Market entry brazil

1
Case Study market entry strategy - Selection of
slides
1
2
Objective of the collaboration

• Situation The Client, global HVAC manufacturer
  would like to evaluate the market potential for
  their products in Brazil.
• In this sense, the overall aim of the
  collaboration would be
• To help The Client identify and evaluate the
  main opportunities for its
• products in terms of positioning, revenue
  sources, geography and channels
• To help The Client identify the best entry
  strategy
• Develop entry strategy and business case

3
Proposed methodology
BMC proposes a five step methodology
Definition channel, manufacturing and after
sale strategy
Product portfolio definition for Brazil
Definition of Business model and Action Plan
Analysis of the Brazilian market
4
Example of output analysis of competitive
landscape Positioning, market share and strategy
of each competitor is different in the Brazilian
market
Positioning and share by brand
High
ROS 8-12
ROS 10-15
Compet1
Compet3
Compet6
Positioning
Compet4
Compet7
Compet2 Compet5
Compet8
ROS 6-10
ROS 0-6
Low
0.1
0.2
0.5
1
2.5
2 High
Low
Relative share
Source Emerging markets information services,
BMC estimates. Note ROSEBIT/Sales
5
Example of output positioning alternatives To
achieve the desired long-term positioning, the
Client has 2 entry options
The Client entry strategy Positioning
High
ROS 8-12
ROS 10-15
Positioning
Entry1
Entry2
ROS 6-10
ROS 0-6
Low
0.5 Relative share
0.1
0.2
1
2 2.5 High
Low
Source BMC. Note ROSEBIT/Sales
6
Example of output manufacturing options gross
margin entry 2
Gross margin for manufacturing options 1 and 2,
following entry strategy 2 are negative for
almost the entire product range
Product series A
Product series B
Product series C
1. Import finished product
8.3
3.7
-1.1
-4.6
-8.1
-10.1
-10.9
-10.9
-12.1
-17.1
-22.2
-25.3 -26.3
-27.0
2. Assemble in AAA
3.7 -0.2
-9.1
-11.8
-14.4
-18.6
-23.6
-24.1
-26.2
-26.6
-32.5
-36.4 -38.1 -37.5 3. Assemble in BBB
36.9
33.7
27.7
27.3
24.4
23.0
18.3
17.7
17.1
17.0
12.1
11.0
10.3
10.3
7
Example of output entry options geographical
approach When it comes to the geographical
approach, a three phased entry strategy is
recommended
Phase 1
Phase 2
Phase3
North (?)
North (X)
North (X)
North East (?)
North East (?)
North East (X)
Mid West (?)
Mid West (X)
Mid West (X)
South East (?)
South East (?)
South East (?)
South (?)
South (?)
South (?)
Market covered 72-78
Market covered 85-90
Market covered 100
8
Example of output business case PL
PL (,000 USD) 2013 2014 2015 2016 2017 2018
Units Sold (,000 units)
Sales
Cost of Goods Sold
COGS Brazil
Gross Margin
Gross Margin ()
SGA
Operations
Selling expenses
Administration and overhead
EBITDA
EBITDA ()
Depreciation
EBIT
Corporate tax
NOPAT
Source BMC analysis This presentation has been
elaborated by BSRIA Management Consultancy (BMC)
exclusively for the use of its client, and will
not be used without written consent of BMC
9
Example of output business case balance sheet
BS (,000 USD) 2013 2014 2015 2016 2017 2018
Assets
Fixed Assets
Facility machinery
Depreciation
Current Assets
Inventory
Raw material
Work in progress
Finished products
Debtors
Cash
Liabilities and Equity
Equity
Capital
Retained earnings
Current year earnings
Financial liabilities
Group Loans
Creditors
Working Capital needs
Source BMC analysis This presentation has been
elaborated by BSRIA Management Consultancy (BMC)
exclusively for the use of its client, and will
not be used without written consent of BMC
10
Deliverables

• The outcome of the study included the following
  deliverables
• Detailed analysis of the Brazilian market for
  HVAC
• Analysis of the Clients main competitors, in
  terms of
• Product range, commercial network, services,
  pricing strategy
• Definition of product portfolio and pricing
  strategy for different market entry positionings
• Evaluation of importing option compared to
  locally assembling or manufacturing options, in
• terms of
• Inital investment, tax regulation, profitability,
  timing
• Set up of potential scenario based target sales
  in 3-5 years
• Development of business plan, detailing resources
  needed, cash flow projections and ROI
  projections
• Recommendation of best approach to enter the
  Brazilian market

11
Project outcome

• BMC helped The Client decide whether or not to
  proceed with the market entry operation in
  Brazil and the best approach for it
• Proving The Client the operation would be bring
  value to their Corporation
• Presenting alternative brand positionings, with
  recommendations
• regarding commercial strategy and manufacturing
  strategy
• Building up a business case valuating several
  scenarios and concrete
• action plans for the targets set

12
Paseo de la Castellana 127, 1A
Old Bracknell Lane West
Bracknell Berkshire RG12 7 AH
Madrid 28046
United Kingdom
Spain
44 (0) 1344 465600
34 91 185 42 37
12