Bringing Allstar Brands to Latin America has the potential for great success. The company must be careful to introduce the brand name strategically to gain the most rewards. Bringing Allsmile to Latin America should begin with an introduction in Brazil, followed by Argentina and Chile. A more detailed explanation and a specified plan follow.
Situation Analysis/SWOT: Allstar Brands has a history of successfully entering foreign markets. There is no reason this should not be done here. Allstar has the resources to do so. The following SWOT analysis will help to explain why Brazil is the best point of entry.
Strengths: Brazil is a developed country with a rapidly growing economy. In fact, in 2010, The Economist reported that between 2002 and 2008, 40 million Latin Americans climbed out of poverty (Reid, 2010, p.3). This means that the economy, too, is growing, and Brazil is at the top of this. Other than Chile and Argentina, Brazil has the lowest amount of poverty in Latin America, as well as one of the highest GDP. Also, Brazil has access to local oil and is a country that has a successful history of exportation.
Weaknesses: Because the official language of Brazil is Portuguese, already Spanish translated ads, product packaging, and communications will need to be translated. Also, Brazil requires the highest amount of advertising, sales, and promotions out of the Latin American countries. Much of Brazil is still in poverty.
Opportunities: The economy is growing steadily. A large, young urban population means previous brand loyalty can be changed, and an introduction of hypermarkets allows for wider distribution channels. The World Soccer Cup is being held in Brazil this year and the 2016 Summer Olympics are as well, which are proven generators of huge amounts of income and are also great opportunities for advertising through promotions and sponsorships.
Threats: Terrorism, global warming, and poverty. But this is true in Latin America, no matter the country. Overvalued currency (Inman, 2013).
Competitive Strategy: Entering Brazil with the whitening and basic products to appeal to the largest demographic—young, urban—will ensure the highest sales of the most popular products, which, at first, should come from US manufacturing. With upcoming opportunities at the World Cup and Olympics, it is important to be established in the country. Once this has happened, a manufacturing facility should be built in Brazil (which has its own oil and is a highly successful exporter) to provide for Brazil, Chile, and Argentina. Local brands cannot compete with the advertising, marketing, and growth capabilities of Allstar Brands.
Resources and Capabilities of the Firm: Proven success in advertising. Ability to distribute quickly and efficiently. Growth potential.
Market Entry: In Brazil, the market entry plan should be aggressive. The brand must be established in time for the World Cup and Olympics, so any channels available should be pursued, though the focus should be on the rapidly growing self-serve and hypermarket channels, with a sales team represented for each (five and fifteen salespeople, respectively)
Which countries to enter, when, and what sequence. Entry Mode: Brazil: all available. Chile & Argentina: Distribution should be mostly self-serve and hypermarket, as these are growing, with 25 members on the sales team, ideally, since this system is not as established in these countries as it is in Brazil.
Locations for operations in each country: Production, sourcing, and distribution should all occur in Brazil (due to oil and export experience). There is no reason to have a full base of operations in each country, as they are within a location that allows for operations to be effectively run from one specific base.
Inman, P. (2013, July 25). Brazil's real economic crisis lies in its overvalued currency. The Guardian. Retrieved March 29, 2014, from http://www.theguardian.com/business/economics-blog/2013/jul/25/brazil-real-economic-crisis-pope-francis
Reid, M. (2010, September 9). So near and yet so far: A special report on Latin America. The Economist, 1, 3. Retrieved March 29, 2014, from http://www.economist.com/node/16964114