Business Risks in Chile, Research Paper Example

Introduction

As Victoria opens the store in the Capital of Chile, she would most likely want to consider the overall economy of Chile, so that she will be realistic in drawing her projections. Thus, understanding the economic trend would be as important as the business itself. According to Dante Contreras (2007), Chile has been the most rapidly growing economy in the Latin America, with economic growth averaging 5% per annum. That has been through some economic hardships brought about by unfavorable conditions resulting from Asian Financial Crisis that occurred in 1997, but regained its rapid growth at 6% in 2003. That growth has continued until today where the country currently enjoys GDP growth ranging at 5%. From that stand point, Victoria’s business idea sounds viable. However, she will have to consider the following;

Market (4 Ps) Risk

There are certain strategic marketing risks that are associated with product, promotion, price and placement of the store products.

Product

Victoria must be aware that she will be facing risks in choosing the right products to stock, lest she purchases the stocks that stagnates, or are never in demand. In this case, it would be most prudent in reducing the risk to stock mainly foodstuffs, ranging from cereals such as beans owing to the demand for the products in Chile.

Promotion

She will not have to do much because as Fowler, Will (1996) puts it; Chilean people are more concerned with customer service than aggressive promotions. To reduce that risk, she will undoubtedly have to learn to be honest, and to speak and deal respectably with her customers.

Pricing

Most cereals in Chile have a constant price range that only differs slightly with regions. Therefore, Victoria must price her products at the lowest price, and focus on selling large volumes than expensively. The latter might result in customers refusing to buy from her.

Placement

Finally on the risks related to the 4Ps is that of placement. Here, Victoria must understand that being a Latin American culture, people are more concerned with attractiveness of the products, in which she might want to consider beautiful packages coupled with clean stores (Fowler, Will 1996, pp 96).

Distribution and Supply Chain Risk

According to Fowler, Will (1996) transport is among the most important supply chain factors that must never be underrated. In this case, Victoria must see to it that she does not wait for her stocks to get completely depleted in order to ask for supply. Stocks ought to be supplied in the best time.

Social and Cultural Risks

In order that Victoria’s business plan can become a success, she will have to identify the risks associated with social and cultural factors in Chile. Given that she wants to operate from the Capital, she will have to understand that several cultures in Chile will be considered, ranging from those by her employees to those by the customers.  According to (Lillian Doulas, 2009), it is customary to offer a person a handshake when you meet them for the first time in any given day. Victoria will have no alternative but to learn how to do that. As a woman, she must learn the practice of patting each other on the right forearm or shoulder rather than shaking hands. This will be perceived as respectful to both the employees as well as the customers, and she will be welcomed as one who understands the culture of the Chileans.  She will also learn to address the people she knows by their surnames as well as Mr., Mrs., or Miss.

According to Pearson, Neale (2004), gesticulations in doing business are very vital in Chile. The accepted culture is the one in which people leave little space between each other when dialoguing. She may also learn not to take offense when a person, including a man, places a hand on her shoulder when they are talking. It is a rather friendly gesture of showing business trust. Victoria must also learn to never slap her fist into her open left palm when talking to people, as it means “stupid” in Chile. (Pearson, Neale 2004)

Cyber Technology Risk

Victoria will also have to consider the technological aspect related to her store. The most important one would be to use the internet, which has according to (Pearson, Neale 2004) been well embraced. She may want to be communicating with her clients and suppliers using the emails and mobile phones which are relatively low priced. That will help her cut on the costs.

Environmental/Geographic/Demographic Risks

Finally, Victoria must understand the risks associated with the environment. Since her store is will be located in the Capital, much of what happens outside the capital will only affect her indirectly. In the Northern Atacama dessert, she might want to realize a niche, as the people there can become her permanent customers if supplied with cereals at affordable prices. This is because as Dante Contreras (2007) puts it; the place is relatively unexploited business wise, but is very rich from the minerals present. The climate which is mainly characterized by subtypes ranging from Tundra to glaciers may not have much to do with her business.

References

Dante Contreras (2007), 2020 focus brief on the World’s Poor and Hungry People, retrieved 28^th   November, 2009 from http://conferences.ifpri.org/2020Chinaconference/pdf/beijingbrief_Contreras.pdf

Fowler, Will (1996). Authoritarianism in Latin America since independence; University of Virginia: Greenwood Press, pp. 30–96

Lillian Doulas (2009), A review of Etiquettes of Business in Chile, Retrieved 25^th November 2009, from http://www.kwintessential.co.uk/etiquette/doing-business-chile.html

Pearson, Neale J. (2004). Chile; Grolier Multimedia Encyclopedia Scholastic Library Publishing