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  1. New Growth Markets Brett Mott Sarah McCauley Kristin Goss

  2. New Growth Market Features Life cycle stage: GrowthDomestic competition: Getting strongerForeign Competitors: StrongConsumer Markets: StrongAwareness of foreign influence Political Risk: Medium

  3. New Growth Market Features Developing infrastructure Emergence of Middle ClassCustomer analysis: AspiringProduct Line: Limited but open to growthPricing: Status

  4. New Growth Markets Latin America

  5. Environment Latin America Stretches from Mexico to the Southern tip of South America, Cape Horn of Chile There is a Wide Variety of Climates throughout Latin America Total Population 560 Million, Low income per capita

  6. Culture Most Latin American Cultures Share a Heritage of Native Americans and Colonization of Spain and Portugal Language Predominately Spanish Large Class Distinction

  7. Business Culture Very Formal Attire Relationships are key High Context Culture Hierarchical Society Mañana

  8. Foreign TradeAgreements LAIA – Latin American Integration Association ANCOM – Andean Common Market Mercosur – Southern Con Common Market NAFTA – North American Free Trade Agreement FTAA – Free Trade Area of the Americas

  9. Market Segmentation Urban VS Rural Population 56% of Population is Under 24 50% of Wealth is Controlled by 20% of the population

  10. Product Positioning Affluent Urban Markets are much like mature markets Status Conscience Small Volume, Low Price for lower income areas Difficulties In marketing to Rural areas

  11. Brand Awareness

  12. Pricing Set a slightly higher price for a differentiation strategy But avoid too much price skimming Desire to Improve Status Be aware of Growing Middle Class

  13. Distribution Hypermarkets Open Air Markets Poor Infrastructure Avoid Latin American Distributors

  14. Transportation

  15. Promotion Brand Awareness Advertising for Men vs. for women Image Music in Marketing Rural marketing

  16. Sample Commercial

  17. Brazil Largest Latin American Country Speak Portuguese, not Spanish Favorable Government Policies Maintains Stable Currency Raw Materials 99,470,000 Labor Force

  18. Brazilian Business Customs Never Embarrass or Criticize anyone Want to know who they are dealing with and have face to face communication Usually will not meet with final decision maker Brazilians insist on detailed legal documentation Time is inferior to relationships Pride themselves in dressing well

  19. Argentina High Standard of Living Demise and Rise Very Network Oriented Name Dropping is a plus Loyalty to people, not their companies Even more High context than other Latin American Countries Buenos Aires

  20. Argentina Meetings are not where decisions are made You are expected to be on time, but the person you are meeting can be late Don’t expect their undivided attention Dress: Quality accessories are expected for men and women They like their vacation

  21. Chile More formal than other Latin American cultures Direct eye contact and a firm handshake Don’t expect to have your personal space Hand gestures imply a lot Consistent Growth Rate Increase in retailing in Malls Credit Cards

  22. Mexico Machismo Even greater power distance You will be judged based on who introduces you Expect to discuss your personal life in some detail Be on time, the person you are meeting will be about 30 minutes late Expect to haggle, never open with your best deal Do not use an attorney in your negotiations NAFTA Mexico City

  23. Why Latin America? Large Population Fantastic Trade Agreements Variety of Climates and Markets Natural Resources

  24. Risks of Investment

  25. Mode of Entry Wholly Owned Subsidiary? Licensing? Exporting? Joint Venture!

  26. New Growth Markets South Africa Alive with Possibility

  27. Environment • South Africa is flanked on the west by the Atlantic Ocean and on the east by the Indian Ocean • Is famous for its sunshine. A subtropical location – warm temperate conditions • Relatively dry country, with an average annual rainfall of about 464mm. • A medium sized country, with a total land area of slightly more than 1.2 million square kilometres • It is 1/8th the size of the US, twice the size of France and over • 3 times the size of Germany

  28. Population • A nation of diversity • Over 47 million people and a variety of cultures, languages and religious beliefs • South Africa has 11 official languages • English is most commonly spoken language • Education system comprises over 12.3 million learners, including 300,000 University students and 190,000 technikon students • Professional skills in engineering, science, finance and management are critically needed as the economy moves into higher gear • Median Age: 24.8 years

  29. “Rainbow Nation” Cultures • South African Indian Culture • Today there are 1.2 million people of Indian decent in South Africa • Indian Culture faced struggles in the face of discrimination until 1994 • South African Indian culture has produced food loved by most South Africans • South African Immigrant Culture • Significant immigrant groups include: • The Portuguese • They brought with them variation of their natural cuisine, spiced by the fiery peri-peri chili • The Dutch • The French • Influenced the wine industry in South Africa – mainly around the western Cape • Italians and the Jews – bringing their magnificent building skills and cuisine • “Our major cities have been enlived by some of the most colorful cultures on Earth, most notably those from West Africa.” – quote from

  30. Talking the Lingo Pick-up Truck = Bakkie Traffic Lights = Robots Sneakers = Takkies Alcoholic Drink = Dop Barbeque = Braai

  31. Political Factors • Until 1994, country was known for apartheid – white-minority rule. • Became a full democracy in 1994 • The highest law of the land is the new Constitution • Rights protected include equality, freedom of expression and association, property, housing, healthcare, education, access to information and courts • Policy Issues: • Black economic empowerment • Correcting social imbalances and job creation • Promoting growth

  32. Current Issues • Crime • Total Crime per capita is 10th out of the 60 countries in data set • Crime in the farming community has been a continued problem • Many South Africans have moved into gated communities • ** Reducing Crime is one of the leading Challenges of South Africa’s democratic government • HIV / AIDS • Up to 31% of pregnant women are found to be HIV infected (2005) • Roughly 5 million people are infected with the disease • Human Trafficking

  33. Major Market Centers • Majority of South Africa’s population is found in areas surrounding • Johannesburg • is the commercial and financial hub of South Africa • Located in the center of the Gauteng Province • Gauteng Province generates 43% of nation’s gross domestic product • Has 8.7 million residents and is the country’s largest and most dense population • Is the center for all rail and road connections and shares • the country’s major international airport with Pretoria • Johannesburg • Cape Town • Durban • Pretoria • Port Elizabeth

  34. Major Market Centers • Durban metropolis • Population of over 3 million – 2nd largest urban area in South Africa • The triangle of Durban-Pietermaritzburge-Pinetown is a manufacturing center: • For agriculturally related industries such as footwear, textiles, paper, clothing, sugar, and processed food • Wood products manufacturing is an emerging industry • Cape Town • Country’s 3rd largest urban area – population of 2.5 million people • Western Cape has excellent road, rail and air links • Cape Town has well-equipped, modern harbor

  35. Business • Is a middle-income emerging market • Abundant natural resources, • well developed financial, • legal, communications, • energy and transport sectors, • a stock exchange ranked among the top 20 in the world, • and a modern infrastructure supporting efficient distribution of goods through the region • Economic growth has been steady and unprecedented • Real GDP rose by 3.7% in 2002, • 3.1% in 2003 • 5.4% in 2006

  36. Business Quick Facts • In 2006, World Bank ranked South Africa 29th for ease of doing business • Has the world’s 22nd largest economy by gross domestic product • It’s the 17th largest global producer of electricity • 15th longest network of railway tracks in the world • 17th longest length of roadways

  37. Communication • South Africans are transactional and do not need to establish long-standing personal relationships before conducting business • If your company is not known in South Africa, a more formal introduction may help you gain access to decision-makers and not be shunted off to gatekeepers • Networking and relationship building are crucial for long-term business success • Relationships are built in the office • For the most part, South Africans want to maintain harmonius working relationships, so they avoid confrontations • They often use metaphors and sports analogies to demonstrate a point

  38. Business Meetings • Appointments are necessary and should be made as far in advance as possible • It is often difficult to schedule meetings from mid-December to mid-January or the 2 weeks around Easter - - these are prime vacation times • Initial meetings are often but not always used to establish rapport • Come prepared and if possible send an agenda ahead of time • Agendas are not seen as rigid in South Africa – people will digress than come back to the topic at hand • If making a presentation – Keep it precise • Decisions are made on facts and figures rather than intuition or anything else intangible • Present your case with statistics and case studies – using charts and graphics

  39. Dress • Business attire is becoming more informal in many companies. • However, for the first meeting, it is best to dress more conservatively • Men should wear dark colored conservative business suits • Women should wear elegant business suits or dresses

  40. Trade Relations • Given the high level of competition for foreign direct investment among emerging markets, South Africa has placed greater importance on forming strong economic trading blocs to gain access to key markets • Active member of the WTO • Free exchange of trade between South Africa and the countries of the South African Customers Union (SACU) • Free Trade between South Africa and the European Union • Founding member of the General Agreement on Tariffs and Trade (1947)

  41. Imports & Exports

  42. Market Opportunities • South Africa is world’s largest producer of: • Gold - Platinum - Chromium -Manganese • As an investment host country South Africa offers a policy of openness which promotoes FDI • Each province has opportunities: • Eastern Cape • Aquaculture • Automotive Components • Pharmaceuticals • The Free State • Downstream Petrochemicals • Farm Equipment & Machinery • Hotels, Resorts & Casinos

  43. Distribution • Slightly less than 50% of total merchandise sales pass through both a wholesaler and a retailer before reaching the final consumer • 40% of sales are from the manufacturer to the retailer, bypassing the wholesaler • Many U.S. exporters of consumer goods sell directly to South African retail organizations • Such as consumer corporations, • Department stores • Chain stores and cooperative groups of independent retailers • Franchising is one of the most promising sectors for business growth • Currently some 90 franchisors in South Africa • 60 are members of the Franchise Association of Southern Africa

  44. Retail • South Africans love to shop – and to sell • A rise in the spending power of black consumer is boosting key retail sectors • 2004 report by Financial Mail: • Motor vehicles, furniture, clothing, media, property and cellphone retailers are all benefiting form South Africa’s new “buppy” class • The Rand is the currency of South Africa

  45. 2010 FIFA World Cup South Africa

  46. Meeting Etiquette • There are several greeting styles in South Africa depending upon the ethnic heritage of the person you are meeting • When dealing with foreigners, most South Africans shake hands while maintaining eye contact and smiling • Some women do not shake hands and merely nod their head • Greetings are leisurely and include time for social discussion and exchanging pleasantries • Take your time in closing deals. South Africans are very casual in their business dealings

  47. New Growth Markets Southeast Asia

  48. Southeast Asia Quick Facts 85% of the population lives off of less than 2 dollars per day. More than 90% of visually impaired people live in developing countries. SE Asia accounts for 32% of the world's blind population. In Cambodia it is estimated that 1/3 of children aged 6-12 have never brushed their teeth. 80% of Southeast Asia’s population lives on or within 100 kilometers of the coast. Agriculture employed 43% of the region's workforce in 2004, and produced 11% of its GDP in 2006. Southeast Asia is responsible for 12% of global greenhouse gas (GHG) emissions (2000 data); countries' per capita emissions are considerably higher than the global average. Land use and the forestry sector contributed 75% of the total regional emissions in 2000, mainly due to deforestation. Southeast Asia is known for its perfect beaches, tasty cuisine, and good air connections import basic commodities, machinery, equipment, textiles, fertilizer

  49. Market Environment • Annual precipitation is heavy; 60 inches to over 100 inches. • Southeast Asian rainforests have 4 different seasons: • winter northeast monsoon, summer southwest monsoon and two intermonsoon seasons. • Northeast monsoon season (November to March) & steady winds from the north or northeast that blow from 10 to 30 knots. • Environmental threats to children's health are widespread and multiplying as nations undergo industrial development • Hazards include: • traditional threats such as bacterial contamination of drinking water and wood smoke in poorly ventilated dwellings to more recently introduced chemical threats such as asbestos construction materials • arsenic in groundwater • methyl isocyanine in Bhopal, India • untreated manufacturing wastes released to landfills • phosphorous pesticides • atmospheric lead emissions from the combustion of leaded gasoline.

  50. Market Environment • Several of the countries are ethnically homogenous (Taiwan, Korea) • Several racial groups (Chinese, Indian, Malay) in Malaysia & Singapore • Countries vary in geographic scope • Indonesia alone possesses an estimated 13,700 islands, has world’s largest Muslim population (over 200M), and its people speak over 250 regional dialects • Economic performance also differs, the longer-established “four dragons” (Korea, Taiwan, Hong Kong, & Singapore) outperforming relative newcomers – Thailand, Indonesia, & Philippines • 2007 Hong Kong & Singapore has per capita incomes in the top 10 of the world • 1 common characteristic is the love-hate relationship with Japan (WWII) • Recent economic resurgence of these countries has been modeled on the Japanese pattern – an export-led expansion • Japanese multinationals have invested heavily in the Asian countries • Operations range from raw material (Indonesian lumber, oil), technology products such as automobile components & computer chips (Malaysia, Thailand) • So, despite various animosities against Japan, the Japanese businesses are basically well positioned & welcomed in these countries