Winning Strategies for the New Latin Markets
Editorial Reviews
Book Description
Preface The Emerging Latin World Globalization is transforming profoundly the business landscape of the Latin world. Firms competing in this region are reacting not only to new trends in technology but also to the impact of fundamental changes that have transformed the economic landscape of the Americas. Several international financial crises have affected the fragile Latin American economies with devastating cycles of growth and contraction. This is the first book to analyze the dynamics of the Latin world and to define key success factors for Latin markets. Based on over 100 executive interviews and in-depth case studies, the book offers managers and analysts engaged in global business a fresh perspective on a dynamic but volatile market. It will be a trendsetter for future strategic studies of emerging markets. Although Latin America is a challenging region in which to do business, it offers rich rewards. Whereas first-movers had time to adjust to the varying conditions and changing regulations, newcomers to the region do not have that luxury. Cycles of economic upturns and downturns have intensified. Multiple drivers affect Latin American markets in many different ways at different times. The essence of strategy in Latin America is to identify the windows of opportunity, timing of entry, resource commitments, and creative response necessary to succeed. Early-movers have built different business architectures based on their geographic and business scope. National champions have emerged to contest the challenge of integrators and specialists. In this struggle, success will be determined in the two largest markets, Brazil and Mexico. These two countries offer different platforms for success, and some firms may have to choose the focus of their Latin American success. For global firms, Brazil and Mexico are essential components of the global value chain. The future of the region may not be decided in the marketplace but in the political arena. The pressure to minimize the region's vulnerability to global shocks and market-driven economies is increasing. This certainly creates an additional source of uncertainty for investors. In the long term, the region's potential should offer many rewards. Any strategy for Latin markets must recognize the importance of the U.S. Latin market. The 34 million people of Latin American descent in the United States represent the fourth largest Latin American nation and the third largest in buying power. The future of any large multinational firm in Latin America will be decided by its ability to command enough market power in the three largest markets of Brazil, Mexico, and the U.S. Latin market. A strategy that focuses on market dominance in only one or two of these three large Latin markets will not be enough to achieve regional market predominance. A Roadmap to the Reader Latin Business in the New Economy In the first chapter we analyze the transformation of Latin American corporate strategy from the old and traditional brick and mortar model to one in which information technology and the Internet play an increasingly important role in planning, production, control, marketing and distribution, and customer service. In the first part of the chapter we provide an overview of the drivers and barriers to corporate development, growth, and expansion in the region. In the second part of the chapter we summarize the emergence of the "new economy," focusing on both business-to-consumer and business-to-business Internet firms, including hardware and software incumbents and startups, vis-a-vis Latin America. In the third part we examine some of the key ways in which Latin American corporations are beginning to integrate the Internet into their business strategies. In the last part of the chapter we present a framework to assess the transformation of multinational firms in Latin America within the larger context of globalization and Internet-driven pressures. The Latin Consumer Markets: Convergence or Fragmentation? In a short period of time, the Latin American social fabric has changed. The region has transformed itself into a complex, fluid social structure of rich and poor, old and young, and cosmopolitan and nationalistic attitudes. If we add to these layers of complexity differences in race, ethnicity, language, and climate, the conclusion is that the Americas are a rich mosaic of diversity that produces a variety of consumption behaviors and different ways of adjusting to the vulnerabilities affecting the region. The nuclear family remains the focus of consumption, but it is changing rapidly. Families are smaller, more urban, and multigenerational. Their members are working more and generating the same or less income. The population is aging rapidly, and by 2015, Latin markets will resemble those of the developed world. Inequality of income distribution remains unchanged; and the incipient middle class has been losing its share of total national income during the last decade. The fragmentation and varying dynamics of Latin markets present a challenge to all firms. The simpler approaches of the past, based on geography and socioeconomic class, no longer reflect the complexity of the region. Regional strategies based on the logic of convergence and similarities of consumer preferences do not work as well. In Chapter 2, we provide a guide to navigation of the intricacies of Latin consumer markets. We analyze the size of the market and identify major drivers of buying power. We discuss changing consumption patterns and provide different ways to segment Latin American markets. The chapter is concluded with a discussion of implications and recommendations as to how to approach Latin consumer markets. The Latin Market Competitive Landscape In Chapter 3, we discuss our view of the dynamics of competition in Latin America. The key players in the theaters of competition are the large American and European multinationals and strong traditional Latin American groups. We identify the various groups based on their origin, historical presence, and intent. Recognizably, the Latin American competitive landscape is not a level playing field. The presence of large national family-owned conglomerates has created high barriers of entry in many sectors. Many of these conglomerates are embracing the Internet revolution and extending their reach to electronic commerce. In this chapter we develop the conceptual framework to analyze how the various players stake their positions for dominance in the region. Building the Infrastructure Network Strategic investors new to the region need to understand a plethora of liberalization and privatization frameworks. Reforms and deregulation have been aimed at dismantling state monopolies, privatizing, and deregulating various components of the infrastructure value chain. This unbundling of state monopolies has taken many approaches in the region. Liberalization has also taken a variety of approaches. In some cases, parts of a sector have been opened for competition; in others, the state has retained ownership and monopoly status. As a result, the region is a mosaic of sector structures, regulatory frameworks, and ownership regimes. In some countries and sectors, the rules are transparent and the regulatory bodies well managed. In others countries and sectors, ambiguous rules and weak regulatory bodies are the rule. In addition, technology is reshaping the nature of competition and providing new opportunities to all firms. Information technology, including the Internet, is revolutionizing the way that infrastructure services are produced, bought, and used. New technologies give rise to new skills and competencies in the once-stodgy infrastructure industry. New technologies, such as using liners in pipelines or remote metering, reduce the costs of transmission and repair of utility networks. Technology is also blurring the distinction between types of utilities. Network value chains can carry different types of services. Energy companies are finding that their pipelines can also carry telecommunication services. In Chapter 4 we examine fundamental aspects of infrastructure network strategy and discuss a successful case of transforming a government-owned monopoly into a global-class competitive business. Reaching the New Latin Consumers A new Latin world has emerged as an attractive revenue frontier for multinationals. A powerful network linking the Americas, Spain, and Portugal is targeting a population of nearly 600 million Latins. In the United States alone, the Latin market of nearly 34 million is the largest ethnic group, with annual spending projected to reach $1 trillion by 2010. Like Mexico and Brazil, it has a young population, a rapid technology adoption rate, and an influential culture. Pioneering firms such as Spain's Banco Santander, Mexico's Cemex, AOL, and Unilever are targeting Latin markets with winning strategies in branding and manufacturing, supported by information technology. To reach Latin American consumers in these difficult and pressing times, firms need to deliver the right market value. The challenge is to find a value proposition that fits the diversity of consumption strategies that one finds in Latin America. The best value/price ratio may depend on a firm's target segment. Clearly, the increasing importance of retail chains and discount stores is part of the value delivery strategy. Another strategic issue is the importance of the brand in meeting consumer value in uncertain times. Do Latin American consumers use familiar brands as indicators of superior and consistent value? Do global brands provide greater value than brands of local champions? Are integrator or specialist strategies better prepared to emerge as strong players out of a recessionary period? In Chapter 5, we address these questions. Funding the Latin Market Growth No sector has been so affected by the sweeping economic, legal, and regulatory reforms of the 1990s as financial services. At the same time, no sector has affected as extensively the economic liberalization process that has been the ...
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Global corporations are rapidly discovering an emerging market of nearly 600 million Latin consumers in the United States and Latin America. In Winning Strategies for the New Latin Markets, three experts analyze the Latin market's unique dynamics and offe
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Winning Strategies for the New Latin Markets
Winning Strategies for the New Latin Markets,Fernando Robles,Francoise Simon,Jerry Haar,Financial Times Prentice Hall,0130617164,Business & Economics,Business / Economics / Finance,Business/Economics,Commerce,Competition,Consumption (Economics),Economic Conditions,Infrastructure (Economics),Latin America,Marketing - General,Marketing - Research,Business & Economics / Marketing / International
Winning Strategies for the New Latin Markets
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