Mexico and the World
Vol. 7, No 2 (Spring 2002)
http://www.profmex.org/mexicoandtheworld/volume7/2spring02/mexican_enterprises.html

Large Mexican Enterprises Within Globalization
                                                              Carlos Morera Camacho

Introduction

     Most significant transformations in the Mexican economy during the nineties took place within foreign enterprises and large national private groups due to economic, commercial and financial reforms put into operation since 1983* within globalization.1 Due to their nature, they suffered deep transformations in their origins, appropriation and social wealth distribution transferring to foreign and national transnational enterprises (TEs) the most active role of the economy.

      This process aims at transforming TEs into international web enterprises, which are more international each time, and national private corporations into transnational ones, constantly modifying and adapting themselves within the framework that is backing them, and within market structures. Nonetheless, the magnitude of the changes contrasts with their fragility. One of the most significant facts, consequence of reforms, is the 1994 crisis that deepened contradictions of the process that the violent international competence imposed upon large Mexican private enterprises to trans-nationalize, giving them, as an option, either bankruptcy or merging. This phenomenon has made these enterprises to expand exports and to invest abroad directly, establishing filials and participating in world nets and in strategic alliances. In spite of this, in several large enterprises and national groups there are still disperse conglomerates holding strong patrimonial links with banks and financial groups, privileging and articulating speculative financial investment as well as productive and commercial ones. One of the advantages and risks for these enterprises and groups has been the international capital markets’ opening that opposes to the authorities protection, and to the control of a good part of national financial services from which foreign financial groups also benefit.

     So, the purpose of this paper is to present a general panorama of transformations within TEs in Mexico, getting closer to the new trans-nationalization process of financial capital enterprises and private groups in Mexico [Morera, 1998: 27] 2 in the light of the process of globalization. Two aspects are developed here: capital flows, and some elements of the TEs new organization, the so-called web enterprise.

     In relation to the first element, new ways of financing and investment are emphasized, which imply, among other things, to deepen on the new international capital flows development, on portfolio investment, as well as on Foreign Direct Investment 3 (FDI) [Graham and Krugman, 1991], as one of the most dynamic elements due to greater capital mobility within the current globalization process through strategic alliances, mergings, and acquisitions. And, in relation to the second one, the so-called informatics revolution is considered, where TEs or Mexican enterprises (MEs) are developing into international webs whose economic organization’s basic unit is the web enterprise (vertical disintegration of production into a web of firms, a process that substitutes the vertical integration of departments within the same entrepreneurial structure) [Castells, 1998] and the interlinking process of large enterprises through strategic alliances, as a huge process of mergings and acquisitions.

Globalization, Transnational Enterprises and the International Financial System’s Reorganization

     World economy scholars agree that the crisis of 1974-1975 was set the end of TEs’ expansion [Dabat, 1998; Porter, 1984; Reich Chesnais, 1994; Petrella, 1991; UNCTAD, 1997] and at the same time it represented the beginning of a transition period of FDI in real terms [Dabat, 1998], where, since 1986, a new expansion cycle had started that ended in 1990, and a second one that had started in 1995 and ended 1998. Between these two expansion cycles there was a recession period from 1991 to 1993 [Morera, 1999]. During the first expansion cycle, most significant flows came from Japan, representing a phenomenon centered in the developed counties. Nonetheless, during the expansion cycle in the nineties, underdeveloped countries were significant. Some scholars have named this incorporation of the so-called emerging economies phenomenon of the underdeveloped countries, from the triad to globalization.

     The capital internationalization process is expressed by goods exchange abroad, foreign direct investment, and international capital-money flows. At present, goods exchange or trade markets opening’s inclination is to have very heavy trade zones between Eastern Europe, North America and East Asia. The North American markets is the largest, for two thirds of world trade is realized there Guillén H., 1999; 126] see Figure 1. Another tendency is the incorporation of Southeast Asia and the Pacific Area, as well as the incorporation of the most dynamic economies from Latin America. Also, TEs and their filials, which have two thirds of trade [World Investment Report, 2000] constitute worldwide trade motor. And finally, there is a growing increase of goods’ world trade with high aggregated value and services (financial societies, insurance companies, real state companies, and large distribution).

     Within international concurrence dynamism, capital flows are the mechanism that connects underdeveloped economies with the economic system worldwide. Since Bretton Woods, three stages are identified characterized by resources’ over-accumulation at the international capital markets: a] stock and exchange markets that culminated with the 1994 crisis. The crack in 1987 closed the so-called financial markets’ economy whose main characteristic was the stock exchange consolidation as the main mechanism for financing, b] the Japanese bank system that provoked the Asian crisis in 1997. Foreign banks increased credit to the region, and their further collapse provoked the Asian crisis. In Thailand, Malaysia, Philippines, Indonesia, and South Korea, foreign institutions’ credit increased between 1995 and 1996 amounting 4 billion dollars, c] the origin of that spectacular increment in bank credit, and its alteration is due, again, to the deep international financial system’s transformation during the last two decades. In Japan, bank financing commonly was to purchase assets. The corresponding demands’ increase triggered stock assets and real state prices. 4

     Transformations during the last twenty years have, as antecedent, profitability’s drop within the capital accumulation process at the end of 1960, and this was evidently manifested since the first half of 1970, in the middle of economic and political turbulence. [Shaik A, 1999] During the decade of the eighties, there were changes at the financial system worldwide that have modified terms within the capital circulation’s sphere and the capitalist class re-composition.5 The main transformation was not in the goods markets, but in the international financial system, in the new role of credit, and in capital-money as the dominant mode over other capital forms, and their articulation within the production sphere.

     Reforms achieved within the financial system worldwide at the beginning of the eighties, made possible an extraordinary capital-money’s movement, and the establishment of new ways of granting credit through capital markets, constituting a huge amount of permanent capital-money6, as well as financial mobilization of the large enterprises’ monetary liquid reserves. As a consequence of financial deregulation, the new structure implied a complex process constituted by subjects and instruments of different nature, for their origins as well as for their operation: large societies and investment banks that specialize in issuing and allocating stock; mutual funds (small and middle investors); protection funds (enterprises specialized in short-term speculative operations); pension funds (worker’s retirement savings); insurance companies and transnational enterprises’ treasuries. As a consequence, a new financial stockbrokerage has developed that has transformed into a large branch of business, which is manifested in large capital markets’ expansion and centralization and in their re-articulation with the bank, creating new institutions: the so-called institutional investors, whose fundamental characteristic has been the role they have played at financial markets, and that, probably, will be more significant during the next decade. The interrelation between institutional investors and financial markets operation is multi-dimensional and complex. The importance of institutional investors (life insurance companies, pension funds, and investment funds) during the last decade grew dramatically. In most OECD countries, domestic financial systems play a key role. For example, pension funds in United Sates, as a group, control more than five trillion dollars of assets. According to some studies, from a sample from the OECD countries, they represent about 16% of total financial assets financing. (http://www.oecd.org/daf/financial-affairs/markets/inst-investors.htm)
 
INSERT FIGURE 1 HERE

     Three basic activities may be distinguished as the cause for their growth at the financial markets: a] as the ones that concentrate homes’ savings (physical persons); b] as funds suppliers at the markets for insurance, guarantees and other financial assets, and c] as participants at the primary and secondary bonds and stock markets, s in foreign exchange markets as well as in money and derivates markets. This process has incremented international transactions and strong connections between institutional investors and the bank system. For example, banks have moved, above all, within the investment funds business. Banks with a large branches’ web have become into life insurance distributors. Financial deregulation and technological information development, have generated strong competence between banks and insurance companies resulting in a confuse demarcation line.

     Also, institutional investors are decisive for insurance markets liquidity. Growing influence that they are exerting upon capital markets structure’s modus operandi, and international portfolio’s diversification influences taxes as a competence factor. (http://www.oecd.org/daf/financial-affairs/markets/inst-investors.htm)

     So, it is true that capital flows’ strong expansion, -portfolio as well as FDI-, over goods and services during the eighties towards regions of the triad, as well as the emerging economies incorporation during the nineties, obeys to the articulation of several factors: quick technological changes, larger capital’s movement due to trade liberalization and to investment, the privatization and deregulation processes, integrated international production, and governmental policies’ support. It is also true that the process has had a contradictory development. On one hand, it cheapened credit; but on the other hand, it created new instability elements, such as greater dispersion, volatility and capital speculation, and with this, it created financial markets globalization that has provoked the extraordinary trans-nationalization of credit titles property. As a result of this main international transaction components’ process, private capital flows, portfolio investment as well as Foreign Direct Investment, have settled as the most dynamic forms of capital at international scale.

INSERT FIGURE 2 HERE

     At the beginning of the decade of the nineties, one of the peculiarities was capital flows’ growth towards the so-called underdeveloped economies, which gave more importance to speculative investment (short-term investment) that affected significantly these economies’ volatility, and, simultaneously, these flows were growing from Foreign Direct Investment through multi-national corporations. This financing has implied extraordinary developments and huge breakdowns, for it depends on portfolio investment and FDI (F&A, join ventures, franchises, sub-contracts, etc.) related to strategic alliances (technological), intra-corporation’s agreements, supply and distribution. This implies a new financing business with global vision, which, by nature, introduces a speculative content. The extraordinary mobility of this enormous mass of titles, stock, bonds, public debt certificates, and all kind of rights to charge rents have constituted now a new kind of “fictitious capital” lacking own funds and circulating according to specific speculative financing laws, that in the mind represents real reproduction process from which they live on.

     All these elements altogether design transnational corporations and place TEs into the highest level of historical development worldwide. Their GDP participation worldwide rose from 17% during the mid-sixties, to 24% in 1982, and to more than 30% in 1995, when there were 39 000 transnational firms that determined world economy development (including 4 148 in the underdeveloped countries), with 270 000 subsidiaries, from which 119 000 were in the underdeveloped countries [UNCTAD, 1996 and The Economist]. The most recent information, from the UNCTAD and the OECD, is that in 1998 there were about 60 000 transnational firms (most of them were not related to stock), from which 9 246 belonged to underdeveloped countries, owning 500 000 subsidiaries. From these, 238 906 were in the underdeveloped countries [UNCTAD, 1999].

     As it can be observed, TEs and the subsidiaries increased significantly during the period of expansion, and the most important ones doubled in only one triennium. In spite of this, capital’s concentration and centralization level is larger if we consider that the largest 100 transnational firms (not including banks and financing institutions) controlled a third of foreign direct investment, and that between 1988 and 1995, mergings and acquisition’s value of all kind doubled, using 72% of FDI flows. According to the UNCTAD, strategic alliances, mergings and acquisitions represented international transactions that had grown more quickly (see Figure 1).

     In this TEs’ expansion, FDI capital flows have a significant role. In 1996 FDI among and towards the OECD countries achieved 465 billion dollars for inflows, increasing 71% in contrast to 1997, and they achieved 566 billion dollars for outflows. Most of these flow was spent in mergings and acquisitions, between United States and European firms, specially Great Britain, where petroleum and gas TEs, automobile, bank and finance, as well as telecommunications were significant [World Investment Report, 1999]. Dominance that United States and Great Britain’s firms performed during the nineties in contrast to the remaining OECD countries is evident: 45 per cent.

     Their assets and sales volume, also demonstrates the firms, TEs, or TNCs’ concentration process. In 1997, the largest 100 TEs had 1.8 trillion dollars in foreign assets and they had sold products abroad for 2.1 trillion dollars. They generated employment for six million people in their foreign affiliated firms [World Investment Report, 1999] that represented 15% of foreign assets from total ETs, and 22% of their sales. From the largest 100 ETs, except Petróleos de Venezuela and Daewoo, all belong to the countries of the triad, so since 1990 automobiles, electronics-electronic equipment, petroleum and chemical/pharmaceutical are the most significant industries.

     In the so-called underdeveloped countries, 500 TEs own 105 billion dollars in foreign assets, achieving a lower trans-nationalization index in contrast to the developed countries. They are in Hong Kong (China), Republic of Korea, China, Venezuela, Brazil, and Mexico, with significant industries such as beverages and food, petroleum, construction, and the most important are conglomerates (several activities). FDI inclination towards deregulation is one of the factors that explain the change. In 1998 FDI regulation experienced transformations in more than 60 countries, which made possible to achieve 1 726 FDI bilateral agreements. At the end of that year, agreements that were signed to avoid double fiscal payment had reached a total of 1 871. International production of all TEs includes tangible and intangible assets, whose characteristic differs from country to country. Nevertheless, they are significant due to the enormous weight they exert upon the manufacturing production and their sales volume: in 1998 the TEs manufacturing production’s value, including affiliates, represented 25% of total production, and sales represented about 11 trillion dollars, in contrast to the 7 trillion dollars in exports worldwide.
     During the decade of the nineties, TEs had constituted as the most dynamic element of Foreign Direct Investment (benefiting from the macroeconomic advantages, and introducing their own macroeconomic advantages). In 1998, FDI flows towards the so-called underdeveloped economies had declined for the first time in 13 years. This was because of the crisis in Southeast Asia in 1997 (from the total, to Asia it corresponded 51%, and to Latin America and the Caribbean Area 43%); in Latin America, Brazil held about 40% from a total of 72 billion dollars.

INSERT CHART 1 HERE
 
     Simultaneously, to this FDI new process, Latin American firms were significant as investors, and among them the Mexican ones held the first place when they acquired foreign companies for 925 million dollars in 1997, and 743 in 1998. [Capital Movements, International Investment and Services Division, OECD, 2000]. Through strategic alliances, especially at the telecommunications sector, in the year 2000, Telmex agreed to invest together with BCI (Bell Canada International Inc.) 3 500 million dollars in Brazil, and Argentine purchased 60% of the telecommunications Techint.7 Brazil and Argentine markets added to the expansion that Telmex has realized during the last two years. At present, Telmex operates in United States, Puerto Rico, Guatemala, Ecuador, Brazil, and Spain, and it participates in bidding processes to acquire national telephone enterprises in Honduras, Venezuela, El Salvador, and Colombia. [Morera, 2000 Bas].
 
INSERT CHART 2 HERE (Mexican Groups Foreign Investment)

Mexico and Capital Flow

     Emerging countries’ integration to the world economy through capital flows (portfolio investment and Foreign Direct Investment, see Figure 2), is one of the fundamental elements of the globalization process during the nineties, from which Mexico has represented one of the most important flow and exporter holders due to reforms that the government of Miguel de la Madrid had started with three purposes: a) to strengthen and to protect Mexican private corporations, specially those which were linked to the bank sector and to telecommunications; b) to guarantee better investment conditions to multinational corporations under commercial opening [Morera, June, 2000]; and c) Mexican groups and enterprises’ trans-nationalization. In the magnitude and the way the economy has realized radical changes, we can find sustained reasons for the crisis and the capitalist reorganization during the last decade, expressed in a violent integration within the North American economy with which main international transactions are realized. (See Figure 3).

INSERT FIGURE 3 HERE
 (Mexico, main international transactions’ components)

     Within the context of reforms, which had started under the government of Miguel de la Madrid, stock brokerage institutions’ privatization was realized, and through the Exchange Coverage Trusteeship and through public debt issuing, the Mexican Stock Exchange was encouraged. This made possible the protection and the partial reorganization of Mexican private groups and enterprises, which could not have access to capital markets as a result of the debt crisis in 1982. Crack in 1987 set Mexican groups vulnerability out and it was coincident with the end of the period of the so-called financial markets economy, whose main characteristic was the consolidation of stock markets as a financing mechanism, and it started the phase of the speculative international economy that culminated in the crisis of 1994. During this stage, stock exchange markets gained importance and autonomy in relation to the real economy achievement. Nonetheless, crisis in 1994 and its rescue, as well as national groups’ fragility, loss of their assets value, and over-indebtedness of the same, made them to get into a violent reorganization process, provoking, at the same time, another capital flows’ expansion, where foreign direct investment had greater dynamism, where significant expressions are mergings and acquisitions that have entailed not only a simple property’s change, not adding a new production’s capacity or profits transference in the long and sort-run, as it is observed by some scholars.8 Not denying that in some cases it is so, expansion and reorganization of many national groups cannot be explained without these capital flows, for example, Telmex, Cemex, and Grupo Modelo, among others, (see, Table 1). It is also the case of automobile TEs, informatics, textile enterprises, and of a group of enterprises, where exports platforms, investment and re-investment profit amounts during the period 1992-1998 had achieved 61 626 mdd, and 13 963 mdd, accordingly, or 22.6% [FMI, 1999, Balance of Payments Statistics Yearbook: 65 and 67) of profit re-investment, that beyond accounting limitations, it expresses a productive re-investment process that does not exclude other investment.

Mexico and Financial Globalization

     The manifestation of “emerging markets” in Mexico during the years 1980 and 1990,9 is the result of reforms realized within the international financial system as well as within several underdeveloped countries, that made possible capital flows mobility and growth towards those markets,10 and their profitability altogether has been larger in contrast to the US and the developed countries’ markets.11 Financial opening to capital markets at the Mexican stock markets can be observed in the foreign participation’s proportion at the stock markets. It rose from 12% in 1990 to 27% in 1993, achieving 31% in 1997. At the debt’s markets, foreign investment’s percentage rose from 11% in 1991 to 53% in 1993, dropping to a level of 12% in 1997. As consequence of foreign participation, Mexican markets capitalization value rose from 32.7 billion dollars (bd) in 1990 to 200.6 bd in 1993 [Heyman, 1998]. Nevertheless, the crisis in 1994 changed the nature and composition of capital inflows that had prevailed during the first half of the decade (see Figure 4). Before the crisis, the private sector’s debt (bank and industry) had grown 2.5 times approximately, and foreign investment, portfolio investment (stock and money markets) had achieved participation of 56% at the markets in contrast to 44% of FDI [FMI, Balance… op.cit.]

INSERT FIGURE 4 HERE (Net Capital Inflows Composition)

     In 1998, industrial groups’ debt and private debt servicing had increased, and bank’s debt had diminished (see Figure 5) thanks to financial rescue implemented by the government, as well as thanks to the Bank Fund for Saving Protection (FOBAPROA, for its abbreviation in Spanish), and its change into debt through the Institute for the Protection of Bank Savings (IPAB, for its abbreviation in Spanish). On the contrary, FDI became into the most dynamic element, participating with 74% of total foreign investment in 1998. So, due to national markets’ size and development level of their capital and money, and due to large availability of investment and financing instruments linked to Mexico and to international markets, as well as due to foreign financing institutions’ participation within its financial system, Mexico is one the most globalized emerging markets with extraordinary volatility.

INSERT FIGURE 5 HERE (Mexico, Private Sector’s Debt Servicing)
Mexican Enterprises Trans-nationalization

     Foreign investment’s participation in Mexican stock markets was short during almost all the decade of the eighties. Financial reforms changed radically this situation since the creation of Nacional Financiera, of “Nafin Fund” or “Neutral Fund” in November 1989, which represented the stock’s foreign investment transformation in Mexico. This trusteeship’s key objective was to separate the “corporative right” (vote) of an asset from its “patrimonial right” (from accounts value and dividends’ participation). [Heyman, 1998: 184]. This change guaranteed the access and the opening to international capital markets, therefore, capital flows started to arrive constantly. At the same time, there were facilities for the foreign investor to sell his stock, for, in fact, in investment, it acquires financial character when it does not have vote right.

     Large industrial and services’ Mexican private groups and privatized banks were direct beneficiaries. In 1991, the enterprise Teléfonos de México introduced “L” stock (with limited vote). These stock offer patrimonial rights, but their corporative rights limit sales, liquidation or business change of the enterprise [Morera, 1998]. It was the first enterprise that integrated to international financial markets as the result of the privatization process during the nineties through the first ADR (American Depositary Receipt) of Mexican stock (or of any other emerging country) registered at NYSE, in May 1991. ADRs’ advantage for a foreign investor is that he is buying stock at a value similar to his stock markets’ value, in his own currency, through a stock brokerage in his country. In 1989, through opening to foreign investment, the US stockbroker (that may be the depositary or a stockbrokerage institution) had the option to choose the ADR’s issuing program with the enterprise’s consent (that is to say, sponsored), for it might not be demand for an ADR if it was not backed by the same enterprise as for information, or contact with investors.12 The ADR’s mechanism facilitates Mexican stock operations with the foreign investor, for this stock is denominated in his own currency and it is operated through his own stockbroker. To be subscribed to one of the three main US stock exchange institutions, NYSE, American Stock Exchange (Amex), or NASDAQ, offers great protection levels for the foreign investor, for it implies that the subscribed enterprise into the corresponding stock exchange institution has met the same North American enterprises’ disclosure requisites, and financial information.

     Cifra Group is another Mexican enterprise that introduced stock “C” (without vote) that offered patrimonial rights without any corporative right. Another large enterprise that incorporated to the New York Stock Exchange through a simultaneous public bidding, in Mexico and New York, was ICA, in April 1992. For September 1997, more than 30 foreign financial institutions had been authorized to operate at the Mexican financial markets, and at the end of that same year, Mexico had achieved the largest amount, among the emerging markets, of ADRs subscribed to the NYSE, as well as in other markets in USA.13 Daily value of ADRs operated in average was larger in contrast to value operated at the same stock exchange institution during that same year. At the same time, foreign stock exchange debt’s value denominated in dollars was larger in contrast to stock exchange’s debt denominated in pesos [Heyman, 1998: 21].

     United States’ financial reforms encouraged stock markets development when they incorporated more than 40% of homes as direct or indirect stock investors [Heyman, 1998], as well as institutional investment development (investment societies, pensions fund, and insurance companies), and derivates’ development linked to stock markets (options and futures over individual stock, and over stock indexes), and when they put into operation computers technology and telecommunications to the financial activity.  

     Stock market’s first antecedents in Mexico belong to Porfirio Diaz’ epoch as a result of economic and financial stability, the establishment of a bank system, and the issuing of debt paper and stock at the European and North American stock exchange institutions during the period. But it was not until two decades ago, with the evolution of large enterprises, that it incorporated to international financial circuits through bank debt and the promulgation of the stock market’s law in 1975,14 when the stock market’s greater boom was experienced since the beginning of the century. This happened during the period of José López Portillo. Nonetheless, in August 1982, the market had an economic collapse during the last year of López Portillo’s period, and it recovered and achieved another boom in 1987, this time mainly supported on financial stock (of banks and stock brokerage institutions). During that year, there were 41 new issuing, up to its collapse in October 1987, stressed by the New York stock exchange’s collapse.

     The next market’s boom started in November 1989 when Nafin Fund (or “neutral”) was created with the purpose of facilitating foreign investment in stock and, in May 1991, Telmex stock, such as American Depositary Receipts (ADRs), was quoted at the NYSE. These two facts facilitated foreign investment’s boom at the stock market. Stock indexes achieved their historical maximum (in terms of dollars) in February 8, 1994: the market’s capitalization value achieved 222 bd in contrast to a value of 2 bd in 1982. That same year, the daily-operated value achieved an average of 336 mdd, and, between the years 1989 and 1994, there was stock public bidding’s record value of 16.8 bd (see www.bmv.com.mx). As part of the expansion, the first “warrants” were introduced in 1992, the intermediate market was established in 1993, the stock exchange opened for foreign stockbrokers in 1994, and there was the first foreign enterprises’ subscription to the stock market through the International Quotation System (IQS) in 1997.

     In Mexico, derivate markets were established again, as result of financial reforms and the crisis of 1994; since 1995 with futures and options issuing over Mexican peso’s futures at the Chicago’s markets (CME). In 1996, PQI futures and Brady Bonus started to operate at the same markets, and, since 1997, there are Federal Treasury Certificates (CETES, for its abbreviation in Spanish) at 91 days, and Balance Interbank Interest Rate (TIIE, for its abbreviation in Spanish) at 28 days. These markets operate in the country as well as abroad, being their more immediate predecessor the petrol bonus (petrobono), which originated from the petroleum boom (1978-1982); its value depended on the petroleum price and the exchange rate peso-dollar. In 1987 they were discontinued due to their low operation.15 Main markets organized out of Mexico are Chicago’s market, and Chicago Board Options Exchange (CBOE). In Mexico these are Mexican Stock Exchange (MSE) and Mexican Derivate Markets (MexDer), programmed to start operations since 1998.16

     Finally, in September 1997, there were 160 enterprises quoted at the main stock markets, with 313 stock series, divided into seven large categories, according to the National Institute of Statistics, Geography and Informatics’ (INEGI, for its abbreviation in Spanish) classification. The seven categories group 26 sectors integrating the 160 enterprises registered at the main stock market. The most representative sectors are: food, tobacco and beverages (20 enterprises), financial groups (20), controllers (19), and commercial establishments (18). In Mexico, besides the stock market (with its primary and secondary aspects), operated through the Mexican Stock Exchange (MSE), there is the main market and the market for the medium Mexican enterprise (Mmex),17 which was established in 1993. The difference between Mmex and the main market is the enterprises’ size and their subscription requisites. In spite of changes mentioned at the stock market in Mexico, and in spite of its integration to international financial markets, it is still a very small and very concentrated market. This is illustrated by the 10 main stock series that represented 46% of total stock market’s value operated in 1997 in contrast to 49% in 1996, and if we take into consideration that three enterprises have more than one represented series (Telmex, Cemex, Cifra), then the number of stock is reduced to only seven enterprises.

The Web Enterprise

     As it was pointed out, the globalization process was being expressed in the economic reorganization during the eighties, and one of its components were TEs that induced firms to follow several reorganization strategies. We can also observe that in spite of the different approaches [Castells, 1998, Reich, 1984, Porter, 1998, Chesnais, 1994, Petrella, 1992] about such reorganization, there are fundamental coincident points in the analysis:

a) Transformations to organize transnational firms started during the second half of the seventies provoking great division within the organization of production and the markets at the global economy.
 
b) Organizational changes within commercial firms interacted with informational technologics diffusion, but in general, they were independent and they preceded it.
 
c) Organizational changes’ priority, of different nature, was to face uncertainty provoked by the changes’ speed within the economic, institutional, and technological framework of the enterprise, increasing production’s flexibility, management, and commercialization.
 
d) A good part of organizational changes intended to rearrange work processes and contracting practices, introducing the “plain production” model18 with the aim at saving labor through the automatization of work posts, the elimination of tasks, and the suppression of directive levels.

     Castells, explains essential changes within the organizational transformation process as follows:

     “Stability and complementary of relationships between the enterprise’s nucleus and the suppliers’ web is extremely important to be able to apply the model (…) Really, almost all key providers are controlled or influenced by financial, commercial or technological enterprises that belong to the mother firm or to the most ample keiretsu. Under such conditions, are we not observing a production system planned under the premise of a relative control of the market on the side of large companies? Therefore, what is important in this model is the vertical disintegration of production in a net of firms, a process that substitutes vertical integration of departments within the same entrepreneurial structure, where, results expected within the production process is to diminish to the maximum all kind of obstacles”. (p. 194).

     There are coincident points among the several scholars about the new mode of the enterprises organization, like the ones pointed out above, and there are authors that differ like Ohmae, Reich, Barlett, and Ghoshal who agree that world enterprises go beyond national frontiers, so the enterprises’ national identity has to be substituted by a strategic paradigm that does not recognize borders. Authors like Porter say that: when studying the globalization of competence there is concluding proof that the allocation is still accomplishing an essential role within the competitive advantage due to three reasons: the first one, originated by “impressive differences in economic profitability among countries, cities, and regions in each country” [Porter, 1998: 310]. Secondly, in several sectors, main competitors in the world have headquarters in one or two countries… This geographic concentration of the competitive advantage does not only operate in established sectors such as the automobile sector and the machine-tool sector, but also in other new ones, such as informatics programming, biotechnology and advanced materials. Thirdly, enterprises have dispersed their activities in several countries, but somewhere, they are still concentrating a substantial part of most significant activities to be able to compete in each of their main production or business lines [Porter, 1998: 310].

     Porter’s assertions allow him to say that the creation of the competitive advantage of the enterprise’s strategy worldwide has to integrate the role of placement, and of a world web of activities. That, at the basis of operations, there are the most important capacities and technologies: it is the place where factors and information obtained through activities worldwide are integrated, for most productive work posts are placed there. He also points out that there are many ways for international sectorial competence that can be multi-national or global, and that in several sectors they are regional or local.19 Several scholars point out that to be able to compete efficiently at the international markets, TEs of a country should innovate to improve constantly their competitive advantage, a situation that is strongly related to investment supported by material and immaterial assets (employees’ qualification, and relationship with suppliers), that is why within the current context of globalization, investment constitutes the determinant cause for the competitive advantage.

     Nonetheless, in the case of Mexico, its way of integrating to the North American market, places enterprises and Mexican private groups into a position of enormous fragility: on one hand, because of poor investment in technology20, and on the other hand, due to integration to the North American system dynamics that channels capital towards the enterprises. This is failing in several competence sectors and it is jeopardizing United States’ economic growth altogether.21 It obeys to several factors, particularly its institutional investors’ structural dependence, that in Mexico it constitutes one of the main ways for foreign investment that favors the short-term investment culture encouraged by financial and economic reforms during the nineties. (See the section Financial Globalization in Mexico, in this paper).

Large Enterprises Interconnection 

 
     The so-called strategic alliances is another way of organization that differ from traditional cartels and from other oligarchic agreements because they have to do with times, markets, products and specific processes, and they do not exclude competence in any sphere, most of them not covered by agreements. In high technology industries they have achieved particular importance, encouraged by investment amounts. The significant risk that FDI implies, and access to privileged information is increasingly difficult in an industry where innovation is the main weapon to compete successfully. The articulation of large high technology corporations is a very complex plot of alliances, agreements and temporary grouping where large enterprises are related. At the same time, alliances stimulate competence and they are the instruments to help enterprises to develop their operational positions and to gain knowledge. In the long run, associates separate or merge.

Horizontal Enterprises and Global Entrepreneurial Webs

    TEs have been forced to change their organizational behavior to adapt to concurrence and to unpredictable conditions that quick economic and technological changes have imposed. Main transformation is defined as the vertical bureaucracies’ entrance to large horizontal enterprises (Castells, 1998: 192).22 The meaning and the purpose of the “horizontal enterprise” model is that the same enterprise becomes into a web, and it stimulate each element of its inner structure.

     For scholars like Castells, in the most recent strategy, investment aims at establishing relationships among companies that belong to different institutional conditions. International competence profits from “information over the grounds” of each market. Information coming from a specific time and space is the crucial factor. Informational technology allows, at the same time, decentralized information, and it allows its integration to a flexible system of strategies’ formation. This transnational structure facilitates small and middle-size enterprises to relate to large enterprises, creating webs that are capable to innovate and to adapt constantly. So, current operative connection is the entrepreneurial project, represented by a web, not of specific enterprises or group of enterprises (…). Information circulates through the web: webs among enterprises, webs within the enterprises, personal webs, and informatics webs. New informational technologies are decisive for a flexible and adaptable model to operate. (Castells, p. 194) These fundamentals, expressed in Castell’s theory, make us to understand the new enterprises’ organization, -the web enterprise-, that together with the theory of national, regional and local competitiveness within the economy worldwide, contributes to the understanding of the enterprises’ organization. This theory emphasizes the importance of concurrence, that is to say geographic concentrations of inter-connected enterprises, specialized dealers, services suppliers, enterprises of similar sectors, and related institutions, such as universities, among others. For, finally, a concurrence is a web.23

Agricultural, Food, Telecommunications and Bank Entrepreneurial Groups in Mexico

     The TE new organization, foreign and national, has developed differently, and their transformation is linked to the sector they belong to. Most developed foreign TEs relevant changes correspond to the automobile’s sector, and to computers, which operate according to the competitive advantage coming from the country of origin, normally the United Sates, and their functioning through webs. As for Mexican private capital enterprises related to foreign capital (see Tables 1 and 2), they are in traditional sectors such as goods consumption services, petrol-chemicals, car parts, cement, commerce, financial services, or top sectors like telecommunications and biotechnology.
 
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     Most important enterprises and/or groups from the agricultural and food sector, at present are organized by the vertical integration that has different characteristics in contrast to the traditional concept which the agriculture had: the organic relationship among agricultural and industrial units, where these ones constituted the integrating pole, so that the reproduction cycle of the agriculture was included in the industries. In past decades, the crucial element for the corporations’ power was the oligarchic dominion of certain significant markets of the system, and one of the mechanisms to achieve it was the vertical integration, the agricultural and food oligarchic dominions are not yet the basis for economic competence, at present, predominant are state regulated and free of territory open corporations. So, a new vertical integration is achieved, centered in agricultural composite through the vertical operation of seeds, biotechnological, agro-chemical and food consortiums.24

     One of the dominant agricultural and food sectors that has reorganized is Grupo Bimbo. Since 1986 it started to operate with Molinos de Harina de Trigofor raw materials supply, and it has penetrated in high agricultural activities, including a new a research center to study strawberries’ new variety, and it invested in third generation plants. In 1993 it invested in fourth generation plants with the most modern technology. In 1995, this enterprise put into operation its technological strategy with a project of five years to re-design its supply web and its information management, increasing information flows within all areas of the organization for key posts, and decision-making posts. It has also transformed a centralized computer model into a flexible one that strengthens the company’s competitiveness. (Chauvet, 1999: 748). As a result of its expansion, in 1997 the firm sold 2 billion dollars. Nonetheless, this group’s trans-nationalization process started since 1994: in United States (8% of total sales) and Latin America (8%). It is a leader enterprise in Argentine, Chile, Venezuela, Costa Rica, El Salvador, Guatemala and Honduras. Recently, itestablished strategic alliances in Peru and Colombia.25 Until 1992 Conasupo supplied Bimbo at fixed prices and variable quality. At present it has the infrastructure to supply itself, and it uses Canadian and North American wheat.

     Another agricultural TE is Empresas la Moderna(ELM), which has diversified cigarettes industry taking the agro-technology, fresh products and packing. In 1999 it sold its participation in Cigarrera La Modernato concentrate in seeds and fresh food, which generate 74% of its revenues. It participates as a world leader in research, development production, and commercialization of intelligent seeds for fruit and vegetables. Since 1990, it has made several strategic corporative decisions to achieve better positions within the bio-technological field. In 1992, it created the International Agricultural Research and Training Center in Tapachula, Chiapas, to develop agriculture in tropical areas. This center supplies germination (gemoplasma) and agronomic test structures in tropical areas. In 1994 it created the filial of Seminis (initial merging of Asgrow Petroseed and Royal Sluis) (…).

     From 1996 up to date, it has realized mergings and alliances in agricultural biotechnology (DNA Plant Technology, United Agricorp and Mendel Biotechnology) and in large agricultural-chemical corporations such as Dupont and Monsanto (…). (Chauvet, p. 751).

     Grupo Gruma, a most important national enterprise, also trans-nationalized.  It produces maize flour, tortilla, crackers and bread. It has 26 processing plants operating in Mexico, United States, Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua and Venezuela, and it is the main producer and trader of maize flour (nixtamal). Mazeca (Gimsa) participates with 70% in production and commercialization. It produces 32% of raw material that supplies tortilla’s national markets. It has 19 plants in the country, and its annual capacity is of 18 million tons. Its expansion during the nineties corresponds to its strategy to become a transnational food enterprise with its own top technology and international distribution webs.
     Grupo Industrial Mazeca and Empresas La Modernaare linked to the financial sector: Banorte and Pulsar, accordingly. They followed two strategies for productive linkage: the first one is to profit from commercial opening to obtain foreign suppliers’ input, and the second one was to instrument a vertical and horizontal integration to make up for weak supply from national dealers.

Consumption Goods and Capital Manufacturing Sector’s Enterprises

     Production technology, scale economies, and international financing access are fundamental elements for competence in capital goods enterprises (and raw materials). Among other factors, these have allowed some large Mexican enterprises to trans-nationalize. This is the case of Cemex (third cement producer worldwide), Alfa (international chemical and iron products producer), and Desc (auto-parts and chemical products).

Financial and Telecommunications Sectors Enterprises and Conglomerates

     After the 1994 crisis, new conglomerates’ strength changed. The telecommunications service is one of the most competitive sectors worldwide: local telephonic companies’ opening since 1997, European telephone companies’ opening that started in 1998, and the enterprises re-privatization that has almost concluded worldwide. Only in Latin America, telecommunications rose, in eleven years (1989-1999), from 12 billion dollars to 38 billion dollars. Technological development is important in local calls, long distance calls, paging, cellular phones, trunking, network, multi-media, Internet, and outsourcing. The telecommunications sector process must be placed worldwide within the framework of purchases, alliances, mergings, joint venture, and take over.

     The telecommunications sector is within a new competence threshold worldwide. Transnational enterprises AT&T, Deutsche Telekom, MCI, France Telekom y British Telekom (BT) are leaders, which in the face of transformations, they have recently realized a process of mergings and associations: British Telecom merged to MCI, creating a new enterprise that will be called Concert Global Communications PLC. This merging sells 42 billion dollars in more than 30 countries. Through this merging, BT gets into the United States’ markets competing with AT&T, which is the largest enterprise in the North American telecommunications markets (it sells 50 billion dollars).26 At the same time, France Telecom (FT) and Deutsche Telecom (DT) acquired North American Sprit stock and they created Global One.27 All of them are present in Mexico through strategic alliances with the new financial groups in a markets that is valued in 6 billion dollars that had monopolized, up to 1997, Grupo Carso through Telmex.

After the crisis of 1994, Grupo Carso reorganized itself, strengthened and internationalized. Also, since Telmex privatization it knew about the temporality of the absolute monopoly of telephonic companies in Mexico; in that way, Carso’s strategy consolidated in the nation and it expanded internationally. The instrument to place stock within the telecommunications sector has been, mainly, its financial group Inbursafor which it created Capital Investment Associations (Sincas, for its abbreviation in Spanish) investing in Televisión Azteca, Grupo Acir (radio), Mexcom (DTH) television, Gigante and CementosMoctezuma.It also created the enterprise Orient Star as financial branch of Carso Global.(Morera, 1998)

Carso’s reorganization obeys to the new international telecommunications sector’s concurrence. It pretends to compensate with global services such as Internet, wait call, call identification, and digital telephonic services. Telmex is competing with Avantel and Alestra (created with transnational leaders AT&T and MCI (merged to BT) through its associates Alfa and Banamex (55% of stock), accordingly. Unicom (the company created by Bancomer, GTE, and the Spanish Telephonic) was integrated to the AT&T-Alfa alliance, but in the end it merged to Alestra. When including Mexico, MCI-AT&T’s strategy will have uniformed webs to cover all “North America in the most lucrative telephone markets in the world, where it is estimated that there are one thousand transnational companies where Mexico could benefit from these North American web services” [Morera, 1998: 220-222]

On the other hand, conglomerates Visa and Vitro that had participated in the bank privatization weakened when they had to transfer part of the acquired bank’s assets. Vitro had to sell other enterprises of Grupo Financiero Serfin (which finally was acquired by Santander), as well as other enterprises from the industrial conglomerate. In the case of Visa, besides initially transferring part of Bancomer’s assets, finally became part of Banco Bilbao Vizacaya (BBV), and it closed the telecommunications enterprise to integrate into Grupo Alestra (AT&T & Alfa) without achieving the expected results in that markets.

On the other hand, once banks such as Inverlat, Probursa, Mexicano/Inverméxico, Bancomer and Serfin had gotten rid of bad credit, they merged to foreign banks. Banorte and Bital associated to foreign investors (Morera 1998: 226). Nicholas Brady, ex Secretary of the US Treasury, acquired Banorte associated with 24% through 35 of investment funds, and 2.5%. The rescue program opened Mexican banks to foreign investors that at present are holding more than 50% of the national markets, that is highly profitable in the face of penETSration achieved under the FTA, which scarcely allowed to participate through filials with 3.9%. In 1998, BBV/Probursa, merged to Banca Cremi y Banorie, and, Banorte merged to Bancen and Banpaís. On the other hand, Asemex merged to Seguros Comercial América, a subsidiary of Grupo Pulsar.28

National groups also merged. Promex merged to Banco Unión, and both were merged to Bancomer. Bancrecer was merged to Banoro and to the Savings, Loan and Foment Mexican Society (Canafo, for its abbreviation in Spanish) (savings cash). As part of the rescue program, National Banking and Stock Commission (CNBV, for its abbreviation in Spanish) authorized Grupo Financiero Bancrecer the acquisition of Canafo, which has been intervened since June 1995. This agreement, that will mean disbursement for 1867 million pesos, will allow Bancrecer to become into the most significant financial organism in the country, with a web of 1107 branches. Banca Confía was merged in 1998 to Citibank. 

To sum up, from the 18 privatized banks, nine were merged. Integrated by six banks merged to the foreign bank and three national groups that had survived, from which two of them are associated with the foreign bank, only Banamex is alone, and it was the leader of the system until Bancomer merged to BBV. At the stock sector Estrategia Bursatil, Value, CBI, Invex, Valores Mexicanos, Arka, Vector and Multivalores disappeared. (Morera, 1998: 226)
 
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Conclusion

     To recognize and to pay debts from the crisis of the nineties will take a long time, and it cannot be put aside the need to re-enter into productive and labor markets of people that lost their jobs. The economy, and financial institutions and enterprises’ health depend on this; consequently, it depends on the maturity of capital markets in Mexico and on the financial system. Solutions are beyond national programs to solve the bank crisis.

     Explosive expansion of imprudent loans and financing; the accelerated increment of liabilities within the context of big differences as for liquidity, maturity terms and currencies’ distribution; the inadequate training for financial liberalization expose bank supervisors to new risks before the new regulating framework is consolidated. Also, great state’s participation within the financial system, and the scarce control of related loans, accounts deficiency, information and legislation disclosure interfere with the markets discipline and hinder a new efficient bank supervision.

     TEs and capitalist reorganization process in Mexico give several lessons. One of the most important was to discover the financial system’s vulnerability worldwide, and institutional policies’ inefficiency of international organizations, like Washington’s consensus,29 as well as the inefficiency to face emergency problems. Another one is the need to increase domestic savings and productive foreign investment that contemplate the lowest volatile component. Nonetheless, analysts (above all, from multilateral institutions such as the International Monetary Fund (IMF), the World Bank, Cepal, and current Mexican government) do not contemplate in any way other of the crucial elements of the experience of the crisis: the Mexican economic reform. Such reform constitutes, maybe, the fundamental obstacle to facilitate sound participation of several subjects and social interests of current capitalist reorganization process. Nonetheless, responsible actors put this aside.30

     Measures realized by multilateral organisms and national governments are insufficient in the face of the international financial markets tendency that aims at speculative short-term financial investment, and to increase interest rates that might affect the system again as in 1994. Enterprises do not have enough real profits to reinvest productively, and financial revenues and financing obtained are involved in the deep merging process and large transnational associations (Mexican as well as foreign), encouraged by the federal government since the financial rescue and financial and economic reforms recently implemented.

     Consequently, the TE reorganization process puts us violently in front of a new reality in the face of great capital. Nevertheless, the capitalist reorganization process is far from presenting a sound solution to improve the majorities, and that separates from the reasons that originated it: speculation and the oligarchic structure. Its possible way out implies, to our understanding, two significant aspects: new public regulations and new independent social organization. (Morera, 1998). 

     Capital provisioning of foreign and domestic markets are interlinked, and they conform a national system. The way enterprises invest their funds is determined by stockholders and lenders’ valuation. Capitalists and their agents value the enterprises’ capital investment, and they influence upon their director’s decisions. To use call options for management retribution creates a direct contact between stock valuation and management behavior. The North American system for capital provisioning has a biased investment behavior that favors short-term financial investment and mergings that produce immediate benefits to new high technology sectors.

Endnotes

* Morera, 1998: 29-36.
1 “a new world accumulation regime whose functioning would depend on highly concentrated private capital priorities, capital agreed for goods and services production, that is also increasingly centralized capital that preserves the form of money and multiplies as such. This accumulation regime…that I call “capital globalization” Chesnais; F., “La globalización y el estado del capitalismo a fines de siglo” en Investigación económica”, 215, México, 1996.
2 In Mexico, there is a tendency to analyze the industrial enterprise separated from bank or financial groups, not considering that most important groups are linked, or that they refer to their patrimonial link, putting aside a sound vision of their strategy. In this respect it is convenient accurate understanding when we refer to a financial capital group. “The category financial capital group refers to capital’s organization (as a multi-entrepreneurial system of capital valuation in all its forms: financial, productive, commercial) to its management, (productive, financial and patrimonial investment strategies), to its privileged financing ways, and to its priority and control”. [Morera, 1998:26-29]
3The very definition of FDI poses serious problems. What we seek to measure is the extent to which foreign firms and individuals control US production, yet it is not easy to define precisely either the nationality of a firm or what constitutes control. Debate over foreign direct investment in the United States begins with a dispute over facts. Critics allege that official US statistics fail to measure the true extent of growing foreign ownership and control the US economy. [Graham, E. & Krugman P. 1991] Foreign Direct Investment in the United Sates, Institute for International Economics, Washington.
4 “The more assets’ price grew, more people solicited bank loans (…). Speculative investment seemed to have no limits: when operations volume multiplied, bank institutions’ profit grew,- and credited people earnings rose thanks to constant increase of assets value… As in other similar episodes, when regular production channels and commerce were saturated, resources were channeled to risky operations, and conditions reproduced to form a speculative bubble similar to the experienced by the Japanese economy years before. Japanese banks as well as several neighbor countries experienced  boom encouraged by the growing financial resources allocation. Nonetheless, Thailand’s bath devaluation in July 1997, and  repercussions over other Asian currencies, was evident of the inherent fragility to this kind of growth.” [ Ramírez, M.A., 1999: 743].
5 Management and new productive re-articulation: the so-called “web enterprises” as the result of capital’s liberalization and mobility globally have created new oligarchic structures, provoking a deep reorganization of the capitalist class as well as encouraging the form and proportion of earnings’ re-distribution among their several fractions, insufficiently studied nowadays.
6 Marx defines capital abundance as capital-money accumulation that exceed real capital accumulation requirements [Capital, III, Ch. XXX] The most important factor to increase abundance, is the tendency of the profit rate decrease, that puts active capitals out of the real accumulation process, and obliges them to compete as loan capitals with the mass of passive capitalists [Ibid; III, Ch. XV and XXIII]
7 The new telecommunications company that BCI and Telmex will create, will be their main means for expansion in South America, and they will have even economic interests. At the same time they have offered SBC 25% of stock, and they are looking for commercial relationship with T1msm, the port developed by Telmex and Microsoft, see (www.bmv.com.mx/cgi). Techint is the controller enterprise of Teschtel. Telmex with Telecom Americas realized the purchasing operation . See La Jornada, July, 7, 2000.
8 See Nadal, A, “F&A: leyendas de la globalización”, La Jornada, December 15, 1999, where he makes an account of the introduction of the CEPAL and UNCTAD’s annual reports about foreign investment. From the Marxist point of view we can speak of a capital centralization process as an co-substantial element to the process of capital reproduction where it is important a new way of the capital accumulation process.
9 “Technically an emerging markets represents “underdeveloped countries’ capital markets where financial investment can be realized…The use of the term  “emerging markets” for the first time was in 1986, when the “Emerging Markets Growth Fund Inc.”, was launched, patronized by the International Financial Corporation (IFC), a World Bank subsidiary, and by The Capital Group, the largest international investment manager in USA”. “In 1986, the so-called emerging countries were eight, and in 1997, there were 34 countries” [Heyman, 1998: 10].
10 There is not a generally accepted criterion to be able to distinguish an emerging markets from a developed markets. Two qualitative criteria have been mentioned: the non-membership to the Organization for Economic Cooperation and Development (OECD), and no to issue values that have been named as investment level. But Mexico, Portugal and Turkey are members of the OECD, and they are considered as emerging countries [Heyman, 1998: 13]
11 During the decade of the seventies, oil boom allowed Mexico to be placed among the significant receptor countries of “petrol-dollars” created by the same boom and by  foreign debt. Lately, when petrol prices decreased and interest rates increased, the country suffered the so-called debt crisis in 1982 [Morera, 1998: 39-40].
12 “There are three levels of  supported ADRs: level 1 ADR which imply minimum risk requisites and they are traded at the over the counter markets (OTC) of USA. Level 2 ADRs are subject to more strict registers by the SEC of USA, and they cannot only be traded at the over the counter markets but also at the stock exchange in USA. Level 3 ADRs are subject to the most strict requisites for registering and information, and they can be used to obtain fresh capital” [Heyman, 1998, p. 189]. See Heyman, T., “Inversión contra inflación”, ed. Milenio, S.A. de C. V., 1998, pp. 223-230.
13 Three main stockholders’ categories open to foreign investment: a) “free stock”. They are stock series open to foreign investment according to the enterprise’s norms (for example Cemex B, TAMSA). b) Certificates of ordinary participation (CPOs) backed by the Neutral Fund stock. Although these certificates do not have voting right, in many cases, through foreign investment, they trade more in contrast to the stock they represent (for example, CEMEX CPO in contrast to with CEMEX A); c) limited vote stock (L). After Telmex allocation, see www.bmv.com.mx/cgi.
14 In 1975, the first stock exchange law recognized the importance of the stock markets for the economic development of the country, it clearly defined the authorities responsibilities, as well as the stock exchange institutions, the stockbrokers and the issuers, and it encouraged the stock exchange institutionalization. As consequence of the law, Guadalajara and Monterrey stock exchange institutions merged to Mexico’s, and it was named as Bolsa Mexicana de Valores, S.A. de C.V. Between 1978 and 1980, the stock exchange infrastructure strengthened with the Instituto del Depósito de Valores (Indeval), and for stock’s centralized and computerized custody, la Academia de Derecho Bursátil, and the Asociación Mexicana de Casas de Bolsa. See, www.bmv.com.mx/cgi
15 It is an extinct instrument. For a more detailed analysis, see Heyman, Op. Cit., 1988, pp. 223-230.
16 One of the main advantages of derivates and their growing use as an investment instrument within financial markets worldwide, is cost’s decrease. In spite of this, the experience of derivates in Mexico is that they are only speculative and highly risky instruments. See Heyman, Op. Cit., 1998: pp 243-256.
17 Main requisites for an enterprise in order to subscribe into the main markets are: minimum net worth of 125 millions of UDIs, minimum allocation of 15% of capital, and a minimum number of 200 investors. For small and medium enterprises, minimum net worth is 20 million UDIs, and 30% of their capital must be allocated among a minimum of 100 investors. www.bmv.com.mx/cgi
18 The “plain production” model set during the eighties, was based on labor savings through automatization combinations, the worker’s informational control, sub-contracted labor and production’s decrease. In its most extreme manifestation, it created was has been called the “empty company”. The “poor production” model decreased costs, but it also perpetuated obsolete organizational structures. (Castells, p. 192).
19 Porter’s statements are supported on the study of three competitors in the world: Novo-Nordik Group (Novo), Honda, and Hewlett-Packard, pp. 311-323.
20In Mexico, “for each 100 thousand inhabitants, there are five devoted to research work and to experimental development, while in Great Britain there are 48, in Japan 140, and in Germany 142 … other great scientific and technological development obstacles in Mexico is the lack of physical infrastructure, whose investment was stopped this sexenio…it was thought that private initiative was going to spend more in science. But it was not possible due to the economic crisis and the lack of the enterprises’ culture to produce useful knowledge for them, for they prefer to purchase patents abroad. Instead, in United States, and in almost all developed countries, 70% of the expenditure is done by enterprises or by non-governmental sectors: the government does only 30%. In Mexico this proportion in completely different: the government expends 90%, and the private sector 10%”. See La Jornada, August 14, 2000, interview to the director of  Science and Technology National Board (Conacyt, for its abbreviation in Spanish) Carlos Bazdrech.
21 “ The North American system problems are, to a great extent, of own creation. Due to a large series of official and non-official norms of non desired consequences, there have been changes in fields such as in the enterprises’ property, the way they choose investment, and the nature of the procedures to assign funds within the enterprises.” [Porter, 1998: 433]. In United States, enterprises that quote at the stock exchange are increasingly relying on transitory stock formed by institutional investors, such as pension funds, investment societies of variable return capital, or other financial resources managers, that are the agents  of individual investors.. In 1950 these proprietors had 8% of total capital; in 1990 the cipher was 60% [Porter, 1998: 439, and Morera, 1998: 52]
22 It seems to be characterized by seven fundamental tendencies: the organization of the  process, not the task; flat hierarchy; team management; to measure results according to the client’s satisfaction; cheap rewards for the team according to results; increasing contacts with suppliers and clients; and information, training and keeping of all employees at all levels.
23 See Porter, 1998, Ch. 7, “Cúmulos y competencia”, pp. 203-233.
24 See Chauvet.
25 During the period 1987-1994, it invested 1 billion dollars in its plants’ modernization, maintenance, and equipment.. The expansion for 600 million dollars from 1994 to 1997 was unusual, for it was realized in the middle of the deep Mexican economic crisis. It is worth mentioning that the group financed several acquisitions abroad with cash flow generated in the country. In 1998, Bimbo had thought to invest 100 million dollars in South America, and 40 millions more in expanding and in routine maintenance of its plants in Mexico” (Chauvet, p. 749).
26 Reforma, November 4, 1996.
27 El Financiero, November 4, 1996.
28 Through this merging they participate in the insurance markets in Mexico, with 32.6% of total issued primes. See El Financiero, January 8, 1997. Alfonso Romo Garza, who at the same time is the main stockholder of Cigarrera La Moderna, founded Grupo Pulsar in 1981. The direction of the Grupo Pulsar is presided by Pedro Aspe, ex-secretary of Finance.
29 “policies derived from the Consensus of Washington are incomplete, and, sometimes, they are wrong…The most dogmatic versions of the Consensus of Washington do not provide the right conceptual framework to be able to understand…The answers to the crisis in East Asia based on these visions will be in the best of the cases, defective, and, in the worst of the cases, counter-productive.” See J. Stiglitz (World Bank vice-president). “Mas instrumentos y metas más amplias para el desarrollo. Hacia el consenso post-Washington”, Desarrollo Económico, Vol. 38, núm. 151 (October-December, 1998), pp. 691-693.
30 By the facts, the crisis has partially broken the initial oligarchic structure. 
 

F 5 Private Sector’s Debt

F 6 Sales per Sectors of 34 Transnational Enterprises

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