Geographic and Product Diversification Facilitating an Improper Distribution of Wealth

This paper is aimed to show evidence about unbalanced wealth distribution in Mexico, affording more information, knowledge and sensitivity from citizens and Mexican government on behalf of looking for an equitable economic development and increasing the national welfare are the objective from this investigation. Across the assumption: “The growth of FEMSA from geographical and product diversification cannot be considered as a directly proportional indicator to the increase personal and economic welfare of their workers”. Was used a qualitative methodology, running an indicators analysis and FEMSA ́s workers and former workers interviews. The result was that the assumption is correct being relevant and necessary to generate measures allowing a balanced wealth distribution and a real growth of national economy.


Introduction
Despite the great diversity ofnaturalresourcesand the potential tobea country witha strong economy, isa fact that Mexico hasbeen dwindling.There areeconomic indicatorssuch as the gross domestic product (GDP) apparently showinggood resultsand positiveannualgrowthin the country.However, if it ischecked outthe quality of lifeof the population,the reality is thatnoimprovementsare identifiedover time.On the otherwise, theNational Consumer PriceIndex(Índice Nacional de Precios al Consumidor, INPC) as of April2013compared to April2012,has shownan increase of4.65%, higher percentage of2013against asalary increase for2013of3.9%beforeinflationof 4.1% Mexican companiesplay a crucial roleto bringpositive growthto the national economyand by logiccorrespondence it has improvedthe quality of lifeof the population.However, it has beenidentifiedmajor contradictionsbetween these indicatorsbecause there arecompanies that contributeto 9%nationalGDP, lowerwage increasesto inflation anda basic basketat a high price.So there is concernto developthis articlein order toshow evidence oftheunbalancedconcentration of wealthin the country, to allow greaterinformation,knowledge and sensitivityof both thecitizens and theMexican governmenttowardsthe search for strategiesto achieveequitable economic developmentanda real increaseof national welfare.

Background of the problem
Over time, through various research studiesfocused onmarket structures, it has been sought the welfare lossassociatedwith the presence ofmonopoly power (Young,1996), where one of thedimensions of thedynamic problemis the degree ofmonopolyentry barriers (Young, 1996).The resultsthat have been generateddetermine that is potentiallysignificantthe welfare lossdue tomonopoly.
Vertical integrationas usualhas been considered asa strategy forincreasingthewelfare of the company (Hamilton and Lee, 1986), though not necessarily so, as indeedmay favorto increasemarket power.However, it isnot conducivein reducingtransaction costsandimprovingproduction technologies (Hamilton and Lee, 1986) and when it comesto the welfareof society,vertical integrationfavorshighergoods and services, damages economyof grassroots and popular sectors,middle class andfarmers, businessmen and traderswho arein needto purchase raw materialsat higher cost (Castañeda and Rodriguez, 2009).
Thus, there is there search question: Is the growth of FEMSA representing also animprovement in the economic and personal.

Justification
In general, in view ofall, being aworker in aprivatecompanyof great reputationandexcellent positioning, translates to a goodquality of lifeof the worker,a good salary, secured economic stabilityand alsopersonal stability.InMexico, thetalkofFomento Economico MexicanoSA(FEMSA) is no exception, becauseithas FEMSA over timesince its inception in1890, transcending and diversifywithparticular strategiesand cutting edge.Thus, FEMSAhasmanaged to position itselfin the Mexican populationasone of the major undertaking, successful andalso as a goodcareer choice.However, lookingfrom adifferentperspectiveand to have aneffect onthis, focused specifically onFEMSA, what is the level of realitythat exists inthe perceptionofincreasedintrinsicallyexpected welfaretowork inthe private sector?
For its part, gross domestic product per capita (GDP) of Mexico has shown positive growth over time (Fondo Monetario Internacional, 2013).However, and generally, for the country, have not been good economic growth expectations, the inflation rate annual increases year after year and it is known that the Mexican country is recognized as one that manages lower wages and salaries around the world (Fondo Monetario Internacional, 2013), in contrast to the National Index of Consumer Prices, showing high prices of the basic basket and with an increasing trend during the first half of 2013 (Instituto Nacional de Estadística y Geografía, 2013).
The growth that FEMSA presents is the result of strategies such as geographical and product diversification, which is strongly recognized as successful, causing the organization to achieve positioning increasingly strengthened.But it sounds incongruous and unreasonable that the welfare of their workers do not improve as the improvement of the organizational situation from the point of view of the business.Thus, it is fully justified the intention to make research relevant to the existence of economic and social well-being of workers and logical same increase reported by FEMSA, expected as a result of excellent performance of each of the operating units that make Fomento Economico Mexicano SA.

Research Assumption
The growth from FEMSA presents strategies such as geographical and product diversification cannot be considered as an effective indicator directly proportional to increase personal and economic welfare of its workers.

Theoretical and conceptual framework 6.1 Vertical integration
Although the concept of mergers and acquisitions is used with some frequency, acquisitions are those that actually run the most.Acquisitions refer to the transfer of control of the assets, operations and management of one firm to another (Peng, 2010), so that the firm is transferred and it becomes an additional unit of the firm that receives the transfer.
There are three main categories of mergers and acquisitions: Horizontal, vertical and conglomerate, where horizontal acquisitions represent those performed by receiving transfer companies before the acquisition was a competitor in the same industry (Peng, 2010).Vertical acquisitions are those that enable firms to acquire either their suppliers, their customers (Peng, 2010) or allowing them to expand their operations through the implementation of activities traditionally undertaken by suppliers or distributors and finally, the clusters that are defined as transactions between firms belonging to unrelated products industries (Peng, 2010).

Agency theory
The separation of ownership from shareholders andmanagerscontrolrefers to whatit is known todayastheagency theory, which is themost dominantamong the theoriesof Strategic Management(Vargas-Hernández,2005).The generation ofa set of rules(rules of the game) within firms, allows to developrights andobligations ofworkers and toachievethemost optimalminimizationof opportunismwithin the organization.Thisis a beneficialresultof new formsof governanceare implemented within companies(Vargas-Hernández, 2005).

Monopoly
It isa concession granted bythe competent authorityto a companyto take advantageon an exclusive basisanyindustry or commerce(Diccionario de la Real Academia Española, 2013).Within the monopoly, the seller can deliverany packageof goods or servicesto a market inhopesofbettertheir quality(Anton y Biglaiser, 2012).Thus,when it is perceived agood qualityand having noother alternativesto purchase at adifferent price,theconsumer chooses toaccess thecashdetachmentdemanded by theonly company in themarket, despite the increased cost ofgoods.
In this form, the monopoly generateslessconsumer surplus, hampers theconsumer welfare andfurtherdamagecrucialin the economy ofthe middle class,small and mediumentrepreneurs andtraders whoin a forced wayshould acquireunique goods and servicesin the market (Castañeda andRodriguez, 2009).
Analyticalstudies were conductedfocused on the economic indicatorsof the country withthe intention of showingthe current situation inthe quality of lifeof the population,identifying those thatat the simpleview showadvancingof very positive impact onthe nation.However,if they are not properlyobserved, could beconsistentlyincurringin a seriouserrorto considerthat the Mexican populationactuallymovesfavorablyon agreater socialeconomywhenactuallythe opposite is true.Such it is in the case of GDPper capita, whichactuallyshowsgrowth or declinebut onlyin productionof goods andservices from businessesregardless ofincome distribution.It is essentialto identifythe real benefit ofthe populationand therefore, to coverpart of the present objective.
With respect toFEMSAgrowth analysis, it is generated a compilation ofinformationwhichclearly identified thegeographical and productdiversificationthatFEMSAhas shownwithin thepreviously definedconceptual framework.It is done in such a way asto show anygrowthdimensionsFEMSAhas reachedin recent yearsas well as itsshort-term planningin favor ofcontinuing itsgrowth.
Conductinginterviews withcurrent and former employeesshould not be consideredas acasualsituation.However, the cause of having establishedthis framewasto reachto visualizeif there are differencesinthe appreciationof both workers andformerwelfareworkersperceivedfor them.In the case ofthe former employees, theycouldgive afuller appreciationsince they havea clear perspectiveregarding theimprovementor notfortheir welfarewhileworked for FEMSAcompared totheir experiencesafter they have left thecompany.It is important to highlightthat the interviewedformer workersleft the companyby choice, not considered themselves forthe sampleof respondentswith therecessionsof contracts casesas that wouldbiasan overview ofinformation andanalysisfrom two viewpointsdifferentthan forpurposes ofpresent study it is not convenient to mix.

Results
When analyzinggrowthcontrastbetweenFEMSAandCountryEconomicindicators, it identifies thatFEMSAgrowth indicatorsregardingthe countryeconomic indicatorsdo not show apositive impact on thecurrentsocio-economic welfareof their workers.FEMSAcontinues to diversifyinboth vertical and horizontalformsinside and outsideof its home country.Itsrecent acquisitionsin Januaryand May 2013was relating tothe business unitofFEMSA Commerce.NowFEMSA focuseson the pharmaceutical industry, which can be seenthe presence ofa monopoly, because when lookingincreasingly tointegrate a greatnumber of industries, there will be fewercompetitorsand accumulation ofwealth inthe same hands.
Finally, regarding the National Consumer PriceIndex (Índice Nacional de Precios al Consumidor, INPC) as of April2013compared with April2012,according to datafrom Instituto Nacional de Estadística y Geografía (2013) has shown an increase of4.65%, which puts inmanifestothat paid personnelby FEMSA for purposes of this researchhas not shownan improvement intheir qualityof life.Further, according to the figuresofFEMSAshowing growthduringthe last five years, it could be inferredthat the concentrationof wealth inMexicoisnot still rightfor increasedcitizen welfare.
FEMSA, an organization that belongs to theMexicanprivate sectorand hasimportantcontributionsto national GDPexhibits initsstatements ofresults that earnings are higheryear after year.However,expectationsofeconomic developmentcontinue to declineand the level oflifeof the Mexican populationdo not shows anysignificant improvement.