1. Assess the effectiveness of your company’s leadership. 2. Discuss the basis of your company’s competitive advantage and the potential challenges to its strategy. 3. What growth strategies might your company pursue?

This week you are required to submit a case study analysis.  Your paper analysis should be between 3 – 5 pages, not counting the title and reference page.  No submission should be fewer than 1050 words.

Include a clear and concise introduction.

Format your case study assignment paper so that the three questions asked below are clearly defined. Double space your work, cite your work, limit quotes, and edit your work well for spelling, grammar, and punctuation errors. If you use any quotes, you must increase the length of your paper to compensate.  Make sure you have two additional references other than the text and use citations.

No abstract is required.

Read the case study and answer the following questions in your paper.

1. Assess the effectiveness of your company’s leadership. 2. Discuss the basis of your company’s competitive advantage and the potential challenges to its strategy. 3. What growth strategies might your company pursue?

Submit your paper into the assignment section of the classroom.

Font and Spacing – Use Times New Roman 12 pitch font with double-spaced lines.

Length – Write a 3 to 5 page analysis not including the title page and citation page. No fewer than 1050 words!

Reference Page – Include all sources including your textbook on a Reference page

Utilize the APA Style for documenting sources. You will need to include at least 2 sources in addition to your text. Finally, remember Wikipedia is NOT a scholarly source.

Punctuation, essay format (thesis, supporting paragraphs with transition and topic sentences, and summary) grammar and documentation count toward your grade.

Review the Grading Rubric attached here for detailed information about the essay grading criteria.

710 THE MEXICAN NARCO-TRAFFICKING PROBLEM

dominant position in this billion-dollar market, there was not much opportunity to expand the market itself. An outcome was that the main Mexican NTOs were soon facing strong competition from each other over access to the lucrative US market. Competition was based on territorial control – access to trafficking routes in Mexico, border areas, production areas, places with corrupt law enforcement, and ports of entry and exit (including airports).

As the competition became fiercer, several NTOs looked for ways to diversify, moving into new markets, such as cocaine for Europe, or supplying new illicit drugs (prin- cipally methamphetamines) into North America via their established routes and contacts (Figure 3). Others took the opportunity to reinforce their local territorial control by developing the domestic consumer market, in this way involving more local people in their business model and increasing local dependency on (and thus loyalty to) that NTO.

The Sinaloa Cartel, for example, building on its existing dominance of the Mexican drug trafficking market and its relationships with US distributors and Colombian sup- pliers, expanded international operations to almost all of the Americas and started to develop trafficking networks through western Africa, as a route to penetrating the

European market. Strategically located on the western US border, it also developed various complex but effective drug corridors for all types of illegal narcotics making their way into the USA. Such was their territorial dominance that anyone involved in any part of the drug trade in their ter- ritory had to do it under the watchful eye of the Sinaloa Cartel, paying ‘taxes’. Although these groups were not directly affiliated, their activities got absorbed into the Sinaloa Cartel’s network of ‘interests’.

With the extra income generated from this new era of trafficking, the Sinaloa Cartel had to find new ways of investing and protecting its cash. One was money launder- ing, the creation of new legal businesses where the carbel could hide and reinvest its drug profits. Involvement in legitimate businesses presented new markets that the Sinaloa Cartel could seek to monopolise, using a mixture of legal and illegal methods. Looking to increase its market position further, the cartel also pursued an aggres- sive strategy of territorial expansion from 2005 onwards, seeking to control the entire west coast of Mexico from Guatemala up to California and the US border states. This brought it into direct territorial conflict with other NTOs, notably the Gulf Cartel, its main historical com- petitor on the East Coast, resulting in a series of bloody turf battles.

Figure 3 Cartel territories and drug–smuggling routes, 2008

Source: Stratfor

THE MEXICAN NARCO-TRAFFICKING PROBLEM 711

A changing competitive landscape . . .

The Gulf Cartel had expanded in much the same way in the early 2000s but had also developed a new wing to its operations: a paramilitary section that came to be known as the Zetas. The Zetas served to enforce the Gulf Cartel’s ‘law’, collect debts and generally ensure territorial control and protection of assets. Through violence, the Gulf Cartel achieved control of the entire eastern coast by 2008.

In response, and in order to expand into new areas, the Sinaloa Cartel did much the same, creating various armed groups or allying with local crime gangs. To build up those enforcement operations, the Sinaloa Cartel increased its investment in areas such as weapons procurement and tra- fficking, recruitment and corruption of military and police. This led to further diversification in cartels’ activities: to keep their paramilitaries busy, and, to enforce territorial control, these groups dedicated their time not only to sup- porting and protecting the narco-trafficking operations and assets, but also moved into extortion, human traffick- ing and other criminal activities that benefit from the presence of armed ‘protection’. These new activities meant that the government of Mexico was faced with highly com- petitive and successful criminal business organisations, willing to compete violently and now developing military

capabilities.

Although tackling the cartels with force became harder for the state, these more diverse NTOs also developed a weakness: they could not survive without the capability to deploy force against the competition, which in turn could not survive without the huge income from trafficking, which was needed to fund arms procurement and increased personnel numbers. Managing the multifaceted nature of these organisations (legal and illegal business, together with military elements) meant expanding management capabilities. Expansion inevitably implied more difficulty in keeping ‘below the radar’ of the state.

. . . and changing alliances

As the NTOs rapidly became stronger and more diverse, internal tensions and frictions increased, aggravated by frequent attacks from competing NTOs, causing constant changes in the NTO management hierarchies. This led to many clashes, such as a dramatic rupture within the Sinaloa Cartel in 2008 after a leadership dispute, resulting in a new splinter NTO that the Sinaloa Cartel immediately came into competition with. The same happened in other cartels, as the new paramilitary wings started to assert their own authority and undermine the parent organisa- tions’ traditional modus operandi.

From 2006 onwards, the Mexican police and military

stepped up strikes against the cartels, while the NTOs

increasingly attacked each other: violence levels exploded, resulting in thousands of deaths every year and huge organisational instability for many of the NTOs. While the aim for all of them was to manage successful international trafficking operations, for which they prefer a relatively stable environment, survival was now based on eroding their main competitors.

Despite the inter-NTO competition and the government’s ‘drug war’ initiatives (Figure 4), the Sinaloa Cartel con- tinued its strategy of aggressive expansion and attacking its rivals, including those with which it was once allied. While it suffered defections, deaths and arrests, its ability to main- tain successful trafficking operations allowed it to continue dominating the market. Arguably, the continuing leader- ship and legendary status of El Chapo was the glue that held the Sinaloa Cartel together, giving it stability despite changes to the hierarchy below. The Sinaloa Cartel con- tinued to successfully undermine lesser organisations, through street battles and bombings and by organising the arrest and death of their leaders – and through the success- ful corruption and co-option of state agents.

A threat to stability of the state?

The year 2009 saw a new dynamic, as the Zetas broke away from the Gulf Cartel and expanded control dramatic- ally through eastern Mexico and into Central America, using extreme levels of violence and brutality when deal- ing with opponents. The Zetas are formed principally of military deserters or people with some form of military training, which is clearly reflected in their organisational structure. Their military chain of command and strict discipline have meant that when leaders are removed, there is a clear line of succession. The organisation’s repu- tation for violence and lack of ‘second chances’ has allowed them to assert authority over new business activities despite their rapid organisational and operational expan- sion. The Zetas, unlike the more traditional NTOs, are more opportunistic: they have no need to win over the local population, and their principal motivation is income and gaining control over varied illegal industries in as large an area as possible.

The resulting clash between the Zetas and the Sinaloa

Cartel is also a clash of business models. Sinaloa and the older drug cartels focus on exploiting their core com- petences (international trafficking capabilities) and main- taining their brand reputation (for quality and reliability) in the industry. Embedding their activities in local eco- nomies is central to their survival and, at the highest levels, family and personal ties reinforce the networks. In con- trast, the Zetas are more involved across a range of local criminal businesses and are less dependent upon inter- national trafficking operations. Although risks are spread