Many Entrepreneurs in the global south see business partnerships as the golden ticket to enter the market in their respective markets. The presence of a rising middle class indicate sustained economic growth in many countries such as Mexico, Chile, Brazi, and Argentina. Additionally, an increasing rise in the number of entrepreneurs in the global south has many investors vying to partner with large and small ventures in an effort to safely enter the market under the protection of an established business. Whether you are running a tech startup, a food distribution operation, or a marketing firm, there are rules of engagement you need to follow when partnering up with Latin American Companies and their respective business owners.
The PESTEL Analysis is used universally by all sorts of business owners looking to merge with another company. PESTEL usually refers to the business climate you are looking to engage in and as always, it’s important to know what you are getting yourself into since you could be merging with a large and powerful corporation to enter the market, but if it’s in current day Venezuela, you might want to rethink that investment.
P: Politics: How Politically stable is the country? A government change in Latin America can often be abrupt and can leave you with a president who is hostile to foreign trade instead of friendly, so always wait till after the elections to make your decisions on the playing field.
E: Economy: How is the inflation, debt, employment/unemployment, and financial security look like within the country? Argentina is a large nation of 41 million people with thousands of different industries to invest and partner with, but the economy is suffering due to many decisions from the previous and current governments, meaning a higher exchange rate, unemployment, and a general rise in prices. Argentina needs business and continuing investments, but it is wise to take precautions and enter this sort of situation gingerly, in order to avoid economic disasters that could tank your startup.
Sociocultural: What are the trends, lifestyles, and, demographics of the people?
Know your audience and your co-workers well before you decide to do business there. If you are out of touch with the people, you will be the clueless gringo that is duped and fooled in all different types of situations. Make sure to understand the culture well enough to avoid making a fool out of yourself and well enough to navigate the social circles inside and outside of business.
Technological: Where is the country’s level of technological advancement? This is critical for tech investors to be able to gauge your products and services to an audience that sees their utility and usefulness. However, be mindful of how advanced your tech is. If you are pitching products in areas that might not need or appreciate your services (ie. cloud storage solutions to micro-businesses in rural Bolivia) you’re gonna have a bad time. Know who needs what, and the level of tech that you are seeking to promote.
Environmental: This shouldn’t be a big deal for most of you unless you are planning on settting up offshore oil rigs or chemical plants.
Legal: Be sure to know the laws of the land. Otherwise, you could face all types of Lawsuits (just like in America) from competitors trying to take your business ideas out of the market. Know your rights and the companies rights. Intellectual property, workers rights, and anything related to your business should be thoroughly researched before you decide to merge or partner up down south.
The PESTEL Analysis is one of the most respected ways to gauge a countries ease of doing business for foreigners and understanding the climate you are entering is of infinite importance with your business ventures. Be mindful and wary of these rules and you will have a smooth landing when the venture starts up.