“Which country is the most attractive market for my expansion in Latin America?” –
“What is the best strategy to enter and conquer this market?” –
“How do I find the right partner to support my business in Latin America?” –
“What are the costs and risks involved in our market entry and how can we control them?”
If you are in charge of expanding your company’s presence in Latin America you will inevitably be confronted with questions such as these. And you will have to come up with the right answers. Every case might result in a different answer, yet there are some generally valid points that every company or investor should keep in mind when planning to do business or invest in Latin America.
Here’s what I have learned in 9 years of advising and supporting foreign companies and investors as Market Entry Specialist in Latin America:
Step 5: Define the Right Market Entry Strategy and Business Model
Many small and medium-sized companies do not have a clearly defined market entry strategy. Some make a conscious decision to be pragmatic and adapt to each country, opening a subsidiary in one, working with a distributor in another, depending on market conditions. Still, those companies will know which business model to use in which country and will not waver once they have decided on the right approach.
But in many cases the absence of a clear market entry strategy is not the result of a deliberate decision but of the lack of experience in successfully entering similar markets. Such companies tend to start with one business model, then switch to another one if the desired results are not achieved soon enough. And should the new approach not work either, why not try a hybrid model? Such conduct will unsettle your distributors, partners, clients and negatively affect your reputation and market potential.
Once you have decided on your market entry strategy and business model, stick to it and give it sufficient time to make it work.
But how do you decide which strategy and business is the best for the first Latin American country you want to enter?
If you have not done business in Latin America before, keep an open mind before making this decision. Do not assume that the strategy you use in another part of the world will automatically work in Latin America as well. Latin American business culture is very relationship-based. Without building a rapport on a personal level first and regularly meeting face-to-face with your partners and clients, you will have a hard time being successful. Also, do not underestimate the language barrier (relatively few people speak English, so you need to be able to communicate in Spanish and/or Portuguese), time difference (especially for companies in Europe) and the fact that emails often go unanswered. All those aspects need to be taken into account when choosing your strategy and business model.
Summary: How to choose the right market entry strategy and business model
- Keep an open mind, consider all options (subsidiary with own sales force, distributors, sales agents, outsourced regional sales manager, hybrid model combining different models, to name a few)
- Analyse the market, the competition, the pros and cons as well as the cost of every option.
- Take the relationship-based business culture in Latin America into account.
- Once you have made your decision, stick to it long enough to make it work!
Following the 9 steps during your market entry process will bring you a big step closer to success. At Ongresso, we help you unlock the potential of Latin America by assisting you with successful market entry and long-term growth in the region.
Contact us to set up a free consultation to talk about how we can help you succeed in Latin America.
Daniel Breitenmoser is the Founder and CEO of Ongresso, a Market Specialist in Latin America who assists foreign companies with market entry and the achievement of long term success in the region. In his 9 years in Latin America, Daniel has helped an extensive list of clients across a variety of industries understand local business culture and implement their business model. His passion is to share his knowledge with like-minded people to jointly unlock the potential of Latin America. Originally from Switzerland, Daniel has found his new home in Medellin, Colombia.
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