Transcript south america

SOUTH AMERICA
THE NEW WORLD….
12 Nations and 3 territories
HISTORY
History…
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Asian inhabitants
•
In 1494, Portugal and Spain – duopoly
•
Around 1497, South America discovered by
Amerigo Vespucci
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Beginning in the 1530s, the people and natural
resources of South America were repeatedly
exploited by foreign conquistadors, first from
Spain and later from Portugal.
•
African slaves were brought in large quantities for
several centuries for hard labor in tropical climate
such as sugar cane plantations or gold mining
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Eventually, the natives and the
interbred, forming a ”Mestizo” class.
Spaniards
• Between 1804 and 1826 in the Spanish
American wars of independence, Venezuela
and Argentina won their independence
followed by Peru, Chile and Ecuador.
• In 1822, Brazil got its independence from
Portuguese rule
• A few countries did not gain independence
until the 20th century:
 Guyana, from the United Kingdom, in 1966.
 Suriname, from the Dutch control, in 1975
 Trinidad and Tobago, from the United
Kingdom, in 1962
 French
Guiana
remains
an
overseas department of France.
20th Century…. The era of
dictatorships…
• The continent became a battlefield of the Cold
War in the late 20th century.
• Some democratically elected governments of
Argentina, Brazil, Chile, Uruguay and Paraguay
were overthrown or displaced by United Statesaligned military dictatorships in the 1960s and
1970s.
• To curtail opposition, their governments detained
tens of thousands of political prisoners, many of
whom were tortured and/or killed on inter-state
collaboration.
• Revolutionary movements and right-wing
military
dictatorships
became
common
after World War II, but since the 1980s a wave of
democratization came through the continent,
and democratic rule is widespread now
DEMOGRAPHICS…..
Population….
Estimated population - 558 million (2005 estimate)
Ethnicity….
Whites
WHITES
Uruguay 98%
Argentina 97%
Chile 92.7%
Brazil 53.7%
Colombia 40%
Venezuela 40%
Bolivia 15%
Ecuador 15%
Peru 15%
Suriname 5%
BLACK
Guyana 30.2%
Venezuela 10%
Brazil 6.9%
Ecuador 5%
Colombia 4%
Uruguay 4%
AMERINDIAN
Bolivia 55%
Peru 45%
Ecuador 25%
Guyana 9.1%
Chile 4.6%
Paraguay 3%
Suriname 2%
Colombia 1%
Brazil 0.4%
MESTIZO
Paraguay 3%
Colombia 58%
Ecuador 55%
Venezuela 50%
Chile 4.7%
Brazil 40.6%
Peru 37%
Bolivia 30%
Uruguay 1.2%
In terms of ethnicity, the demographics of South America shows a mixture
of Europeans, Amerindians, and Africans.
Languages Spoken….
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Spanish and Portuguese are the most spoken languages in South
America
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Spanish is the most spoken language as a first, second and third
language in South America.
•
Portuguese is the official language of Brazil, spoken by nearly half of
the continent's inhabitants
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Dutch is the official language of Suriname;
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English is the official language of Guyana, although there are at
least twelve other languages spoken in the country such
as Hindi and Arabic.
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English is also spoken in the Falkland Islands.
French is the official language of French Guiana.
•
Other than these Quechua, Aymara, and Guarani are the
indigenous South American languages spoken in parts of Equador,
Peru, Chile, Argentina.
Currency…
Religion….
• An estimated 90% of South
Americans
are
Christians
(82% Roman Catholic, 9% other
Christian denominations), accounting
for ca. 19% of Christians worldwide.
• Guyana and Suriname are exceptions,
with
three
major
religions:
Christianity in general, Hinduism, and
Islam.
• In lowland South America, as well as
the Andes, animism and shamanism
are common, as noted among the
Urarina of Peruvian Amazonia.
CULTURE
• South Americans are culturally
influenced by the historic connection
with
Europe,
especially Spain and Portugal, and
the impact of mass culture from
the United States of America.
• South American nations have a rich
variety of music.
• The literature of South America has
attracted considerable critical and
popular acclaim, with the rise of
authors such as Mario Vargas
Llosa, Gabriel García Márquez in
novels, and Pablo Neruda and Jorge
Luis Borges in other genres.
• South American cuisine takes on
African, American Indian, Asian, and
European influences.
Sports….
•
South American nations have regularly performed well in
football competitions, with Brazil winning 5 World
Cups, Uruguay, and Argentina have won the World Cup twice
each.
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The continent has produced many of the most famous and
most talented players including Pelé,
Diego
Maradona, Teofilo Cubillas, Arsenio Erico and Alfredo Di
Stéfano.
•
Motor Sports: The continent has produced two of the most
famous Formula One Grand Prix drivers Ayrton
Senna of Brazil and Juan Fangio of Argentina. Brazil has hosted
the Brazilian Grand Prix every year since 1973 and Argentina
has hosted Formula One on 21 occasions.
•
South America has produced a number of talented Tennis
players such as 4 times grand slam winner Guillermo Vilas, US
Open
winner
Gabriela
Sabatini,
2004
French
Open winner Gastón Gaudio and double Olympic Gold
medalist Nicolás Massú. Marcelo Rios and Gustavo
Kuerten were No. 1 in the ATP rankings
Tourism….
• Historical relics, architectural and
natural wonders, a diverse range of
foods and culture, vibrant and colorful
cities, and stunning landscapes attract
millions of tourists every year to South
America
• Some of the most visited places in the
region are Machu Picchu, the Amazon
Rainforest, Rio de Janeiro, Salvador, Isla
Margarita, Natal, Buenos Aires, São
Paulo, Angel Falls, Cuzco, Lake
Titicaca, Patagonia, Cartagena and
the Galápagos islands
CARNIVALS…..
RIO CARNIVAL…..
http://www.youtube.com/watch?v=F7iTGOM7F
1U
Geert Hofstede Cultural Dimensions
•
Uncertainty Avoidance: South American society has low level of tolerance for
uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules,
laws, policies, and regulations are adopted and implemented. As a result of this
high Uncertainty Avoidance characteristic, the society does not readily accept
change and is very risk adverse
•
Individualism: Other than Brazil, virtually all the Latin countries are considered to
be Collectivist societies as compared to Individualist cultures. This is manifest in a
close long-term commitment to the member 'group', be that a family, extended
family, or extended relationships. Loyalty in a collectivist culture is paramount, and
over-rides most other societal rules.
•
Power Distance: This is indicative of a high level of inequality of power and wealth
within the society. This condition is not necessarily subverted upon the population,
but rather accepted by the culture as a whole.
•
Masculinity: This society experiences a higher degree of gender differentiation of
roles. The male dominates a significant portion of the society and power structure.
This situation generates a female population that becomes more assertive and
competitive, although not at the level of the male population.
Talking South American???
• All speak Spanish, except in Brazil
• Many South Americans like to talk in close proximity to each other.
• Stepping back, an unconscious gesture to reclaim your space, is seen as a
rebuff, a rudeness.
• Keeping eye contact while speaking is an asset
• Latin Americans are both more effusive, flowery and more formal in their
speech.
• A South American tends to be more diplomatic and tactful
• The attitude toward time is less rigid and a 30 minute delay should not be
a surprise
• The honorific Donor Doña, used with the first name in a friendly or family
relationship, or with the surname, is a token of respect.
• Latinos are very warm and friendly people and enjoy social conversation
before getting down to business. This is a calculated process aimed at
getting to know you personally
• Latinos tend to be more interested in you, the person, than you as a
representative of some faceless corporation.
Some specific tips….
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Argentinians aren't thrilled to discuss the Peron years and past human rigths issues. They are also
sensitive to the Falklands War, and call the islands the Islas Malvinas
Bolivians are sensitive to the loss of territory to Chile.
Brazilians are not Hispanic. They are proud of their Portuguese heritage. They are also exuberant,
talkative, but sensitive to discussions about the rainforest destruction. Marital status is not a good
conversational topic.
Chileans love to talk about their country, but avoid politics and the Allende/Pinochet years. Human rights
is an ultra-senstive topic.
Colombians like bullfighting, so negative comments aren't welcome. Don't discuss drugs, political
situations, or terrorist activity. Interest in emeralds and coffee are welcome.
Ecuadorians like to talk about their families and their jobs. Discuss their country in favorable terms, but
avoid politics, sexual or personal topics.
Paraguayans are tremendously proud of their hydroelectric dams. Discuss famiy. sports, touring, but avoid
any political talk. Conflict between the liberales and the colorados is still tense.
Peruvians enjoy talking about families and jobs. They'll ask about your country, and welcome discussions
of their own, but avoid politics, money and government.
Uruguayans enjoy talking about their country - what to see and do, where to eat - but are more reticent
about personal matters. You can discuss international politics.
Venezuelans are sensitive about politics, government and family matters. If you are asked, be prepared to
discuss the economy.
Business Environment
Political Structure
• Present democratic rule has been achieved after years of
dictatorship
• Poverty and inequality were the outcome of left influence
• Embraces Free Market Policies
• Formation of Union of South American Nations Community by
merging Mercosur and Andean community
– Thereby forming the third largest economic bloc in the world
• Women in South American Politics
– 15% in executive power
– 13-14% in legislative power
Political Structure
• South America can be roughly divided into two
groups
– Andean countries - Venezuela, Colombia, Peru, Ecuador
and landlocked Paraguay display signs of instability
– Brazil, Argentina, Uruguay, Bolivia and Chile are rapidly
becoming solid democracies
• Are there chances of return of autocratic rule?
– International pressure
– People are educated and will raise voice against any such
idea
Political Structure
• Problems
– Corruption of political leaders; bribery is prevalent
– Illegal drug trade, with money finding way in the
pockets of people in power
Industries
• Countries like Venezuela, Argentina, Peru, Chile, Colombia and Ecuador
used there petroleum reserves to develop capital intensive industries
• Agriculture and related industry is an important part of the economy; 12 %
GDP
• Coffee, sugarcane, tobacco and many other agricultural products are
exported from South America
• Mining industry attract a lot of money in exploration
• Fifty percent of the area is forest and the continent has a rich marine life
yet fishing and forestry are still small and usually cater to domestic market
• Some hardwoods and tropical woods mainly coming from the Amazon
Basin where large areas are being deforested are exported, as well as pine
from southern Brazil and Chile. Vast areas of commercial forests have
been planted in Brazil and Chile for lumber.
Industries
• Leading sectors by production value are food
processing Chemicals and pharmaceuticals,
auto parts, iron and steel, aluminum,
petroleum and home appliances
• Brazil, Chile, Argentina and Venezuela have
begun privatizing transportation and
communications industries
– Fallout has been a higher unemployment rate
Globalization
• Concept of free trade and the third largest trading
bloc points towards globalization
• Globalization was actively pursued to get out of debt
crisis, hyperinflation and economic downturn of the
1980s; Washington Consensus
• Communication and information revolution
integrated the region to globalization
• The mid 90s saw eroding belief in globalization;
however it has become a part of its economy
• Coffee crisis in Peru and Brazil was due to increased
production in south east Asia
Globalization
• Civil Society groups such as Alianza Social Continental, ALOP,
Plataforma Inter actively campaign against globalization
• The key elements of anti globalization groups in the region
include:
– Trade does not assure justice and development and international
agreements and institutions such as WTO or FTAA do not recognize
the asymmetries of markets.
– Globalization is a multinational led process, where a small number of
huge enterprises control the direction of the international economy.
– International Finance markets are a source of instability and
speculative behavior, with no relation to the real economy.
Globalization
• Chile has been an implicit supporter of globalization
Chile's booming global economy has been touted as
a model economic system for South America
• McKinsey report says that Brazil provides a suitable
environment for foreign companies as there is lower
cost of capital in plenty of financial liquidity
• Argentina was a success story till 2001, though the
belief has been shaken yet the country exports a
major chunk of its produce
Globalization
• Measures taken by various governments
– Floating exchange rates
– Tackles inflation effectively, esp Brazil
– Open market policies
Management Strategies
COMPANY IS LIKE A FAMILY!!
• Business model as a hybrid of globalization and the
region’s historic traditions.
• Simpatia, personal dignity
• Personalism –personalismo: can rely on employees
and colleagues because of personal loyalty
• Collectivism and in-group/ out group behaviour
• Recruit new workers through their current
employees and employees’ family members and
close relatives
• Employees generally put the well-being of their
families ahead of their professional careers
• Small budget allocated to training
• Compensation usually comes in the form of fixed
salary. Only multinational companies and large Latin
American firms provide variable compensation based
on corporate performance
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Manager’s role and responsibilities
Approach towards change
Approach to time and deadlines
Communication and negotiation styles
Decision making
Motivating Factors
• Need for affiliation
• Path goal theory
• Maslow’s need hierarchy theory
Leadership traits
• Paternalistic leadership:
- expect bosses to take an interest in their
non-work lives
- has two main aspects-the power of the father,
government, or boss to make decisions for others as
well as the responsibility for those who are
dependent on them
• Supportive and directive leadership
STRENGTHS
• a serious and effective commitment to the individual
and his or her job;
• a willingness to provide social benefits to employees
via the company, since governments have few
resources to offer them;
• a culture in which managers transform companies
into centers for community development; and
• a willingness by companies to support community
development
WEAKNESSES
• developing HR policies that properly reflect the
economic deregulation of the region;
• creating alliances with educational and technological
institutions for the training of personnel;
• cooperating with governmental institutions in order
to deal with violent and turbulent conditions;
• increasing corporate investment in HR-related
information technology, and
• developing HR practices that are more appropriate
for the size and resources of small and midsize
companies.
Case study 1
Petrobras
Brief history
• Founded in 1953 (oldest national oil company
worldwide), with sole rights of domestic oil
exploration and production.
• Diversified into petro chemicals in 1960
• Monopoly scrapped in 1997
• Issued $4.3bn in an IPO in brazil and NYSE
(both institutional and retail investors)
• The Brazilian government owns 55.7% of
Petrobras' common shares with voting
• In 2003, commemorating its 50 years,
Petrobras doubled the oil and natural gas daily
production, surpassing the mark of 2 million
barrels.
• It is a world leader in development of
advanced technology from deep-water and
ultra-deep water oil production.
• In 2006, Petrobras achieved Brazilian selfsufficiency in oil.
International expansion
• Petrobras’s long history of international
expansion started with the creation of Braspetro
in 1972
• At that time, oil imports covered more than 80
per cent of domestic demand and Petrobras’
international branch had as its main purpose to
guarantee supply security.
• The first investments were made in Iraq,
Colombia’s Caribbean Sea, Angola (1979), and the
Gulf of Mexico, where Petrobras currently owns
more than 300 deepwater blocs
• Nowadays, Petrobras holds more than 100
production licenses in 27 countries in Latin
America (Argentina and Venezuela), Gulf of
Mexico, and Africa (Angola, Nigeria, Tanzania,
Libya).
• Argentina 2nd largest market
• Overseas refining capacity has gone from zero
barrels in 2000 to 126.2 thousand barrels of
oil per day in 2007
• According to its 2009-13 strategic plans,
Petrobras expects to realize overseas
investments of US$15.9 billion in both
exploration and production, along with the
expansion of international biofuels
production.
• Agreement with ONGC in 2007 for mutual
stakes in exploration blocks
Bolivian controversy
• On May 2006, Bolivia's president Evo
Morales announced the nationalization of all
gas and oil fields in the country
• Petrobras was heavily affected
• Relationship strained:
- Petrobras represented 24% of the Bolivian
industrial taxes, 18% of the country's GDP and
20% of the foreign investments.
• Agreement signed on October 28, 2006: the
company would take 18% of the profits, and
the Bolivian government would take the
remainder
Case 2
REVLON Perfume in Latin America
Brief History
• Found in the midst of great depression in 1932 by
Charles Revson, his brother joseph and a chemist
Charles lachman, starting with anail enamel in NY
• By 1940, it became multi-million dollar co., selling
major dept. stores and drug stores
• Black n white hand made ads till 1940, from 1945
full-color photographic ones (fire n ice, fashion
plate, Love pat, cherries in the snow, etc.,)
• November 1955, Revlon went public with IPO
priced at $12/ share, reaching #30 within 8
weeks.
• 1960s: Segmentation into different divisions
focusing different markets
• Crossed $1 bn mark in 1977, acquiring Armour
Pharmaceutical Company, carlos colomer (a
spanish professional beauty distributor) and
Fermodyl and Roux (ethnic care brands: crème
of nature, milk & honey)
• 1983- attempted an unsuccessful hostile take
over of Gillette.
• In 1985, at a price of $58 per share, totaling $2.7
billion, Revlon was sold to pantry pride (later
renamed to Revlon Group, Inc.), a subsidiary
of Mc Andrews and Forbes Holdings.
• 2000s: dropped supermodels from their ads and
instead focussed on female movie stars
• Faced 27 consistent quarterly losses till june 2007
after which again start showing profits,
(inconsistent though)
The trouble
• In 1985, they entered brazil in the form of
foriegn subsidiary, Revlon Ltda. (Brazil)
• After 4 years of success, in 1989, they
launched a perfume which smelt of camelia
flowers under the brand name of roux
• The management was taken by surprise by
strange sales pattern across different parts of
America: In certain countries, it was just not
moving.
• Many parts of South America, including Brazil,
Bolivia, Paraguay, Uruguay and Argentina were
just still: no sales at all
The reason
• The company came to know that in these
countries, camellia flowers are Funeral flowers
!!
• It was recalled in early 1990 (within 3 months)
from these parts of America
• In 2008, they have sold a number of brazillian
brands (including Men’s hair care brand) in
order to concentrate on its core brands
around the world