Global Marketing

Presentation on -

Market Entry Decision For Hero Motors In Chile & Uruguay

Presented by: Presented to : Nitish Pratap Singh 67 Priyanka - 73 Shivi - 96 Navita - 61 Ayushman - 25 Kirti kumari - 49 Isha - 42

Prof. Satish Irde

Company brief:
Company expects to sell 1 million scooters and motorcycles in overseas markets by 2016-17. Firm is also identifying overseas locations for assembly plants if (the) volumes justify it. The current range of Heros engines may not perform well in countries such as Brazil, Argentina, Mexico and Chile that use ethanol-blended fuel.

Product profile of Hero Motors (As per Industry Segmentation)

Dawn, Deluxe

Splendor

Passion, Glamour,

Extreme, Hunk,

Karizma

Ignitor

Impulse

On the basis of Price Entry ( 35,000-45000, 125 cc) Medium (45,000-70,000 150 cc) Premium(70- 80,000 250 cc)

Snapshots from two Countries

Chile
GDP growth :- 6% Population:-13.82 million Language:- Spanish Average annual inflation rate:12% Major exports : - motor vehicles from USA Ethnic groups:- 95 %white people Literacy rate:-98% Youth population:- 35-40 % Imports India:- 1780 million dollar Foreign direct investment:- 100 %

Uruguay
GDP growth:-8% Population:-3.82 million Language:- Spanish Average annual inflation rate:-9% Major exports : - motor vehicles from USA Ethnic groups:- 90 %white people Literacy rate:- 96% Youth population:- 30- 40% Imports India:- 750million dollar Foreign direct investment:- 100 %

MORE FACTS
It has the highest investment grading in the region according to Moodys, Standard & Poor and Fitch IBCA. Chile's corporate tax of 17 percent is one of the lowest in the world. Cost of electricity also one of the lowest in the world. It has a single uniform tariff of 6% for imports Urban population is 88 % Plan to sell at 600$ (6.9% of annual income) Consumer spending increased by 5%

Business environment in Uruguay (PESTLE)

Political Environment
A left-wing government in power. Bilateral tensions such as the controversy between Uruguay and Argentina Difficulties within the WTO. Exploring new trade alliances e.g. FTA with U.S.

Economic Environment
According to IMF estimates, Uruguay is likely to achieve growth in real GDP of 4% in 2013. equivalent to 59.5% of the GDP. Uruguays economic freedom score is 69.9, making its economy the 29th freest in the 2012 Index. Income category: Upper middle income GNI per capita (US$): 11,860

Source -Heritagefoundationindexofeconomicfreedom.com

Social Environment
5% of the citizen is upper-class. Uruguay has frequently been referred to as South America's first welfare state. Women-50%of the workforce. Strong Human rights organization

Source - ECLAC,economicsurveyoflatinamericaandcaribbean,2010-2011

Technological Enviroment
Latin Americas top technology country. Developing new tech companies. Providing technology solutions to foster the development of small and medium-sized companies. Introducing technology in education ,health sector.

Source - ECLAC,economicsurveyoflatinamericaandcaribbean,2010-2011

Legal Environment
One of the most business friendly legal environments in the Latin America. It ranked near the top in terms of the rule of law, the perception of corruption, economic freedom, protection of property rights, and global competitiveness in 2011 .

Source - ECLAC,economicsurveyoflatinamericaandcaribbean,2010-2011

Business Environment In Chile (PESTLE)

The political landscape: It is a progressive and political stable democracy. The Chilean government conducts a rule-based counter cyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high economic growth, and allowing deficit spending only during periods of low growth. The economic landscape: Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Chile considers foreign investment as an essential engine of growth, and an integral part of its open economic policy

The social landscape : Chile is a multi-ethnic society, including people of European and Indian ancestry.

 The technological landscape: Chile leaping forward in terms of technology. Its technological connectivity is 3rd in the world

The Legal landscape : Government is strict on the law and Chile has maintained its position as the most transparent real estate market within Latin America and has made some modest gains since 2008 Agreements and others have given Chile access to over 4.2 billion consumers in markets around the world. The environmental landscape : best business environment in south America investment friendly free-trade economy.

 Trade and investment regime: Chile's trade and investment regime continues to be characterized by openness, transparency, predictability and inter-sectoral neutrality. Chile remains strongly committed to the multilateral trading system, where it participates actively. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico.

Demographics of Uruguay

Age structure
Population: 3,316,328 0-14 years: 22.2% 15-64 years: 64.1% 65 years and over: 13.7% Population growth rate: 0.24% Urban population: 92%
Source- uruguayproperties.com, indexmundi.com

Income distribution
GDP (purchasing power parity): $51.56 billion Economy: Uruguay's economy is characterized by an exportoriented agricultural sector, a well-educated work force, and high levels of social spending. GDP per capita (PPP) (US$)= 15,300

Source- uruguayproperties.com, indexmundi.com

Lifestyle
Uruguayans are passionate about sports. Fashion is also a significant part of Uruguayan life. Its is a country that allows you to have a high standard of living with the equivalent of an average European or US salary or pension.

Source- uruguayproperties.com, indexmundi.com

Occupation
Uruguay is largely dependent on agriculture and services for its economy. Agriculture accounts to over two-thirds of the total exports in the country. The main industries in Uruguay include food processing, electrical machinery, transportation equipment, petroleum products, textiles, chemicals and beverages.

Demographic Profile of Chile

Age Structure
0 to 14 years: 22.3% (male 1,928,210/female 1,840,839)

15-64 years: 68.1% (male 5,751,091/female 5,744,014)

65 years and over: 9.6% (male 680,450/female 944,156

Source CIA worldfactbook & Ginni index

Income Distribution
Ranked as upper middle income by World Bank. South Americas most stable and prosperous nations. 30th most competitive country in the world and first in Latin America.
Source CIA worldfactbook & Ginni index

Lifestyle
Racial mix of American Indians and Europeans.
50% below 25 years of age. 72% below 40 years of age.

Active at outdoor sports and innovative.

Source CIA worldfactbook & Ginni index

Occupation
Mainly services sector like: Education Doctors Teachers Engineers

Market Facts
Motorcycles market - Consists of , 1. On- and off-road motorcycles 2. Scooters 3. Mopeds (50 c.c.) The automobile sector expanded rapidly in 2010 in response to strong domestic demand. Sales - 15% p.a. (2012 - 2014) Number of new vehicles sold - 6.5 million in 2012.

Source Latin America motorcycle industry, Motorcycle Markets and forecasts, Conferderation of production and trade.

 Both countries dont have automobile manufacturing facilities . 100% import of vehicles.

Nearest Automobile hubs are Brazil & Argentina in South America and Mexico.
The main exporter are : Korea (34%), Japan (21%) & China (15%).

But Chinese lack trust.

83.5% (2009) of the population of Latin America live in large cities. % of vehicles financed through Banks 80% Chile, 63% Uruguay Dakar Rally takes place in Chile

Source Latin America motorcycle industry, Motorcycle Markets and forecasts, Conferderation of production and trade.

 Motorcycles in these countries used to be seen as luxury products. Fancy models used for recreational and competition. The most popular models are motorcycles around 125-cc capacity. (For messenger service ) Motorcycles in Latin America are mainly used in the distribution services industry. Motorcycles for working purposes are used intensely. Mileage could be as high as 8,000 kilometers per month. Average life could be as short as 5 years and thus Per capita change in Vehicle owned is 50 per 1000 that is highest in the world.

Source Latin America motorcycle industry, Motorcycle Markets and forecasts, Conferderation of production and trade.

 The use of motorcycles for work related trips are low. (Motorcycles Non-Existent For Personal Transportation) Respect for the motorcyclist is non existent. Motorcycles are easily subject to robbery. In rural areas, Use is limited because there are few representatives and repair places. Also personal transportation is usually associated with cargo movement. Motorcycles prices are still high when compared to average per capita income.
Source Latin America motorcycle industry, Motorcycle Markets and forecasts, Conferderation of production and trade.

Competition :
1. Two-wheeler a. Number of players (local and international) Dominated by Japanese manufacturers Some of them have partial manufacturing facilities in the region. Honda, Yamaha, and Suzuki are the best known brands. b. Popular segments in two-wheeler market High end & Designer bikes. 2. Four-wheeler People prefer them over Bikes 3. Public transport- Very cheap though not world class.
Source Latin America motorcycle industry, Motorcycle Markets and forecasts, Conferderation of production and trade.

Target group Rich and high class - Racing & Recreational Bikes
Organizations - Having Delivery and messaging services Government Organizations Police , Defense

Market Entry Decision:

A significant market is there.
Entry through Distributors and exporting from manufacturing facilities in India. Later on we can think of setting up manufacturing facility over there to cover other countries.