International Expansion – Green

Group Wireless

Brazil vs Chile

1 Green Group Presentation II 12/14/2010

 Company Profile

Presenter: Peter

2 Green Group Presentation II 12/14/2010

 Company Profile
 Company demographics Domestic Market Share
 3rd largest domestic carrier
 Utilize CDMA network standard
 Employ over 42,000 personnel
GG Wireless
 Domestic growth fueled by: Remainder

 Emphasis on innovative product

lineup
 Investment in network
expansion
Domestic Market Share
 Strong customer service culture -22.5
 Need for International -23 Q1 Q2 Q3 Q4

Net Adds YOY

-23.5
Expansion -24

 “First Mover” Advantage -24.5

-25
 Domestic penetration: 93% -25.5
-26
 Net growth deccretion Year over -26.5
Year GG Wireless

3 Green Group Presentation II 12/14/2010

 Economic Profile

Presenter: Maria

4 Green Group Presentation II 12/14/2010

 Economic Statistics
Statistic Chile Brazil
Gross Domestic Product (USD) $161.8 billion $1.574 trillion
GDP - Real Growth Rate (1.7%) per year (0.2%) per year
GDP (Per Capita) $14,600 $10,100
GDP - Composition by Sector
Agriculture 5.60% 6.10%
Industry 34.50% 25.40%
Services 51.90% 68.50%
Unemployment Rate 9.60% 8.10%
Investment (Gross Fixed) 21.4% of GDP 16.7% of GDP
Budget
Revenues $32.62 billion $354.8 billion
Expenditures $39.82 billion $434.9 billion
Public Debt 6.1% of GDP 60% of GDP
% below poverty line 18.20% 26%
Human Development Index Rank 45th 73rd

5 Green Group Presentation II 12/14/2010


CHILE
 Active Policy of Trade liberalization through
three channels:
 Unilateral liberalization (1975-2002):
 Unilateral reduction of Tariffs
 Flat rate of 6% tariffs
 Real actual tariffs on goods and services: 1.7%
 Signature of several free trade agreements
 Multilateral liberalization:
 Participate in World Trade Organization (WTO)
 Continuous support for fairness, transparency and
nondiscrimination.
 Bilateral / Regional Agreements:
 Active policy of Free Trade Agreement negotiations
since the 1990s.
 Overall Analysis:
 Dedicated to Free Trade
 Welcoming environment to international expansion
6 Green Group Presentation II
Trade Policy
BRAZIL
 Began modest trade reforms in 1990s
 Unilateral liberalization (1990s to date)”
 Reduction of Tariffs:
 1990 average tariff rate: 32%
 2000 average tariff rate: 13.7%
 Multilateral liberalization:
 Participate in the World Trade
Organization (WTO)
 Bilateral / Regional Agreements:
 Limited policy of pursuing Free Trade
Agreement negotiations since the 1990s.
 Overall Analysis:
 Significant trade reforms over last two
decades
 Moderately welcoming environment
toward international expansion
12/14/2010
 Trade
Statistic Chile Brazil
Trade Balance $530 million ($25.3) billion
Exports $53.74 million $153 billion
Imports $39.75 million $127.7 billion

 Major Export Markets:  Major Export Markets:

 China, 16%  China, 13%
 USA, 11%  USA, 10%
 Japan, 9%  Argentina, 8%
 Major Trade Partners:  Major Trade Partners:
 USA, 22%  USA, 16%
 China, 13%  China, 13%
 Argentina, 10%  Argentina, 9%
 Brazil, 6%  Germany, 8%

7 Green Group Presentation II 12/14/2010

 Summary: Economy (25 pts)
 Chile  Brazil

 Points in Favor:  Points in Favor:

 Tremendous economic growth  Attracting foreign capital
over the past 20 years  Raising income level among
 High level of foreign trade middle class
 Strong financial institutions  Brazil has continued to be
 Points Against: publicized as a so-called
„emerging‟ country that offers
 Chile's economic and political investors solid and stable
success is vulnerable returns.
 Small market  Huge market
 Points Against:
 Higher volatility
Conclusion: Chile – 15 points. Brazil – 22 Points
8 Green Group Presentation II 12/14/2010
 Infrastructure / Geography

Presenter: Boris

9 Green Group Presentation II 12/14/2010


CHILE
 Paved Roadways: 16,745 km.
 Unpaved Roadways: 63,760
km.
 Railways: 5,483 km.
 Major Airports: 6
 Major Ports: 7
 Notes:
 87% of trade is done in Ports.
 International Airport “Arturo
Merino Benitez”.
 Mi. Paved Road / Sq. Mi: 0.22
Infrastructure
BRAZIL
 Paved Roadways: 96,353 km.
 Unpaved
Roadways:1,655,515km
 Railways: 28,857 km.
 Major Airports: 15
 Major Ports: 30
 Notes:
 Greater portion of Brazil‟s
exports and imports are
shipped by sea.
 International Airport “Governor
André Franco Montoro”.
 Mi. Paved Road / Sq. Mi: 0.113
16 0.25
14
0.2
12
10 0.15
8 Brazil Brazil
6 0.1
4
Chile Chile
0.05
2
0 0
Pops / Airport (M) Mi. Rd / Sq. Mi. Area

Population Serviced By Airport Miles of Road per Square Mile of

Area
• Measures availability of air transit
• Measures availability of paved road
• Chile has clear advantage in aerospace
infrastructure
• Chile appears to have better
highway infrastructure

CHILE
 Communications:
 Main lines: 3.575 million
 Mobile cellular: 16.45 million
 Internet users: 1.056 million
 Broadcast media: About 250
radio stations & no more than
25 TV stations, many state-
owned.
 Major cellular companies:
VTR, Nextel, Movistar, Entel,
Claro.
INFRASTRUCTURE
BRAZIL
 Communications:
 Main lines: 41.497 million
 Mobile cellular: 173.959
million
 Internet users: 64.948 million
 Broadcast media: More than
1,000 radio stations & more
than 100 TV stations.
 Major cellular companies:
Brasil Telecom Participacoes,
Brasil Telecom, Tele Norte
Celular Participacoes,
Telecomunicacoes de Sao
Paulo, Telemig Celular
Participacoes, TIM
Participacoes, Vivo
Participacoes.
 Summary (25 pts)
 Chile  Brazil

 Points in Favor:  Points in Favor:

 Availability of roads, highways,
etc
 Availability of widespread air
transit
 Points Against:
 Highly mountainous geography
causes technical challenges for
wireless
 More towers needed to cover
smaller population
 Geography tends to be more
„wireless‟ friendly:
 Low mountains, rolling terrain
 Dense urban areas mitigate the
technical challenge of putting up
towers
 Points Against:
 Few; infrastructure poorer than
Chile‟s, but sufficient

Conclusion: Chile – 17 points. Brazil – 21 Points

17 Green Group Presentation II 12/14/2010
 Government, Regulation &
Taxation
Presenter: Yvonne

18 Green Group Presentation II 12/14/2010


 Brazil
 Starting a business in Brazil is
not a fast process and patience
is needed. Brazilians are
entrepreneurial and have all of
the infrastructure that is
enjoyed in America, but they
also want to know and trust the
people with whom they are
doing business. Raising
venture money in Brazil is also
a time consuming process and
they will want to have the
money used for a Brazilian-
based company.
 Easy of doing business: 125
out of 181
19 Green Group Presentation II
Starting a Business
Chile
 Chileans will ask foreign
visitors, very seriously, why
they have come to this narrow,
string-bean of a country at the
end of the Americas. Argentina
is more cosmopolitan, they say,
Brazil more sexy, Mexico is
closer. Building a business in
Chile means serving a small
market at just 16 million people,
but it's a great, stable spot from
which so service South
America and it has become an
exporting powerhouse on
copper, salmon, wine and fruit.
 Easy of doing business: 40 out
of 181
12/14/2010
 Government
Brazil
 Government Type: Federal
Republic
 Legal System: Based on
Roman codes (Civil)
 Corporate Tax: Brazil's
corporate tax rate for 2010 is
34%.The tax consists of a basic
tax of 15%. There is also a
surtax of 10% for annual
income of over BRL 240,000,
about $ 110,000. Additional 9%
are added for social
contribution on net profits.
 Capital Gains: Capital gains of
companies are added to the
regular income.
20 Green Group Presentation II
Chile
 Government Type: Republic
 Legal System: US-style
adversarial system (Common)
 Chile‟s flat-rate corporate income
tax, known as First Category Tax,
is 17%, which is much lower than
rates charged in most OECD
countries. Of the OECD‟s 31
members, only Iceland and
Ireland charge lower corporate
income tax (15% and 12.5%,
respectively) than Chile.
Companies in the United States
pay 39% while the rate in
Mexico, the only other Latin
American member of the OECD,
is 30%.
12/14/2010
 Business-Friendly Brazil
 Brazilians need to know who they are doing business with before they can
work effectively.
 Brazilians prefer face-to-face meetings to written communication as it allows
them to know the person with whom they are doing business.
 The individual they deal with is more important than the company.
 Since this is a group culture, it is important that you do not do anything to
embarrass a Brazilian.
 Criticizing an individual causes that person to lose face with the others in the
meeting.
 The person making the criticism also loses face, as they have disobeyed the
unwritten rule.
 Communication is often informal and does not rely on strict rules of protocol.
Anyone who feels they have something to say will generally add their
opinion.
 It is considered acceptable to interrupt someone who is speaking.
 Face-to-face, oral communication is preferred over written communication.
At the same time, when it comes to business agreements, Brazilians insist
on drawing up detailed legal contracts.
21 Green Group Presentation II 12/14/2010
 Business Friendly Chile
 When meeting someone in Chile and handshake is customary. You may see women
patting each other on the right forearm or shoulder rather than shaking hands. When
meeting large groups, it is good etiquette to shake hands with all those present.
 When addressing people start formal and wait for an invitation to go informal. Address
people by their surnames and Mr, Mrs or Miss. Most Hispanics have two surnames,
one from the father and one from the mother. Only the father's is usually used.
 In Chile people leave little space between each other when interacting. Don't be
surprised if the person you are speaking with places a hand on your shoulder when
talking with you. Try not to step away or appear uncomfortable.
 Eye contact is important in Chile as it conveys trust, sincerity and interest.
 Business entertaining usually takes place at hotels or restaurants. If you are the one
inviting them you should pick up the bill. Arrange for payment with the establishment
before the meal or meeting as this will help avoid a lengthy debate as to who should
pay. If you are the guest, it may be polite to offer to pay although realistically you
would not be allowed to do so. In such cases, offer to reciprocate and ensure you do.
 Appointments should be made a few weeks prior to arrival in Chile. January and
February are the summer holidays so try and avoid them.
 Chileans negotiate in a serious and straight talking manner. Be upfront but not
overbearing. Hard sell tactics or pressure never works. Always be prepared to
compromise as this shows you value the relationship more than the financial aspects
of the deal.
22 Green Group Presentation II 12/14/2010
 Summary (20 pts)
 Chile  Brazil

 Points in Favor:  Points in Favor:

 Extremely business friendly
government
 Very open to foreign investors
 Very low business income taxes
 Familiar legal system
 High ease of doing business
 Points Against:
 N/A
 Large market means finding
legal and tax representative
talent should be simple
 Cons
 High rate of taxation
 Strict legal code
 Historic distaste for foreign
investors

Conclusion: Chile – 20 points. Brazil – 5 Points

23 Green Group Presentation II 12/14/2010
 Population Demographics

Presenter: Khabirah

24 Green Group Presentation II 12/14/2010

 Population Statistics

Population Growth Rate Chile, Population

16.7M
1.50%
1.00%
0.50%
0.00%
Brazil,
Brazil Chile 202M

• Brazil a significantly larger

market
• Population growth rates do not
suggest a rapidly increasing
market in Chile
 Age Demographics

Brazil Chile

 Median Age: 28.9  Median Age: 31.7

years  Male Age 30.7 years
 Male Age: 28.1 years  Female Age 32.8 years
 Female Age: 29.7 years  Age Structure
 Age Structure  0-14 years 23.2%
 0-14 years 26.7%  15-64 years 67.8%
 15-64 years 66.8%  65 and over 9.1%
 65 and over 6.4%
 Birth/Death/Sex Ratios
BRAZIL CHILE
 Birth Rate 18.11 births /1000  Birth Rate 14.46 births/1000
population population
 Fertility Rate: 2.19 children per  Fertility Rate: 1.9 children per
woman woman
 Death Rate 6.35 deaths/1000  Death Rate 5.9 deaths/1000
population population
 Sex Ratio  Sex Ratio
 At Birth: 1.05 male(s)/female  At Birth:1.05 male(s)/female
 Under 15 years: 1.04  Under 15 years: 1.05
male(s)/female male(s)/female
 15-64 years: 0.98  15-64 years: 1 male(s)/female
male(s)/female  TOTAL POPULATION: 0.98
 TOTAL POPULATION: 0.98 male(s)/female
male(s)/female

 Chile
 Points in Favor:
 Educated, stable population
 Points Against:
 Small population / market
 Population growth unlikely
Conclusion: Chile – 5 points. Brazil – 10 Points
28
Summary (15 pts)
 Brazil
 Points in Favor:
 Large, growing population
 Sustained population growth
seems likely
 Points Against:
 Lack of education
 Comparably high rates of
mortality and disease
Green Group Presentation II 12/14/2010
 Culture – Values & Norms

Presenter: Rich

29 Green Group Presentation II 12/14/2010


Brazil
 Men shake hands when
greeting one another, while
maintaining steady eye contact.
 Women generally kiss each
other, starting with the left and
alternating cheeks.
 Hugging and backslapping are
common greetings among
Brazilian friends.
 If a woman wishes to shake
hands with a man, she should
extend her hand first.
30 Green Group Presentation II
Greeting
Chile
 Men will usually shake hands.
 Women generally pat each
other on the right forearm or
shoulder.
 Men may embrace and
energetically pat each other on
the back among friends.
 Women will kiss once on the
right cheek.
12/14/2010
 Business Customs & Practices
Brazil Chile
 Use surnames and titles  Use surnames and titles

 Be on time  Be on time

 Dress conservative  Dress conservative

 Do not accept gifts  Gifts

 Business cards  Business cards

31 Green Group Presentation II 12/14/2010

 Geert Hofstede Analysis

32 Green Group Presentation II 12/14/2010

 Geert Hofstede Analysis
SD Model of professor SD Model of professor
Geert Hofstede Geert Hofstede

100 100

80 80

60 60

40 40

20 20

0 0
PDI IDV MAS UAI LTO PDI IDV MAS UAI LTO

United States Brazil United States Chile

33 Green Group Presentation II 12/14/2010

 Summary (15 pts)

Points in Favor and Points Against

Conclusion: Chile – 13 points. Brazil – 11 Points

34 Green Group Presentation II 12/14/2010

 Summary, Conclusion, and
Recommendations
Presenter: Peter

35 Green Group Presentation II 12/14/2010


Chile
 Points in Favor:
 Strong economy
 Strong prospects for economic
growth
 Political stability
 Business-Friendly environment
 Comparative infrastructure
advantage
 Points Against:
 Small market
 Mountainous geography
presents technical challenges
36 Green Group Presentation II
Summary
Brazil
 Points in Favor:
 Large market / population
 Geographically suitable for
wireless industry
 Suitable infrastructure
 Points against:
 Relatively weak economic
environment
 Unfavorable environment toward
foreign investment
 Higher population mobility
12/14/2010
 Analysis - Points

Chile Brazil

 Economic Conditions: 15 points  Economic Conditions: 22 points

 Geographic Conditions: 17 points  Geographic Conditions: 21 points
 Governmental Conditions: 20  Governmental Conditions: 5 points
points  Population Demographics: 10
 Population Demographics: 5 points points
 Cultural Conditions: 13 points  Cultural Conditions: 11 points
Conclusion: Chile – 70 points. Brazil – 69 Points
Recommendation: Chile
37 Green Group Presentation II 12/14/2010
 Backup Slides

Brazil vs Chile

38 Green Group Presentation II 12/14/2010

 CURRENCY

CHILE BRAZIL
 PESO  REAL

 1 Chilean peso = 0.0021 US  1 Brazilian real = 0.5787 US

dollars dollars

1.0 Chilean Peso = 0.0036 Brazilian Real

39 Green Group Presentation II 12/14/2010

200

180

160

140

120

100 Brazil
80 Chile

60

40

20

0
Main Lines Mobile Internet
 Language
Brazil Chile
 Portuguese (Official)  Spanish (Official)
 Spanish  German
 German  English
 Italian
 English

43 Green Group Presentation II 12/14/2010