Developing a new market entry strategy is a tricky business if organizations rely on intuition analytics and inaccurate data. The fact that companies often follow a herd mentality or a one-size-fits-all approach while devising their market entry strategy often results in failed expansion plans. Many businesses have made blunders when setting foot in new markets, especially in Latin America. If you’re looking to expand your business or foray into the Latin American market, read what you should keep in mind while devising an effective market entry strategy.
Don’t Rush into a Joint-Venture or Purchase a Local Company
Recently, the governments in Latin America relaxed rules that pushed foreign companies to enter into a local partnership or joint ventures with local businesses in order to foray into the local market. Today, while entering new markets, organizations must leverage business intelligence tools to understand the market landscape in the proposed region. The insights availed from such market intelligence solutions will help companies to analyze the present market scenario and make strategic decisions. A joint venture with the local company may result in conflicts and clashes regarding decision making and overall business control.
Don’t Ignore the Online Distribution Channel
Companies must realize that they can’t follow a one-size-fits-all approach when it comes to different markets. Some distribution channels may have worked wonders for them in certain markets but may fail to deliver results in other regions. If an organization is planning to enter the Latin American market, a proper study of the competitor landscape and their strategy with the help of market intelligence tools is essential to understand the factors that drive growth in that region. For instance, the American market has a well-established e-commerce and online distribution channel. But that’s not the case in the Latin American market, where cross-border product e-commerce operations have failed miserably. Only a handful of Latin American countries such as Mexico, Brazil, and Argentina have a sophisticated e-commerce fulfillment system, but other domestic markets will soon follow suit. Cross-border e-commerce will improve gradually with the help of innovative solutions, and the Latin American market looks promising.
Instead of Sending Foreign Employees, Hire Local Talent
While devising their new market entry strategy, organizations tend to exercise control in the new market by employing a foreign country manager to oversee the business operations. However, companies must understand the fact that hiring a country manager who understands the local customs, business practices, speaks the local language, enjoys cooperative relationship with local players, and is sensitive to the local customs would be a far better bet. In simple words, it is easier and less time-consuming to imbibe the corporate culture and the organizational values in a local hire as compared to waiting for a foreign employee to understand the nitty-gritties of the local market.