
It has found great success in the Mexican market with its high-quality products.
Increased access to OXXO's services will be possible thanks to the company's robust
distribution network throughout Mexico (Castillo-Villar, 2020).
Exhibiting at trade exhibitions is a great method to promote this Mexican company to
the Canadian market. As a result, the corporation could introduce its wares to a large
group of interested Canadians in one location. Two options are advertising in Canadian
media or forming a strategic alliance with an established Canadian firm.
The staff of OXXO is well-versed in Mexico's industrial sector. With this team in place,
the company can succeed in the expanding market better. All of these indicators lead to
OXXO's dominance in its field.
There are several entry points for a Mexican company in Canada. Opening a branch in
Canada might be a good strategy. Conduct research on the consumers and businesses
in Canada. Make plans for expanding the business in Canada. For example, one may
collaborate with a Canadian company or advertise in Canadian publications. Make sure
the goods are legal in Canada by checking the relevant laws. Forming a partnership
with a distributor or sales agent is recommended to get into the Canadian market
(Kaltenecker,2019).
Canada offers an enormous size of market and growth potential for the Mexican
company, but also the supply chain management in Canada can be quite difficult to run.
First of all OXXO will face a very different fluidity of transport in this country, although
Mexico is one of the most diverse countries as far as weather is concerned, the
Canadian climate could be a challenge for OXXO because they have never managed
their logistics in a cold weather environment as the canadian. Truck freight is often
impacted in the winter due to spontaneous, severe snowstorms. Conditions like snow
storms, and other unforeseen weather conditions, can severely impact the speed at
which products are delivered.
Canada also has faced some troubles with their gas prices, OXXO needs to keep in
mind that Canada imports most of their gas fuel, so costs are gonna be exponentially
higher in relation to Mexico.
Statistics Canada conducted the Canadian Survey on Business Conditions with the
objective of having a better understanding of the supply chain management
environment and expectations moving forward. The survey pointed out that Nearly
one-third (32.1%) of businesses expect difficulty acquiring inputs, products or supplies
domestically over the next three months, Almost one-fifth (18.1%) of businesses expect
difficulty acquiring inputs, products or supplies from abroad over the next three months
and One-fifth (20.8%) of businesses expect maintaining inventory levels to be an
obstacle over the next three months.
The PESTEL model is a useful tool for scanning the external environment of a company
in order to identify potential opportunities and threats that may impact the business.
When applying the PESTEL model to a Mexican company considering entering the
foreign market, the following potential barriers to entry should be considered:
Mexico
Political: The current political environment in Mexico is relatively stable. However, there
is a potential for future instability. It could impact the company's ability to do business in
the country and make it difficult to enter the market.
Economic: The Mexican economy is growing, but there is still some uncertainty. It could
make it difficult for the company to get funding and make it difficult to enter the market.
Social: The social environment in Mexico is generally favorable towards businesses.
However, there is potential for social unrest, which could impact the company's ability to
do business.
Technological: The company should have no problems accessing technology in Mexico.
However, they may need to invest in new technology to compete in the market.
Environmental: The company will need to comply with environmental regulations in
Mexico. It could add to the cost of doing business in the country.
Legal: The company will need to comply with Mexican laws and regulations. This could
add to the cost of doing business in the country

Canada
Political: Oxxo requires a thorough understanding of the current political situation in
Canada for several reasons, but mostly to understand the openness of the country to
foreign businesses. Canada is described as a “full democracy”, and in general the
conditions are satisfactory enough to start doing business within the country.
Government grants and tax credits are generous in Canada, a good indicator for new
and upcoming businesses, but considering Oxxo’s economic prowess, this is not
necessarily needed.
Economic: According to the World Bank, Canada’s annual GDP growth rate is 4.6%,
inflation rate is 3.4%, and unemployment rate spiked up to 7.5% (2021). Canada is
ranked the ninth largest economy in the world today by Investopedia, a reflection of a
healthy economic environment. This, paired with Oxxo’s economic power, compels a
great opportunity for the company to expand its operations further north.
Social: More than 90% of Canadians live within 150 miles of the US border, which
means that OXXO needs to focus on these areas. Also, Canadian cities have a high
population density and are walkable or have great public transportation, this means that
convenience stores are great for this market. Canada's market also has brands that
have been around for a long time, OXXO will need to win Canadian hearts so that they
choose them over their competitors.
Technological: OXXO can take advantage of Canada's technology used in their cities to
create more engagement with its clients and create a better customer experience.
Environmental: Canada is a very cold country so OXXO could prioritize some products
that work well with the cold, as well as introduce common Mexican products. Canada is
a country with lots of immigrants so a great variety of products will work well with the
market.
Legal: Canada has a trade agreement with Mexico, this will make any logistics or supply
chain legal issues much easier to deal with.
Challenges faced by the company
As a company, one may face various challenges if the company decides to relocate to
Canada. They consist of the following:
The disparity in the spoken language, even though English and French are both
recognized as official languages in Canada. As a result, foreign companies whose
employees do not speak either language may need help communicating with local
customers.
Businesses in Canada must adhere to a wide variety of federal, provincial, and local
rules, which may be a significant burden. In addition, it may be difficult for companies
not used to operatin inside Canada's regulatory framework (Pacheco-Valencia, 2020).
Canada's taxation structure is complicated, which may be a hurdle for foreign
companies operating in the country. Problems arising from differences in cultural norms
and practices: Canada is home to various ethnic groups and religions. It is difficult for
foreign companies that are not used to Canadian customs (Pacheco-Valencia,2020).
Canada has a robust economy, but the country faces severe economic headwinds,
including high unemployment in some regions. As a result, it might provide a significant
obstacle for foreign companies unfamiliar with the Canadian market.
Impressive Growth of OXXO

As shown in the graph above, the constant growth that OXXO has had throughout the
years is impressive but what’s even more impressive is the growth that this company is
going to have in the future. OXXO is already planning to add 10,000 new stores by the
year 2031 which will bring the total stores to near 30,000 (Mexico News Daily, 2021). In
2017 OXXO had 16,526 stores and since then the numbers have gone up each year.
This gives us the confidence to believe that the company will be able to achieve their
goal of 30,000 total stores by 2031 and beyond that if they ever choose to expand into
Canada they will also have good success there because there is a lot of room for
growth in this particular field.

Competition in the Canadian Market

The convenience store industry in Canada is a 11 billion dollar industry that has 11,786
stores open and 41,057 employees.
7-Eleven would be OXXO´s main competitor, alongside Alimentation Couche-Tard Inc.
In Mexico, OXXO´s main competitor is 7-Eleven with 1,874 stores.

5. CONCLUSION-SUMMARY OF YOUR FINDINGS

In conclusion, Canada offers a large unexploded market for OXXO to enter, Data
tells us that the Mexican company has the resources to make a strong push in the
canadian grocery store industry, OXXO have mastered the supply chain management in
their place of origin and in other latinoamerican countries, we think that OXXO has the
capacity to do the same in Canada.

Logistics in Canada are far different to logistics in Mexico, for instance bad weather and
supply chain management costs could be a problem or barrier for OXXO, but as stated
OXXO has the capacity to overcome these challenges and be a main competitor in the
canadian market.
Furthermore, OXXO has the ability to introduce many additional services that it offers in
Mexico to the Canadian market, services like payments in its stores, money transferring,
etc. Differentiating it from its competitors.

6. APPENDIX (Everyone)
● Grand View Research (2022). Convenience Stores Market Size, Share & Trends
Analysis Report By Type (Cigarettes & Tobacco, Foodservice, Packaged
Beverages, Center Store, Low Alcoholic Beverages), By Region, And Segment
Forecasts, 2022 - 2028. Recovered on September 27th, 2022.
 https://www.grandviewresearch.com/industry-analysis/convenience-stores-marke
t-report
● Mastroberte, T. (2022). The Wonders of Workforce Management: Today’s
technology enables convenience stores to do more with less store-level staff.
Convenience Store News, 58(3), 68-72.
https://www.csnews.com/empowering-employees-through-workforce-manageme
nt-technology
● Mexico News Daily (2014). Oxxo stores are everywhere and they continue to
multiply.
https://mexiconewsdaily.com/news/oxxo-stores-everywhere-continue-multiply/
● Mexico News Daily (2021). FEMSA’s 10-year goal: 10,000 new OXXO stores in
Mexico.
https://mexiconewsdaily.com/news/femsas-10-year-goal-10000-new-oxxo-stores-
in-mexico/
● Statista (2020). Number of Oxxo convenience stores worldwide from 2017 to
2020.
https://www.statista.com/statistics/1206690/number-stores-oxxo-worldwide/
●
https://www.sopitas.com/noticias/cuantos-oxxo-tiendas-oxxos-hay-mexico-2021-f
emsa-oficial-exacto-01/
● Castillo-Villar, F. R., & Cavazos-Arroyo, J. (2020). Social Representations of
“Rounding Up” as a Cause-Related Marketing Practice: A Study of Mexican
Millennials. Sustainability, 12(13),
5278.https://www.researchgate.net/publication/342584864_Social_Representatio
ns_of_Rounding_Up_as_a_Cause-Related_Marketing_Practice_A_Study_of_Me
xican_Millennials
● Kaltenecker, E., & Montoya, M. A. (2019). Mexican Multinationals. EMERGING
MARKET MULTINATIONALS REPORT (EMR) 2019,
102.https://www.johnson.cornell.edu/wp-content/uploads/sites/3/2019/11/EMR-20
19.pdf
● Pacheco-Valencia, V. H., Vakhania, N., Hernández-Mira, F. Á., &
Hernández-Aguilar, J. A. (2022). A Multi-Phase Method for Euclidean Traveling
Salesman Problems. Axioms, 11(9), 439.
https://www.mdpi.com/2075-1680/11/9/439

● World Bank. (2022). Canada. Data. Retrieved November 10, 2022, from
https://data.worldbank.org/country/CA

●
 https://www.tradecommissioner.gc.ca/mexico-mexique/market-facts-faits-s
ur-le-marche/0003854.aspx?lang=eng
● Analysis on supply chains in Canada, first quarter of 2022. (2022, 17 marzo).
https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2022006-eng.htm
● Challenges in the Canadian Supply Chain. (2022, 16 agosto). Welke.
https://welke.com/challenges-in-the-canadian-supply-chain/
PROJECT REPORT DOCUMENT MUST ALSO INCLUDE THE FOLLOWING INFORMATION:
● Key findings for answering the main question
● What are the challenges that you have faced in completing this assignment?
● Your suggestions to improve this experience?

THE FORMATTING REQUIREMENT FOR THIS ASSIGNMENT ARE:

• One-inch margins
• 12-point type-Arial
• Single-spaced.
• Length: between 1500 to 2000 words-including introduction, literature review,
methodology, body, and conclusion.

FEEDBACK TO CONSIDER

1. Investigate CAGR (Compound Annual Growth Rate) for Canadian convenience store
market
2. Expand on explaining a bit more about Oxxo for non-mexican audience to provide
OXXO´s company profile/performance
3. Expand on identifying scope and focus: market expansion, understanding Canadian
convenience store maturity and expected growth, etc.
4. Need to prepare a preliminary PESTEL diagram