391
C A S E T E A C H I N G N O T E S
The Mexican narco-trafficking problem
Clive Kerridge and Sophia O. Kerridge
1. Introduction
This case usually gets good student engagement, since most have some knowledge or
perceptions about organised crime, which features prominently in contemporary films, TV,
books, magazine articles and online news media though rarely, have they thought previously
about those organisations as successful businesses.
2. Position of the case
The position of the case study in the course depends on the role for which it is being used. It
could be used in one of the following ways:
a. It lends itself to being used at different stages of a course:
(i) initially, for strategic choices (directions and methods), based on an analysis of strategic
positioning;
392
3. Learning objectives
Strategies of atypical business organisations be able to assess the parallels and differences
between NTOs and conventional business corporations
4. Teaching scheme
4.1 Plenary or seminar session discussions
The case could be used in plenary or seminar sessions as a basis for discussion ideally
culminating in two or more student groups evaluating strategies from the differing points of
4.2 Role-playing active learning sessions
Alternatively, this case lends itself particularly well to active learning session(s), with role-
playing by student groups. This can be done in various ways but the following is a suggested
framework, based on a four class activities approach which has been used successfully:
4.2.3 Using an Ansoff Matrix, e.g. on white boards or flip-charts, each group:
(a) defines the strategic directions available to their assigned organisation;
4.2.4 Transfer some of the NTO groups members into the government camp (bringing their
knowledge and perceptions) and get each group to conduct a strategic evaluation of:
(a) What strategic options are open to the NTO/government;
5. Questions for discussion
Note: starting with more straightforward analytical questions but working up to strategic
evaluation tasks and leading students to look beyond the case study.
1. What strategies are being followed by the main NTOs?
Strategic analysis of the NTOs positions, e.g. SWOT (including differences between the
2. What strategic options are available to NTOs (at the time of the case study)? How is the
current situation changing?
3. How might these strategic options be evaluated?
What strategic options are open to the NTOs?
4. What strategic options are open to the government? And which strategic choices should the
President make?
394
6. Case analysis
1. What strategies are being followed by the main NTOs?
Based on a good reading of the case, students (or student groups) should be able to produce a
SWOT analysis for the main NTOs. Some of these apply to most drug cartels but others are
distinctive to one or a few. Some examples follow (but this is not a definitive list!):
Strengths
Control of corridors/access to USA market
Weaknesses
Lack economies of scale
Opportunities
Growing European cocaine market
Threats
Aggression and militarisation of competitors
395
What are the NTOs main objectives?
This needs some understanding of their overriding aims but is also dependent upon prevailing
conditions, i.e. builds on the SWOT/TOWS analyses.
Who are the key stakeholders?
Again this will vary between NTOs students should be able to look beyond generalisations.
Do differences in the business model operated by the Zetas, compared with the longer-
Which diversification strategies have applied at which stages of the NTOs life cycles/
evolutions?
Within the case study text, students should be able to identify how the NTOs have followed
different strategic directions at different stages of the markets and cartels evolution: market
2. Which strategic options are available to NTOs (at the time of the case study)?
On the basis of their analyses for 5.1, students can start to consider which directions and
methods are available and appropriate to the relevant NTO(s). First requirement is to identify
key changes in the environment, e.g. increased military pressure from the government (and the
396
3. How might these strategic options be evaluated?
Answers to the preceding question should help focus students on which options are available to
the NTOs. Now they can evaluate these options, using the SAFe criteria of Chapter 11:
Suitability, perhaps in terms of Table 11.3, review options in relation to strategic direction and
methods. Clearly, there will be some differences between options for an illicit NTO and those
for legitimate corporations although similar strategic principles may apply.
4. What strategic options are open to the government? And which strategic choices should the
President make?
The key challenge in this case rests on evaluating the strategic options for the new Mexican
administration.
Acceptability considerations will need to look hard at risks and prospective returns/rewards.
With the benefit of hindsight, it would be painfully clear to the incoming Peña Nieto
administration that his predecessor Calderóns war on drugs led to a catastrophic increase in
violence and instability across many states with a serious deterioration in quality of life for
In evaluating options, students may consider and discuss that perhaps it will only be measures
which reduce the profitability and attractiveness of drug trafficking, in and through Mexico,
which are truly feasible strategic options.
Or is it the case that eradication of the international drug smuggling business is just not feasible
and that viable strategies in a Mexican context may be better to focus on limiting the scope of
SAFe criteria For NTOs (e.g. Sinaloa
Cartel)
For Mexican Presidency/Govt.
SUITABILITY
(issues and opps)
SWOT (do a version of Table
11.2)
Can/should start evaluation
using
SWOT (also a version of
Table 11.2)
Seek to define Key strategic issues
(Ranking) Aspects of game theory
(strategies in relation to likely
competitive responses)
Ranking as second guessing
(game theory here too: multiple
players),
e.g. disrupting NTO value/supply
chain is this balloon effect or a
true blitzkrieg?
Consider Linkages and
Inimitability, i.e. the I of VRIN,
but be aware of
complexity
casual ambiguity
embedded cultural aspects
Use
Decision Trees approach
and associated drivers
ACCEPTABILITY
Stakeholders
(NTO stakeholder
expectations)
NTO Leaders
NTO partners (esp.
international)
NTOs local communities, e.g.
funds, employment, security
NTO local partners (e.g.
corrupted officials)
(Govt. stakeholder expectations)
The people (but the electorate will
not be homogeneous)
The USA and agencies such as
UNODC industry and investors
Judiciary and law enforcement
Implications? What trade-offs are
acceptable, e.g. civil liberties and
human rights
A2 Returns Financial and non-financial Primarily non-financial though, by
implication, subsequent financial
returns
Cost-benefit analysis
Real options (emergent),
e.g. lessons from the Colombian
1990s experience
Beware of a balloon effect
(where just move the
activity/resources between
NTOs)
Local communities, e.g. social
costs
Ethical considerations + Human
rights
Externals USA especially
FEASIBILITY (how/can it work in practice)
Cash reserves (cash cow
rather than weakening maturity
phase?)
(how/can it work in practice)
Resources and capabilities
financial/ govt budgets