international communications-ppt
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TRANSCRIPT
ANINTERNATIONALBUSINESSEXPANSION
BrazilJA
SMIN
A ROSSEEL
LARRY MAIO
LO
MONTEIZ
FRAGER
FEBRUARY 28, 2011
INTRODUCTION
WHAT?
WHERE?
HOW?
WHY?
Mobile end of the telecommunication market
Brazil
Take over Telefonica’s stake in VIVO
Because they are well positioned in the market
MOBILE PHONE MARKET IN BRAZIL
• It has been expanding steadily since 1998
• It has dominated the fixed line market due to the expensive expansion of fixed lines
• Strong growth potential reflects a growth and improvement of income levels.
• Expanding broad-ban width will help sell more high-end smart phones which will lead to raising profit margins
• Lots of pre-paid phone users
LOOKING FORWARD
• By 2020, the largest mobile market in Latin America will be Brazil with an estimated 260 million subscriptions.
• More people can now afford a cell phone since the medium income continues to grow.
• Many underdeveloped countries surrounded that we can target.
SWOT ANALYSIS
• Large amount of debt from VIVO
• Risks associated with taking on partners and sharing business
• Big gap between rich and poor
• Low market entry price due to debt levels
• Large untapped market
• Brazil is 5th largest mobile population
• Voice over Internet Protocol (VoIP) expected to grow 62% annually
• Up to 10% increase of subscriptions
• Stable government
• Strong market share (35%)
• Rising medium income level
• Telecommunication had increase of $35.6 Billion
STRENGTHS WEAKNESSES OPPORTUNITIES
• Strict regulations on pricing
• Large number of competitors
• Major infrastructure upgrades needed to expand broad ban capabilities
THREATS
MICRO CONSIDERATIONS
• Overall market: 93.8 cell phones per 100 people.
82.36% of which pre-paid and 17% under contract
• Expected growth of use of high-end smart phones
Has been growing 5% every year
• In Brazil, there is a large portion that doesn’t have access to internet
3G will solve this.
Internet vs. mobile phone service
MACRO CONSIDERATIONS
• Government is highly accommodating outside investment.
• Economic system in Brazil is a free market
• Continuously growth in GDP.
Avg. of 8% in last decade
• Gross National Income of 11,231.00 p.p.
• Relatively low unemployment rate (5.7%)
• Strict regulations regarding price caps
• Skilled labor, minimum wage of $555.00/month
ENTRY STRATEGY
• Partnership with Telecom, buy out Telecom’s current partner Telefonica VIVO
31% market share in Brazil
• We would aggressively advertise 3G broad ban
• Already expanded broad ban above competitors
• We will provide the best service possible trough superior technology and customer service
• We will try to get SMS more on the market
CONCLUSION
• Factors that come into play for expansion:
Cost associated with the acquisition of Telefonica’s stakeo Requires a substantial initial investment
Extensive growth of mobile service market and economy in Brazil
Low asking price because of debts
Opportunities to expand other telecommunicationso 3G, broad ban
QUESTIONS? WE HAVE ANSWERS.
THANK YOU.
JASM
INA R
OSSEEL
LARRY MAIO
LO
MONTEIZ
FRAGER
INTERNATIONAL COMMUNICATIONS, INC.