Industrialization and Private Enterprises in Mexico: 7: Import Substitution Industrialization and the Development of Indigenous Enterprises

By Hoshino, Taeko | I.D.E. Occasional Papers Series, January 1, 2001 | Go to article overview
Save to active project

Industrialization and Private Enterprises in Mexico: 7: Import Substitution Industrialization and the Development of Indigenous Enterprises


Hoshino, Taeko, I.D.E. Occasional Papers Series


As Mexico's industrialization progressed, the leading industries changed from consumer goods to intermediate goods and then on to capital and durable consumer goods. The six cases of indigenous enterprises examined in this book have been the companies at the forefront of the leading industries at each stage. Following the time periods presented in the Introduction that mark the stages of Mexico's industrialization, the consumer goods industry played the leading role during the first period from 1890 to 1940, and the beer brewer Cuauhtémoc and the bread manufacturer Bimbo belong to the enterprises which arose in this period. The second period from 1940 to 1953 marked the shift to the intermediate goods industry, and Fundidora and Hylsa belong to the enterprises of this period. The third period from 1953 to 1962 saw a shift toward the production of capital goods as well, and Grupo Mexico in the nonferrous metal mining industry belongs to the enterprises of this period. The autoparts maker Spicer belongs to the fourth period from 1962 to 1982 during which the capital goods and durable consumer goods industries became the leading industrial sectors. All of these enterprises established their dominant positions in their respective industries during the period of import substitution industrialization, and with the exception of Fundidora, they still continue to dominate their industries, even as Mexico has progressed with market liberalization. Why were these enterprises able to enter the leading industries of each stage and grow into the dominant enterprises of their industries'? The analysis in this study indicates that the main factors making such entry and growth possible were the innovativeness of these enterprises along with the supportive policies pursued by the government.

Enterprise Innovativeness

In the Introduction, this author defined the innovativeness of enterprises as the ability of enterprises to correctly understand the requisites of growth, then to resolutely take up the challenge of new ventures in order to prepare the way for growth, then finally to realize growth; and this ability is embodied in the technological, productive, and marketing capabilities of an enterprise. For the enterprises in this study, the requisites of growth were very much determined by the characteristics of the industries they operated in and by the conditions of Mexico's industrial development. The beer brewing and bread manufacturing industries, for example, have common characteristics. The technology is standardized, companies have to build up extensive networks for procuring raw materials and selling products, and they can build up brand loyalty amongst customers through advertising and product promotion. Technologically the impediments to new entrants are low which means it is quite easy for indigenous enterprises to set up in these two industries, and these enterprises have the advantage over foreign companies when establishing networks with customers and raw material suppliers. The requisites for enterprise growth in industries which have these characteristics are: decreasing costs, increasing quality, diversifying products by introducing advanced technology, establishing wide-ranging networks to assure the stable procurement of raw materials and the sale of goods, and cultivating the loyalty of clients through vigorous advertising and product promotion activities. Cuauhtémoc and Bimbo both incorporated these requisites into their business strategies, and by doing so, both companies became "first movers" who quickly secured their dominant positions in their respective industries. At the same time, the ability of both companies to carry out their corporate strategies depended on the progress of Mexico's industrialization. The lack of development of the raw materials sector led Cuauhtémoc to internalize raw material production. Meanwhile the changes in people's life style, the growth of the country's road network, and the spread of mass media that came along with industrial development stimulated the expansion of the domestic market and prepared the way for expanding sales networks and undertaking mass advertising which were major factors for the growth of both companies.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Industrialization and Private Enterprises in Mexico: 7: Import Substitution Industrialization and the Development of Indigenous Enterprises
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?