Sunday, October 22, 2006

Talk on Latin America at IIM Kolkata 2 November

My friends laughed... when I mentioned that I was going to give a talk at the IIM. They asked if i was inspired by a colourful politician who gave a talk at IIM recently.

It struck me. Surely the rustic wisdom of Bihar and the lusty Latin America add new dimensions to the otherwise staid and serious business of management. The first one is important to understand the growing rural market of India while the second one will help to reach out to the promising Latin American market. Understanding of the culture is the key to business success in both the cases.

Latin America can surely teach how to have fun and enjoy life to our young managers, who miss out on these, in their unrelenting pursuit of career glory. Salsa and Samba will reinvogorate the management mind.

Of course, our globalising managers need to understand the culture of Latin America to do business with this region which is becoming prosperous and stable and is offering opportunities for Indian business.

IIM Kolkata has a tie up with a management school in Rio and their delegation has come back from a successful trip to Latin America recently.

1 comment:

Nirmala Maharaj said...

Good Day Sri Vishwanathan,

I read your posting on Talk on Latin America and agree with your point that globalising managers need to understand the culture of Latin America in order to successfully do business with that region.

I wrote an artice on this particular topic for the Arthur Lok Jack Graduate School of Business which was published in the Trinidad Business Guardian and focused on the area of understanding culture in Latin America for success.

I am priviledged to share the details with you.

Building your trade capacity in the area of FTAA known as Latin America

Caribbean countries are strongly pushing for a free trade agreement with the United States. The Free Trade Agreement of the Americas (FTAA) will encompass 34 countries in the region that extends from Alaska to Argentina, including the Spanish and English speaking Caribbean. It will create a market of $11 trillion, with 800 million consumers. FTAA is projected to be twice the size of Europe’s market and will dwarf the Japanese. Only China’s and India’s markets will be larger in raw numbers.

However, FTAA will not be a monolithic, seamless aggregation of consumers and goods crossing borders unimpeded. National characteristics, business, accounting and legal practices, and linguistic and cultural differences will remain. Customs regulations will be relaxed but intra-regional harmonization will take years to create seamless borders, if ever. The 600 million consumers in what is known as Latin America, from México to Argentina, are discriminating and demand high-quality, state-of-the-art technology, consistent, top-notch customer service, and competitive prices. How then can you plan to do business in the area of FTAA known as Latin America, including México and Brazil?

These suggestions will get you started:

Recognize that drug trafficking, guerrilla wars, political instability, imperfect democracy, corruption, and corruptible officials are only a part of Latin America, not the whole. Honest, dependable, highly educated and competent men and women make up the legal business community of Latin America. Like you, they are interested in strategic alliances to produce and market high-quality products and services, sound management, legal profits, and a loyal base of repeat customers or clients.

Recognize that Argentina’s economic collapse and political uncertainties do not affect the region as a whole, although some areas of Brazil and Chile, Uruguay and Paraguay have been more affected than others, and this only in some industry sectors. Also the war going on in Colombia will affect the Andean Region, but Brazil, Mexico, Chile and Argentina will be unaffected by it.

Don’t rush into appointing a distributor, representative, agent, or joint venture partner. This should be your last step. You will first need to gather information through market research and due diligence to decide which country is most advantageous to your product or service positioning, and who your partner might be.

Ascertain whether your competitive factors and technology or processes are transferable to Latin America. Learn which local laws or cultural perceptions enable, prohibit or impede their transferability. For example, mechanical locks made in China enter Mexico under a 170% compensatory tariff, while those made in the U.S. enter free. The original Oreo cookie did not sell in Brazil because the dark cookie looked burnt to the Brazilians; a light colored cookie did sell!

Establish your domestic sales cycle and your product/service’s life cycle. Sales cycles in Latin America can be two to four times longer than in the U.S. Pirating could shorten your product life cycle.

Be clear about your technological edge and its overall application. For example, a technical product that can succeed in Mexico will not necessarily do so in Brazil, Chile, or Ecuador. Vast differences exist within a given country and among its regions. For business purposes Brazil is five different countries in one. In Mexico, Monterrey, Mexico City, and Guadalajara are three distinct markets. Ciudad Mendoza and Buenos Aires are worlds apart in Argentina.

Corroborate the strengths and weaknesses of your marketing and sales campaigns. Determine how current they are and their cross-border meanings. Do their taglines and slogans mean the same in, for example, Venezuela or Chile? Decide your price flexibility to gain market share. Price competition in Latin America is fierce. FTAA will make it more so.

Register your product or service before heading south or before you begin distributing catalogues, product samples and, possibly, product specifications willy-nilly at trade shows, even those sponsored by the U.S. Department of Commerce. Be cognizant of the legal protection a given Latin country grants to your company’s patents, trademarks, logo, copyright and trade dress. Copyrights must indicate All Rights Reserved. All Latin American countries have protections of property rights, but these rights must be duly registered before entering the market. And they are very difficult and costly to enforce once they are infringed. In most countries, the “first to use in trade” doctrine prevails, and “use in trade” is decided by local laws.

Accept that not “everybody speaks English down there.” Your company will need to communicate in the language and culture prevalent in your chosen market, the language of your customers. Your vision, objectives, corporate image, marketing and sales collaterals must have meaning in the cognitive environments shaped by Spanish and Portuguese. The Brazilians speak Portuguese, not a dialect of Spanish. Spanish speakers may understand Portuguese, but they can’t speak it without studying it, and vice versa. If the best you can afford to do is produce materials in English for the Brazilian market, do so. But do not try to sell the Brazilians using Spanish—you will not succeed.

Unless you have worked or lived in the business environment of Latin America, use an independent source that has done so to help you identify the country and region where you will be most competitive. Use the same source to help you perform due diligence to define the strategic positioning of your product, and to work with you to identify, articulate, implement and manage your Latin American partner or strategic alliance. The cost of this source is an investment in your future success and an up-front savings in time, energy, and money. Know that words such as associate, agent, representative, distributor, and partner have very different legal implications when translated into Spanish or Portuguese. You will be operating under their legal system, not yours.

If you take your time to do thorough market due diligence and follow these suggestions, you will be well on your way to doing business in the part of the Free Trade Area of the Americas known as Latin America. You will not leave dollars on your competitors’ table. You will be ahead of them!

Nirmala Harrylal (Ms.)
Senior Associate
Arthur Lok Jack Graduate School of Business
The University of the West Indies
St. Augustine
Max Richards Drive
Uriah Butler Highway, North West
Mt. Hope
Trinidad, West Indies

Phone: 1-(868)-645-6700 x 118
Cell: 1-(868)-689-6539
Fax: 1-(868)-662-1411