Analysis: Impacts on the Non-IT Globally Competing Firm
In analyzing Venezuela as a potential location for companies to invest, it is important to look at macro economic issues, along with telecommunications issues. The 1997 National Trade Data Bank estimated the following factors:
VENEZUELAN MACRO ECONOMIC INDEXES |
||
DESCRIPTION |
1996 |
2000 (ESTIMATE) |
| Population | 21 Million |
24 Million |
| Persons per family | 4.3 |
4.1 |
| Telephone penetration | 14% |
18% |
| Percentage of Families with TV’s | 95% |
100% |
| Gross Domestic Product growth | 2% |
7% |
| Penetration by mobility | 1.52% |
5% |
| Population above poverty line | 32% |
38% |
Source 1997 National Data Bank
The projected growth of the economy in Venezuela is enough to consider doing business in Venezuela. It appears that Venezuela has made it through the roughest of its economic times, and with the continuation of privatization to take place in the year 2000, the future looks good.I would recommend that a non-IT company do business in Venezuela. The telecommunications are currently sufficient to support a sales office. I feel the basic communications needs, telephone, wireless communications and data transfer are advanced enough in Venezuela to support these requirements.
I would set up a regional distribution center in Venezuela. The educational level of the people in Venezuela is at a high enough level that quality people would be able to be hired. The relatively low cost of labor in Venezuela would also prove to be beneficial to overall profits.
The IT issues associated with a regional distribution center are more significant that those of a sales office. If a need existed to communicate with some of the more rural locations in Latin America, I would consider using satellite communications. The current infrastructure of Venezuela and neighboring countries would not support communications with remote locations.
With regard to the issue of establishing a manufacturing center in Venezuela, I would recommend waiting for 2-3 years, until after the year 2000. After this time, complete privatization will have occurred, and more advanced technology and competition will have an affect on pricing. A more complete infrastructure will be in place in a few years, and the chances of the success of a manufacturing center will be higher.
Back to Analysis: IT Strengths and Weaknesses