“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 9: The (Sometimes) Uncomfortable Part: Being Told the Unvarnished Truth, Having the Personal Format to Admit an Error and Acting on it
In my opinion, honest feedback is one of the rarest yet most valuable commodities in the world. How often does it happen that we become too involved in something to see that we are on the wrong track; and while this is obvious to the people around us they might hesitate to tell us in order not to hurt our feelings or be the bearer of the bad news that could hurt their position. These situations happen all the time, in personal life as much as in business.
The situation becomes especially delicate if the object in question is your client. In my role as advisor and supporter of foreign companies and investors in Latin America I regularly find myself in this difficult situation. Do I tell my client that in my opinion he is using the wrong approach, working with the wrong partner, employing the wrong people, communicating with locals in the wrong way? Or is it better not to overstep and risk hurting the working relationship with the client?
The answer is clear: If the local expert, consultant or advisor does not give his client a completely honest feedback, who else will? In my case, that sometimes includes providing unsolicited feedback about aspects of my clients’ business that lie outside of our contractual scope of work. But it is this unvarnished and sometimes uncomfortable truth that can open the client’s eyes and allow him to take corrective action before it is too late.
One of my clients from Germany had a sales executive in charge of the Andean region, based in Bogota. This person had been hired a few years before, by the previous regional manager and showed an unsatisfactory sales performance. The client asked me to review the sales executive labor contract and propose changes that would provide more effective incentives that would lead to improved sales. A first look at the contract showed that the base salary was ridiculously high for a sales position. This guy was living the high life with a fixed salary equivalent to a local CEO. No wonder he was not generating a lot of sales! The impression gained from a personal conversation I had with this guy showed that he was neither willing to change nor to renegotiate his contract. So, my recommendation to the client was to terminate his employment and look for a more ambitious replacement with a salary package at market conditions. And I made it clear to the client that it was not enough to write a new contract and hire a new guy but that he had to change his approach and manage the new person much more closely than before. I would not say my client was exhilarated to hear the honest truth because it did not shed a positive light on his management style, but he had the personal format to admit the past errors and take action.
How can you ensure you receive the unvarnished truth about your business activities that helps you take corrective actions on time if necessary?
Usually it is easier for an outsider to criticize what is going wrong in your organization. They will have a more objective approach and will not be afraid of jeopardizing their position in the company by saying the wrong thing. Hearing the uncomfortable truth from such an outsider is easier to accept for many executives.
Hiring an experienced local consultant to conduct an independent review (similar to a Due Diligence) of your company’s current situation can open your eyes to necessary changes. This applies not only to the first phase of market entry but makes sense every once in a while as market conditions, regulatory and tax requirements and so on can change and might require your company to adjust and take corrective action to avoid unnecessary risks and ensure your long-term success.
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 to understand local business culture and to 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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