Chile – Country Overview & IT Profile MIS 680 – International Issues in Information Systems Professor Licker 11-10-03 Cliff Bliss Alex Nielsen Ron Papa

Chile – Country Overview & IT Profile

MIS 680 – International Issues in Information Systems

Professor Licker 11-10-03Cliff Bliss

Alex Nielsen

Ron Papa

– 2 –

Agenda

Country Overview :

• Brief History

• Geography

• Infrastructure

• Economy

• Government/Politics

• Culture

Information Technology Landscape :

• Telecommunications/Infrastructure

• eCommerce

• Hardware & Software

• Analysis

• Overall Recommendations

– 3 –

Chile – Brief History

Chile is located along South America’s west coast. Chile is bordered by the Andes on the east and the Pacific Ocean on the west.

Chile has a pervasive European heritage. Although most people from Chile have a Spanish ancestry many European groups are influential. These groups include, Irish, English, German, Italian, Croatian, French and Middle Eastern. Chile’s Native Americans are also a very influential group.

A three-year-old Marxist government was overthrown in 1973 by a dictatorial military regime led by Augusto PINOCHET, who ruled until a freely elected president was installed in 1990. Sound economic policies, first implemented by the PINOCHET dictatorship, led to unprecedented growth in 1991-97 and have helped secure the country's commitment to democratic and representative government.

–http://www.cia.gov/cia/publications/factbook/print/ci.html

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Chile – Geography

Climate: temperate; desert in north; Mediterranean in central region; cool and damp in south

Terrain: low coastal mountains; fertile central valley; rugged Andes in east

Geography: strategic location relative to sea lanes between Atlantic and Pacific Oceans (Strait of Magellan, Beagle Channel, Drake Passage)

Area - comparative: slightly smaller than twice the size of Montana

Language: Spanish

Population Growth: 1.05%


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Chile – Geography

– 6 –

Chile –Infrastructure

Ports and harbors: AntofagastaAricaChanaralCoquimboIquiquePuerto MonttPunta ArenasSan AntonioSan VicenteTalcahuanoValparaiso


– 7 –


ChileMontanaDoubled

UnitedStates

Paved Highways 11,012 km 225,806 km 5,733,028 km

Airports

w/ paved runways71 234 5,131

Railways 6,585 km 194,731 km

–http://www.mdt.state.mt.us/map/fastfact.htm–http://www.cia.gov/cia/publications/factbook/print/ci.html

– 8 –


Electricity - production: 41.66 billion kWh (2001)

Electricity - production by source: fossil fuel: 47% hydro: 51.5% other: 1.5% (2001) nuclear: 0%

Electricity - consumption: 40.13 billion kWh (2001)

Electricity - imports: 1.386 billion kWh (2001


– 9 –

Chile –Economy

• Market-oriented economy

• Stock Market

• Signed free trade agreement with the US on 11 December 2002

• High level of foreign trade

• Export $17.8 billion

• Import $15.6 billion

• Debt $40.4 billion (2002)

• Strongest sovereign bond rating in South America

• Fifteen year growth (1998 is the only exception)

Budget: revenues: $17 billion expenditures: $17 billion


– 10 –

Chile –Economy

Distribution of family income - Gini index: Chile 56.7 (1998)U.S. 40.7 (1997)

Inflation rate (consumer prices): Chile 4.5% (2002 est.)U.S. 1.6% (2002)

Labor force: 5.9 million (2000 est.)

Labor force - by occupation: agriculture 14%industry 27%services 59% (1997 est.)

Annual growth: 3.5%


–http://www.lonelyplanet.com/destinations/south_america/chile_and_easter_island/

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Chile –Economy

Chile Montana

Unemployment 9.2% 4.6%

Poverty 21% 13.7%

Per Capita Income $10,000 $ 24,044

ChileMontanaDoubled

Gross Product 184 Billion 45.2 Billion

Population 15,665,216 1,818,906

–http://www.mdt.state.mt.us/map/fastfact.htm–http://www.cia.gov/cia/publications/factbook/print/ci.html

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Chile– Government/Politics

Legal system

• Currently based on Spanish law

• US-style adversarial system is being gradually implemented throughout the country

Executive Branch

• Popular vote

• Six Year Term

• Senator for Life

Legislative Branch

• Senate

• Chamber of Deputies

Supreme Court

Several Political Parties


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Chile – Culture

Literacy: total population: 96.2%

Thirty One Universities

Education: 12 Years Compulsory, 13 million in Attendance

Health: Childbirth rate 2.4 children, Infant mortality rate 8.9/1,000. Life expectancy 79 yrs

Chile's European heritage is pervasive

Nobel Prize-winning poets Gabriela Mistral and Pablo Neruda

Until the military coup of 1973, its cinema was among the most experimental in Latin America

National Parks

Major industries: Copper, fishmeal, wine

Major trading partners: USA, Japan, Germany, UK

–http://www.lonelyplanet.com/destinations/south_america/chile_and_easter_island/index.htm

–http://www.state.gov/r/pa/ei/bgn/1981pf.htm#people

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Chile – Culture

PEOPLE - About 85% of population lives in urban centers, concentrated in the southern and central regions with 40% living in greater Santiago.

- Nearly half the population is under 25 years of age

- 72 % is under 40

- Most have Spanish ancestry

- Small, yet influential number of Irish and English immigrants

- German immigration to the southern provinces of Valdivia, Llanquihue, and Osorno

- Other significant groups: Italian, Croatian, French, and Middle Eastern

- About 800,000 Native Americans, mostly of the Mapuche tribe, reside in the south-central area.

–http://www.state.gov/r/pa/ei/bgn/1981pf.htm#people

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Chile – Culture

PEOPLE - Culture is a mix of Spanish and indigenous groups native to the region

- The common religion is Roman Catholic

- Although society is not riddled by ethnic, religious or regional conflicts, certain class barriers and distinctions still exist

- Modernization has improved the quality of life, yet great disparities in income are still apparent

- The present challenge is to overcome the growing gap between those with easiest access to a modern Chile, and those left behind.

–http://www.chiptravel.cl/

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Chile – Culture

Huasos

Like the Argentinian Gauchos, east of the Andes, the Chilean huasos are skilled horsemen, honing their skills daily. Over the years, the huaso has come to signify much of the Chilean folkloric culture, and he is a vital part of parades, fiestas, and holidays.

–http://gosouthamerica.about.com/library/weekly/aa051302b.htm

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Chile –Telecommunications/Infrastructure

Telephone system

General assessment:

Modern system based on extensive microwave radio relay facilities

Domestic:

Extensive microwave radio relay links; domestic satellite system with 3 earth stations. Mobile telephone service has been a key driver of growth in the telecommunications sector. Between 1999 and 2001, mobile subscribership in Chile soared from 2 to 5 million. Mobile use in 2001 surpassed fixed-line use with a density exceeding 34 mobile phone lines per 100 inhabitants. Chilean officials predict that by 2010, 60 percent of the population will have mobile phones.

International:

Satellite earth stations - 2 Intelsat (Atlantic Ocean)


–http://www.osec.doc.gov/latinamericatrademission/telecom%20pc.htm

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Chile

Telephones 2.603 million (1998)

Cell phones 5 million (2001)

ISP 7 (2000)

ISP 11 (2003)


–http://www.osec.doc.gov/latinamericatrademission/telecom%20pc.htm

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July 2001 Data

AMPATH (AmericasPATH project)

Connect Research and Education networks

• North America

• Central America

• South America

• Caribbean

Chile was the first participant

Optical Fiber Network

“ Chile has a small, but very active scientific community that has placed a priority on integrating into the worldwide scientific community by electronic means.”

Florencio Utreras Director RENUNA

–http://www.lanic.utexas.edu/la/chile/

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2003 Data

Estimated Internet Users: 4,000,000

Projected Users by end of 2004: 4,500,000

–http://www.lanic.utexas.edu/la/chile/

–http://www.buyusa.gov/chile/en/page85.html#5

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Chile – eCommerce

Estimated that 25% of Chileans will buy over the Internet this year and total sales via the Internet will reach $6 billion annually in Chile by 2004.

Amarillas.com

• American and European Business Portal

Mercantil.com

• Latin American Business Portal

Chilnet.cl

• Chilean’s Business Portal

–http://www.amarillas.com

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Chile – Hardware & Software

Technology Initiatives and Regulations

• Government sponsored “Enlaces” program which funds and supplies computer equipment and internet access for it’s state-funded schools.

• Signed the Joint Statement on Electronic Commerce with the U.S. (2000).

• Partnership with the U.S. - Inter American E-Business Fellowship Program.

• Chile’s government has set as a goal that, by 2005, the Internet should be just as accessible in Chile as it is in the developed world.

http://www.mac.doc.gov/ebusinessfellowship/

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Chile – Analysis

- Positive Economic Growth- Stable Political System- Free Market System- High Unemployment- High Gini Index (Digital Divide)

Level of Economic Growth

Political System

Culture

Key MISManagement

Issues

ITStrategy

Palvia, Palvia & Whitworth 1996

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Chile – Analysis

Environmental

Factors

Industrial

Policy

Industry

Structure

IT

Diffusion

Economic

Payoff

• Politically stable for 13 years

• Economic growth for 15 years

• European influenced Society

• Sound Education System

• Corporations (AT&T) are investing in Infrastructure

• Economy is growing

Dedrick & Kraemer 1998

– 25 –

Chile – Analysis

Hofstede

Power-Distance - High

Uncertainty Avoidance - High

Individualism - Low

Masculinity - High

Shore’s Model

Risk vs. Power Distance - Pyramid

– 26 –

GLITS Model

Chile – Analysis

Rank Variable Chile

1 Customers Access to South American Market Strong Benefit

2 Time Zones 2 hours ahead of eastern time Minimal Benefit

3 Products & Services Educated workforce, High Unemployment Benefit

4 Economies of Scope Ports for Product Transportation Benefit

5 Integration Fiber Optic Access from U.S. Benefit

– 27 –

Chile – Analysis

Supply Chain Management

Porter’s 5 Competitive Forces

Substitutes

New Entrants

Suppliers Traditional RivalryAmong Firms Buyers

– 28 –

Chile – Analysis

Trans Border Data Flow

Technology

- Fiber Optic connection to North America, Central America and Europe complete.

Cultural

- Protectionism ???

Laws

Several gov’t initiatives include a draft law on the use of electronic signatures written to international standards, and regulation of certification services. Other legislative projects refer to cyber-squatting, electronic contracts, consumer rights, and online privacy. A law before the Chilean Congress will also update the legislation on intellectual property rights, bringing them into line with international standards.

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Chile – Overall Recommendations

If there is a current or future market in South America, Invest in Chile!

Considerations

- Type of Corporation ( multinational vs. global etc..)

- Corporate Culture vs. Chilean Culture (Cooper’s Model)

Reasons

- Localized Service in a Developing Market- Corporations are Making Investments in Infrastructure- Stable Political System- Fiscally Stable- Educated Workforce- Pleasant Place to Visit- Gateway to South America

Documents

Chile – Country Overview & IT Profile MIS 680 – International Issues in Information Systems Professor Licker 11-10-03 Cliff Bliss Alex Nielsen Ron Papa