Essay Sample on Latin America: Economic & Political Turmoil Ahead

Introduction

The current economic and political troubles in Latin America have made integration into the market difficult. The disintegration of the Argentine financial system destroyed the Yugoslav treaty. Political unrest in Colombia and Venezuela's defense distress has affected trade relations and stability between the Andes. Over the next decade, the Latin American economy will not develop significantly, and political and economic turmoil will continue. Mexico and Chile are more stable today, but an unexpected crisis could occur.

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This, however, does not exclude the continued integration of "multinationality" between the Latin American market and the business environment. This is the best way to avoid this. There is not much in common with other emerging market groups. Latin American countries have many languages and Spanish traditions. The Portuguese verbal communication and cultural tradition do not differ in large margins, and Brazilians and fellow citizens in the neighboring countries can easily converse. The crucible is located in South Florida, which shows that Latin Americans of all nationalities can easily integrate with the fusion of Spanish culture and become Latin (Smith, 2002). Leveraging local cultural affinities across the network is an excellent competitive strategy.

In addition, the growth of the middle course group and the higher aspiration of the subordinate category call for improvements in the standard of living, services, and products. In all countries, the large, underdeveloped consumer market and growth prospects are attracting more foreign multinationals and local businesses.

Low-Income Opportunities

It offers great growth opportunities for multinationals and many Latin American countries by increasing new products and models of business for middle-class and low-income classes, in relation to 245 million citizens, which is about 50 % of the overall populace(Williams, 2003). However, it is difficult for non-Latin American companies to make profits in this market. Latin America's mass consumption income is only a tiny proportion of the average consumption earnings of developed markets. In the urbanized countries, opening bank accounts and holding credit cards are not allowed. Overall, these customers contain a strong procurement influence and a strong yearning for services and goods, which are basic.

To win as well as sell money in this group marketplace, you need features that are lacking in multinationals. Many multinational companies, especially consumer goods companies, are trying to import global brands and high-end retail models from the mass-market retail markets in Latin America. Integrate local businesses that make famous low-cost brands famous for companies that produce and sell more expensive products (Prahalad & Hart, 2002). As a result, in both cases, these corporations lost or sold segments of the significant market dividend of the acquired business.

Global multinationals often struggle to manage Latin American distribution channels. Most of the distribution channels in the region are undersized shops, particularly in the grouping of groceries, building supplies, and packaged merchandise, which are very different from the central distribution environment in Europe and America (Economist, 2003).

Large Latin American countries can also sell products to low-income consumers compared to their foreign competitors. Local people furthermore contain appropriate allotment directions to ensure these goods are widely available and commerce replica can take advantage of them.

Bradesco Bank in Brazil and Bankakoha Social Bank in Colombia can serve low-income households that many other banks cannot provide and are one of the main lucrative banks in the country. Polar in Venezuela and Grupo Maseca SA in Mexico have become one of the most flourishing and leading Food Corporations in Latin America (Prahalad & Hart, 2002). They have made shops where low-income consumers shop.

Many Ways in Latin America

Locals are acutely aware of the drawbacks of size, funding channels, and expenses. Throughout the difficult times of the 1990s, hardly any neighborhood firms were able to compete with multinational companies during the acquisition process.

Multinationals have lost profits because of the global economy and the decline of the global stock market. The weakness of the Latin American economy was useless, and the GDP of the region decreased by 0.6% in 2000 and less than 1% in 2001. For example, BSCH in Spain and Clorox and BellSouth in the United States have had unsatisfactory outcomes in Latin America during the year 2002 (Williamson & Kuczynski, 2002). Numerous large overseas businesses in the region have found that revenue growth and incomes in the 1990s are not enough to justify the huge premiums they pay.

In fact, the current M & A activity in Latin America is based primarily on domestic mergers and unions that are cross-border between Latin American businesses. Non-Latin American businesses accounted for over 80% of transactions in the region about three years ago. According to Thomson, financial space activities held about 62.5% of every M & A activity in the expanse since the beginning of 2003 and spent $ 6.5 billion on other Latin American companies (white paper, 2002).

This disruption could encourage some global multinational corporations to withdraw permanently from the region, as economic uncertainty still prevents foreigners from entering. Latin American companies seem to use uncertainty when relying on foreign competitors.

References

"The Changing Face of Strategic Alliances in Latin America," strategy+business and Knowledge@Wharton white paper, September 11, 2002; Click here."Wanted: A New Regional Agenda for Economic Growth," The Economist, April 26, 2003

C.K. Prahalad and Stuart L. Hart, "The Fortune at the Bottom of the Pyramid," s+b, First Quarter 2002; Click here.Christopher C. Williams, "La Vida Loca: Latin American Markets Are Surging - and Money Is Still Pouring in," Barron's, June 17, 2003

Geri Smith, "War of the Superstores," Business Week, September 23, 2002

John Williamson and Pedro-Pablo Kuczynski, "After the Washington Consensus: Restarting Growth and Reform in Latin America," Institute for International Economics, 2003