Issues entering LA markets

Question 1

which would be the best LA market to enter? Brazil or Mexico because they are big? If not why not?

Answer 1

no, its costly and complicated pilot markets. Espec. Brazil is most complicated bc: bureaucratic, costly local regulations, lots of taxes, high cost of capital, expensive real estate environment, poor infrstructure, conflictive legal environment
In Mexico the competition is hard after 25 years of NAFTA + direct violation of mexican labor and tax laws giving them advantage over the high standards of MNC

Question 2

where to invest then? and why?

Answer 2

mid-size or small market such as Colombia, Peru, Panama, Chile.
Learning curve is less costly, competition still weak

maybe a benchmark study, tailored to their needs

Question 3

JV, Greenfield or Acquisition?

Answer 3

as there are not too much protectionism anymore there is no need to go through all the possible problems of JV
-> clash of cultures asked to share power and decision making
-> JV only when its needed!

Going alone simple, but you need excellent local support

Through Acquisition you can benefit from the name recognition as there are many well-known brands

Question 4

who should you send as the Country Manager?

Answer 4

HQ’s country manager is the wrong instrument!
In LA it’s crucial to know the market, have powerful relationships, be sensitive to local customs

Question 5

why is Country Manager so important?

Answer 5

he is
your top sales person
your brand spoke person
your number-one problem solver
your government relations manager and
the inspiration to employees

Question 6

what about giving credit to LAC importeurs?

Answer 6

credit is paired with risk but holding back credit limits the ability of ur product to penetrate the market as credits are costly and scar, so the opportunities for LA distrubutors are limited

in LA credit more a sales and marketing decisions than financial risk decision

Question 7

Sell through e-commerce or not ?

Answer 7

better not due to challenges in payments (just few have credit card and local banks often reject international ecommerce purchase for fear of fraud)

Question 8

what about grey market?

Answer 8

• representing over 60% of national sales in LA!!
• some deal in pirated products, includingsoftware, films, counterfeit (gefälscht) luxury goods
• rare support from local government due to corruption

Question 9

what is the best exit strategy?

Answer 9

wiser to downsize than fully withdraw bc abandoned customers will not return if u decide to re-enter the market
Also, market entry and exit costs are high, so maintain minimal presence