America Movil †The Jaguar’s Next Move

After a deep synopsis of the strengths and weaknesses of the States Movil, and considering the forces that are currently driving the ripening of the wireless telecom trade in Latin the States and the rest of the world, we commit elaborated certain recommendations concerning the lodges future strategic decisions which, in our opinion, should be considered in order to consoli get out the commodes current position as a global leader in this industry.Regarding the issue of the possible expansion of the States Movil into new commercialises the analysis shows that the appearmatch outline for the comp whatsoever to follow, considering its current investments, assets and the forecasts for each region, is to instruction on the organic growth and to continue fortify its position in the Latin American market, where the corporation has been able to develop substantial brand sentience among the consumers and where the cultural, social and economic aspects of the region represent an proceeds against competitors.Regarding the possibility of a future merge surrounded by America Movil and Telmex International, there is no doubt that the synergy that twain companies could generate is enormous, nevertheless, due to the basic so far significant differences in these telecom segments, the best option is to keep both companies as separate entities plot of land totallyowing them to work together by the establishment of marijuana cigarette ventures and strategic alliances in specific projects. Sincerely Yours, reference Organic Growth against Positioning in New tradesAfter quite a immense shopping whirl that lasted everyplace seven years, from 2000 to 2007, in which America Movil invested and acquired assets all all all oer Latin America, becoming the largest and most mighty corporation in the region today the company needs to decide whether to continue its expansion by dint of acquisitions either in the same region or in different authority markets such( prenominal) as Europe or Asia or to settle down and focus on getting the most out of its current investments.To determine which of these options brings the most benefits for America Movil, we will analyze several aspects of the company and the environment in which it competes, as well forecasts, opportunities and terrors that come with each iodine of these options. Analysis of America Movil and its current position in the Latin American MarketAmerica Movil currently holds a privileged competitive position in the Latin American Market, with strong presence in 16 different countries that at the same time, share a great variety of cultural, economical and social aspects. These common characteristics represent an emolument for America Movil against foreign competitors due to the take in and proven success of the company in spot itself and reasonableness the dynamics in this region.Some of the countries in which the corporation competes, are currently in an advanced stage of deve lopment regarding the wireless market such as Argentina, Chile, El Salvador and Uruguay, where the wireless percentage of penetration is above 85% of the population duration others represent an mesmerizing opportunity of growth such as Brazil, Colombia, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Paraguay, Peru and Puerto Rico where the percentage of penetration ranges from 41% to 75% of the population.The equal of these percentages can be better comprehended in exhibit 1, where it shows that the tot up number of potential clients in the region can be assumed to be above 150 million, a number which exceeds the total number of customers currently affiliated with America Movil 141 million-, especially in countries such as Brazil, Colombia, Mexico and Peru, where the company already has a relatively high percentage of the market share.The total number of potential customers just in these four countries is almost 130 million, 85% of the total number of potential customer s. As of the essence(predicate) as the size of the market available for this corporation, is the distribution of revenue that each one of these countries represents. This distribution can be better appreciated in exhibit 2. What the trend is showing is that the percentage of revenue from Mexico, the most strategic market for America Movil, is decreasing compared to other countries in which the company operates.From 2004 to 2008 the participation of Mexico has reduced from 54% to 39%, meaning that over half of the revenue of the corporation today comes from its operations in foreign markets, accentuation their increasing importance relative to the domestic market, which importance has decreased in over 15% while the Brazilian, Caribbean, Andean and Mercosur markets have rose between 4% and 7% each. However, as we can appreciate in exhibit 3, the overall behavior of the Latin American Market shows that it has been in an important phase of growth in the past 4 years, from 2004 to 20 08, where revenues have increased over 151%.These numbers together support the arguments of both, the strong position that America Movil currently has in the Latin American market, and of the success of the company in belowstanding the dynamics of the Latin American economy and culture which translate in a competitive vantage over its chief(prenominal) competitor in the region, Telefonica, and other European and unification American based corporations that have struggled in positioning themselves in the countries where America Movil has established.Current Strategy in Latin America The success factors of America Movil system in this region can be summarized in two main categories the penetration strategy and the positioning strategy. Penetration Strategy The penetration strategy developed by the company has been clear since the commencement ceremony the acquisition of assets in the different Latin American countries for a low price.This strategy has benefited the corporation b y providing them with the required infrastructure to operate at a relatively low cost, taking advantage of opportunities generated by the failure of other companies to develop a strong position in the market and taking advantage of the liberalization of the Latin American economies. Examples of these acquisitions are the purchase of BCP from BellSouth Corp. (USA) and Verbier (Brazil) in 2003 for $643 million and American Movil Peru from TIM International (Italy) for $503.4 million. The main reasons for the retreat of these companies from the region were either difficulties at their domestic markets or failed business strategies, two factors that America Movil had under control, with a strong domestic market performance in Mexico and with a profitable business strategy in the region. Positioning Strategy The second factor that drove the success of the corporation in the countries where it permeated was the positioning strategy.The strategy to obtain a strong position in the markets where it competes was developed considering the economic situation of the mass of the Latin American population, which is relatively weaker and more(prenominal) unstable and than the one in markets such as North America or Europe. With this in mind, America Movil developed a system of pre-paid cards, which to this date, has been the driving force of the companys growth in the region.The advantage of this model lies in the fact that the corporation discovered that Latin Americans were more likely to become users of wireless communication services if they had the opportunity to pay for the service as they required it avoiding long term contracts and potentially escalating debts, which, because of the unstable economical situation, could become impossible to pay.The customers were not the nevertheless ones beneficiated, since with this model, America Movil became able to considerably reduce collection costs and to avoid invoice defaults that on the long run, could have affected the revenues of the company as well as the number of their clients. There are, til now, two main weaknesses in this model, the first one lying in the fact that this strategy can be relatively easily copied by its competitors and in the long run, it doesnt represent a significant competitive advantage over them.The second disadvantage is that the revenues generated by this strategy are lower than the ones obtained by a prepaid model, which mean that its profitability is based on the volume. Nevertheless, this is currently not a problem for the company since over 83% of its customers are using the pre-paid option. Forecasts of the Wireless Market in Latin America As appreciated in exhibit 1, there are currently a huge number of unattended potential customers in the Latin American Market.This can be assumed by noticing that the overall penetration is 66%, with countries such as Argentina with an astonishing 97% penetration percentage while others important markets such as Brazil and Mexic o are about 65%, a number that can be more often than not increased considering the pre-paid strategy used by America Movil, which simplifies and encourages the use of its service among the population.As seen in exhibit 4, correspond to the case, the forecast for the year 2012 expects an increase from 66% to 76% in the number of subscribers in the wireless market this represents an increase of almost 50 million new customers, which, as analyzed earlier, are mostly judge to come from four countries Brazil, Colombia, Mexico and Peru, which faithd, have a population of unsubscribed potential customers of almost 130 million, while all of the other countries barely reach 22 million.This information can help the company focus their efforts in the markets mentioned before, while maintaining a relatively stable growth in the others, focusing mostly not in attracting new customers but in increasing the profitability of each one of them. Analysis and Forecasts of the Wireless Market in th e rest of the world After analyzing the benefits of focusing on the organic growth of the company, it is also important to consider the option of expanding further into new non-natural markets for America Movil.The options available are the Asian, European and the Middle eastern hemisphere/Africa and North American Market, where the company currently has a small operation. The main advantage of the Asian market is definitely its size as the continent with the larger population, over 3,879,000,000 according to the World Atlas estimates of 2006, and over 10 times the population in South America its definitely the most amiable market to consider. Nevertheless, there are two main barriers that might decrease the attractiveness of hard to penetrate in this market the competitors and the enormous cultural differences between Asia and Latin America.The competition in Asia represent a huge threat for newcomers, since is the domestic market of China diligent, the largest wireless corpora tion in the world with over $275 billion in revenue and the financial power to overwhelm any new entrant. In admittance to this, the fact that, as in Latin America, America Movil is familiarized with the economic, social and cultural aspects of the population, China Mobile has a huge advantage and experience with the Asian culture.Europe is also another important market to consider, and the one that America Movil has been closer to penetrate in however, the same problems arise, with the presence of Vodafone, a British corporation with over $152 Billion in revenue and the advantage of competing in a market in which the company is more familiar with. This in addition to the fact that, as stated in the case, Europe doesnt look to be ready to open to competitors from the new world, which mean that America Movil is going to have more cark penetrating with its acquisitions strategy.Finally, North America doesnt seem to be an attractive market due to its vividness and low expected grow th of only 1. 2% and in the Middle East and Africa America Movil may end up making the same mistakes made by European and North American Corporations in Latin America, which is a weak positioning strategy. These are the reasons why the most feasible strategy is to focus on the organic growth, since the strengths that the company has in Latin America, specially the knowledge of the market, can become weaknesses when trying to expand to new markets where strong competitors already have the advantage of experience and economic power.Merger between America Movil and Telmex International The rapid technological changes in the telecommunications industry and the emergence of new players, combined with the reduction of tralatitious entry barriers and the rise of alternative service providers are forces that currently represent a huge threat for both America Movil and Telmex International. This is the reason why, taking advantage of being part of Carlos Slims Holdings, both companies shou ld be able to establish synergy in the markets where they compete in order to offer a combination of services that would be more difficult, if not impossible, to provide by separate.Nevertheless, due to the significant differences in issues such as the infrastructure and strategies required to operate, a merger could not be the best option, however this doesnt mean that both America Movil and Telmex International are not able to develop joint ventures or strategic alliances while working in specific project that might, in the long-term, increase their profitability, conflict and presence in the Latin American Markets.New trends in telecommunications such as the triple play which offers voice, date and video are rapidly acquiring popularity and obtaining an important share of the market, if Telmex International and America Movil can combine these with the wireless service, there is no doubt that they will obtain an important advantage in any of the countries where they establish.Cit ed Works Rullan, Samantha. America Movil, The Making of a Mexican Global Latina. 2008. INSEAD The Business School for the World America Movil. 2008 Annual Report. 2008. 29th April 2010 . World Atlas. Continents of the World. 2006. 29th April 2010 .