Doing Business in Another Country

Topics: Venezuela, Mobile phone, Unemployment Pages: 7 (2412 words) Published: November 6, 2008
Executive Summary

In order to successfully introduce a product into a foreign market it is important to know the culture of the country you plan to do business in. In order to introduce mobile handsets into a market like Venezuela, the supplier must be well acclimated with the purchasing habits, tastes, and willingness to purchase the product that is being sold. Understanding these things starts with building a knowledge base about the major aspects of the culture and your target consumer. With this being said I am providing a brief overview of the country of Venezuela. Venezuela boasts a population of well over 27 million, and represents a large potential market for any firm looking to do business within the country, because it is one of the more industrialized countries in Latin America. With a highly literate population Venezuela has a rather sufficient education system. Though it is effective it doesn’t reach full potential, because of a stretched government funding. Even though the population is educated rates of unemployment are still high.

With over 90% of the population being Roman Catholic religion is an important part of life for the citizens of Venezuela. Venezuela has a history of authoritarian rule; but has recently been shaped as a democratic nation and holds all the values of a democratic nation. The way business is done in Venezuela doesn’t differ much from the way it is done in the United States. Customs similar to those in the United States should be expected, such as a face to face meeting firm handshake, appropriate attire and a proper environment.

Venezuela has always had a high dependency on the oil sector. The profits from the oil sector make up the majority of the country’s GDP. The oil industry is what makes Venezuela one of the most industrialized nations in Latin America. Venezuela is trying to distance itself from American influence, but still relies on American’s being big players in the oil sector. Oil is not the only product that generates money in Venezuela. Export of agricultural goods along with aluminum, steel and the rest of the mining industry also bring in a large portion of GDP.

Though it may be a democracy the political environment in Venezuela is at times shaky. This derives from a history of corruption that still plagues Venezuela to this day. Though corruption is evident Venezuela still has one of the more stable governments in Latin America. This can be seen in the consistent economic growth Venezuela has been experiencing. As a member of the WTO Venezuela’s tariff laws are held to reasonable values which are around 5% to 20%. Even though guidelines are followed a high luxury tax is imposed on all “non-priority” goods, which acts as a trade barrier, because they discourage domestic importers from wanting to pay high taxes on foreign goods. The government encourages foreign investment which has also played a key role in their economic growth.

The mobile handset markets largest consumer will be young adults in the upper and middle class. This group is already a large consumer and will only get larger with the introduction of new technologies and services. Multiple mobile service providers cut prices in during quarter three in Venezuela this year. This drop in service prices can allow for more superior and slightly more expensive handsets to be introduced to the market; this is where American firms come into the country to produce and distribute handsets.

Cultural Issues

With a population of roughly around 27.03 million people, Venezuela is one of the more industrialized countries located in South America. As one of the more industrialized countries it has seen a mortality rate of 5.08%, which goes hand in hand with them experiencing a steady population growth rate of 1.486%. This is especially good for Venezuela because they are a society who relies heavily on agriculture, and with an increasing population this means they will be capable...

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