Pestle Analysis In Latin America

Expanding into Latin America
New markets for any company can be anywhere in the world and since this world every day is becoming more globalized every single company around the world is targeting moving into new places and being able to expand their horizons around the world. Latin America is a region that is becoming more and more approachable to companies from around the world. It provides with a fast variety of raw materials and labor possibilities for them to exploit. Before any organization moves into a new market it must first evaluate it and scan its possibilities in order to determine the best option for it. The following is a description of this process and the best options that the company selling high quality distance measuring technology

One of the most commonly used is the PESTLE Analysis which is based on the investigation of the political, economic, social, technological, legal, and ecological factors that surround the country. The analysis aim is to evaluate the aspects that could directly affect the company during its time in a foreign country since these are the factors that could come into play that some may not consider before. This is important because a better understanding of the country’s environment (including political, economic, and cultural aspects) the greater the probability of the product being a success and there is a less risk involved. Yet this among the other aspects previously mentioned form part of a much larger process that the company must

What is normally suggested is that if a firm is producing, manufacturing or reselling goods that they usually export since it is the easiest and least risky method. The risk that occurs if this type of strategy is used is that the firm depends on the company that will be exporting to and their customers in order for their product to be known. Yet other strategies include a joint-venture, licensing and franchising, foreign direct investment, and strategic alliances which even though they have more risk than just exporting they are more likely to be used than full ownership. These strategies give the firm the opportunity to still have some control, at different levels, of how the product will be managed in the foreign country. An example of this is Kia Motors direct investment in Slovakia in 2004 or Volkswagen’s joint-venture with Skoda for a period of time in 1991. IKEA uses franchises in order to reach other markets in which it does not have stores yet to take advance of the local knowledge and expand their brand.
The company must also decide based on the market what is the best strategy in order to reach the customer and not just the strategy that will help it enter the country. The author Cunningham (1986) identified five strategies in order to enter a new market:
• Technical innovation strategy – for products which are perceived and demonstrable superior as seen by the customer.
• Product adaptation