Next Phase in Latin America - 22 Oct Sao Paulo - Council on Emerging Markets (2)

8/14/2019 Next Phase in Latin America - 22 Oct Sao Paulo - Council on Emerging Markets (2)

1/69

Proprietary and Confidential

The Next Phase in Latin America

Win Locally to Succeed Globally

Senior Executive RoundtableHosted by the Council on Emerging Markets22 October 2009 So Paulo, Brazil


2/69

The Next Phase in Latin America: Win Locally to Succeed Globally

Senior Executive Roundtable Agenda 22 October 2009 Grand Hyatt So Paulo

12.3014.00 Lunch at Sala ArgentumIntroduction by Stephen Bailey, Chief Operating Officer, Frontier Strategy Group

Remarks by Gustavo Loyola, Former President, Banco Central do Brasil, and FSG Expert Advisor

14.0015.30

Session 1 | Global and Regional Outlookpresented by Dr. Oren Ahoobim, FSG Research Director

15.3015.45

Coffee Break

15.4517.00

Session 2 | Aligning for Effective Execution, choice of either:

Government Reborn: Aligning with Your New Key Customer

Presented by Dr. Oren Ahoobim, FSG Research Director

Tapping Domestic Demand: Localizing for the Emerging Latin American Consumer

Presented by Christopher Moore, FSG Research Director

17.0018.30

Cocktails

2


3/69

Session 1 Global and Regional Outlook


4/69

FSGs Perspective for Remainder of 2009 and 2010

As global markets recover throughout the remainder of 2009 and into 2010, emerging market regions will lead growth;recovery in the US and Western Europe will be slower and shallower

We expect to see an overall GDP contraction of 2% this year in Latin America, followed by 33.5% growth in 2010

Brazils economy has shown more resilience in 2009 due to strong domestic demand; it is poised to benefit fromstrengthening commodity prices and is expected to grow 4% in 2010

Short-term economic volatility in Chile, Colombia, and Peru has dampened confidence in 2009, but all threemarkets should experience healthy recoveries of 34% growth in 2010

Any recovery in Mexico will continue to be fundamentally tied to the strength of the US economy. While a

severe contraction of 78% is expected this year, 2010 should see a mild recovery of 23% growth, with theturnaround lagging US recovery by 46 months

Continued political and regulatory uncertainty in Argentina and Venezuela make these markets less attractive in2010. Multinationals must weigh the real political and regulatory risks as they consider large capital investments

Looking ahead, major markets in Latin America will continue to be shaped by external macroeconomic and geopoliticalforces. Yet, multinationals effectiveness in addressing demands from local consumers and governments andresponding to increasing competition from domestic players will become central to long-term profitability in the

region

4


5/69

Emerging Markets Will Soon Represent More Than Half of the Worlds Economy

5

Share of Global GDP (US$)

Emergingand

developingeconomies37%Developed

economies63%

2000

Emerging

anddevelopingeconomies

51%

Developedeconomies

49%

2014F

Source: IMF

Emergingand

developingeconomies

47%

Developedeconomies

53%

2010

Emergingand

developingeconomies36%

Developedeconomies

64%

1990


6/69

Emerging Markets Will Make Up a Majority of Short-Term GDP and Population Growth

Emerging markets will make up 90% of global GDP growth in 2010 and 96% of population growth through 2013

6

49%

17%

11.0%

6.7%

4.1%3.4%

2.5%1.5% 1.4% 1.2% 1.0% 0.7% 0.5% 0.4% 0.2% 0.1% 0.1% 0.1%

-0.3% -1.8%

-20%

0%

20%

40%

60%

80%

100%

% Share of Global GDP Growth, 20092010F % Share of Global Population Growth,20092013F

Source: IMF, July 2009

*Other Emerging Economies: Kenya (1.6%), Turkey (1.0%), Saudi Arabia (1.0%), UAE (0.3%)** All Other includes non-listed developed and emerging economies as defined by IMF

*** Advanced Economies: US, France, Germany, Hong Kong, Japan, Singapore

Russia-.7%

Indonesia4%

AdvancedEconomies***

4.4%

Nigeria4.5%

Brazil3.6%

Mexico1.8%

Argentina0.6%

OtherEmerging

Economies*4%

China10.5%

India

27%

Rest ofWorld**

40%


7/69

The Rise of Emerging Market Multinationals: Rebalancing?

A new era of M&A and competition from emerging market MNCs is transforming extractive and manufacturing industries.Distribution is forecasted to follow soon

Emerging market MNCs will deploy their strong balance sheets, privileged relationships with governments, and a betterunderstanding of local customers to redraw the competitive landscape

First-mover advantages in establishing partnerships with these firms can have persisting impacts

Emerging Leaders

Embraer (Brazil) Yue Yuen (China)

Cemex (Mexico) Haier (China)

Hyundai (S. Korea) Concha Y Toro (Chile)

Samsung (S. Korea) Tata (India)

Arcelor Mittal SABMiller (S. Africa)

Grupo Modelo (Mexico) Reliance (India)

7


8/69

Continued Weakness in US Economy Is Tied to Housing Prices

US consumption generates 1/6 of globalGDP, and consumer spending power isnow directly linked to housing prices

8

-25

-20

-15

-10

-5

0

5

10

15

20

25

%

ChangeYOY

Change in US house prices versus impact on US consumerbalance sheets, 19892009*

Y-o-Y Change in house prices (%)

Y-o-Y Change in Networth of U.S. Households (%)

Source: FactSet * Half year

1/4 of global GDP comesfrom the US

70% of US GDP comes fromconsumer spending

US consumers contributenearly 1/5 of global GDP

House Prices, % Change YOY

Net Worth of US Households, % Change YOY

A full recovery of US consumer spending

may require a 40% increase in UShousing prices. Compared to previouscrises, housing prices now have astronger impact on US householdbalance sheets


9/69

-15%

-10%

-5%

0%

5%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

%C

hangeYOY

US Industrial Production,20002009

Industries Continue to Cut Production to Match Subdued Demand, Especially in the US

9Sources: FactSet, IMF

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

%C

hangeYOY

Global Industrial Production,20002009

World Advanced Economies Emerging Economies

Emerging economies areexperiencing a slight rebound inindustrial production, but globalindustrial production levels remainsubdued

Developed markets such as theUS are experiencing a significantcontraction in industrialproduction, reflecting ongoing cutsin supply to match dismal demand

The US is experiencing the mostsignificant contraction in industrialproduction in more than two decades


10/69

0

200

400

600

800

1000

1200

1400

Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09

IndexValue

Commodities Index (1967=100),19992009

Metals Energy Raw Materials Food

Recent Moves in Commodity Prices/Shipping Rates Signal Turnaround in Demand

10Source: FactSet, September 2009

Energy, metals, food, and rawmaterials prices are on the risein Q3 2009 but have a longway to go to reach their 2008peak

The Baltic Dry Index, a closely

tracked leading indicator ofglobal economic activity, isrising in Q3 2009. The indexmeasures the demand-supplybalance for dry bulk carriersused to transport raw materials

0

2000

4000

6000

8000

10000

12000

14000

Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09

Baltic Dry Index,19992009

IndexValue


11/69

Focus on Consumer and Government Spending to Maintain Growth

11

3%

1%

-3%

4% 4%

8%

3%

1%

-1%

1%2%

6%

-4%

-2%

0%

2%

4%

6%

8%

10%

ConsumerSpending

GovernmentSpending

Imports Exports Investment(Fixed, Other)

Total GDPGrowth

GDPGrowth,%

YOY

Pre-Crisis and Post-Crisis Breakdown of GDP Growth in Emerging Markets, 20032013F*

Pre-Crisis (last 5 years) Post-Crisis (next 5 years)

Consumer spending isforecasted to be the singlelargest contributor to GDPgrowth, while government

spending will increaseslightly over the next 5

years

Exports and fixedinvestments are forecasted

to decline as largecontributors to GDP growth

Source: FSG analysis

Economies included: Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Mexico, Poland, Russia, Saudi Arabia, South Africa, Thailand, Turkey, Ukraine, Venezuela

6% GDPgrowth is thenew normal

Imports areforecasted tobe less of a

drag onemergingmarketsgrowth

* Discrepancies are due to rounding

+ + + + =


12/69

White Knight or Trojan Horse?

~$6 trillion of global stimulus has provided near-term relief and decelerated the flow of negative news

G-20 leaders are discussing a rebalancing of global GDP away from the dependence on the US customer (~18% of global

GDP)

Peering Beyond the Next Move

The Party Returns The New Normal Money Cant Buy Me Reform

12


13/69

2009 Has Brought a Global Slowdown; Positive Expectations for Recovery in 2010

13

3.1%

-1.4%

2.5%

2008

2009

2010

Global GDP Growth

5.1%

-0.1%

4.2%

Brazil

5.6%

-7.0%

3.0%

Russia

5.2%

2.0%3.7%

Middle East

5.5%

1.5%4.1%

Sub-Saharan Africa

6.7% 6.1%7.5%

India

9.0% 8.3%9.4%

China

1.1%

-5.8%

3.1%

Turkey

4.2%

-5.4%

2.0%

Eastern Europe

0.6%

-4.4%

0.8%

Western Europe

4.2%

-2.4%

3.1%

Latin America

-0.7%

-5.7%

1.5%

Japan

0.4%

-2.6%

2.4%

US

Source: Global, Sub-Saharan Africa, Middle East from IMF, July 2009. All else from Consensus Economics, September 2009


14/69

Green Shoots Should Sprout in 2010 Across Latin America

14

Forecasted 2010 GDPGrowth Rates (%)

Sources: Consensus Economics, FSG analysis

Peru 4.3

Chile 4.2

Brazil 4.2

Panama 3.6

Bolivia 2.9

Mexico 2.8

Colombia 2.7

Dominican Republic 2.5

Costa Rica 2.4

Paraguay 2.3

Uruguay 2.1

Nicaragua 1.9

Argentina 1.8

Ecuador 1.7

Honduras 1.6

Guatemala 1.4

El Salvador 1.2

Venezuela 0.5

Latin America 3.1

Leading companies arepositioning for growthopportunities across Latin

America

Government and localconsumer demand willcontinue to fuel growth in2010

Additional lift expected fromrebounding global demand

and rise in commodity prices

LowerGrowth

HigherGrowth


15/69

-200

0

200

400

600

800

1,000

-5

0

5

10

15

20

25

30

35

40

45

50

Brazil Mexico Chile Colombia Argentina Peru Venezuela

FDI Likely to Recover in 2010, but Below 2008 Levels

15

2008 2009F 2010F

FDI Levels, 20082010

Sources: Consensus Economics, FSG analysis

Total, US$ billions(left axis)

FDI as % of GDP for Each Country

2008 2.9 2 9.9 4.3 2.7 3.2 0.5

2009 1.7 1.5 6.1 3.6 1.7 2.7 0.1

2010 1.8 1.7 7.1 3.5 2 2.6 0

Per Capita, US$(right axis)


16/69

Opportunity for MNCs: 2014 World Cup and 2016 Olympics

16Sources: Bloomberg, FSG analysis

Brazil has been selected to host the 2014 World Cup and the 2016 Olympics

These events are an important opportunity for the country and a very positive signalto investors and multinationals that Brazil has arrived on the global scene

It is projected that more than US$60 billion will be injected into the Brazilianeconomy, primarily in infrastructure investments

~US$3 billion for transportation infrastructure (bus and light rail) in Rio

~US$2.5 billion for airport modernization and upgrades

+US$16 billion for intra-urban transit upgrades

~US$17.5 billion for potential high-speed rail link between So Paulo and Rio

The games are projected to create more than 120,000 jobs annually through 2016

Sectors such as construction, steel, concrete, and raw materials are poised tocapture significant growth opportunities

Sectors related to tourism and transportation can also expect to see increasedinvestments


17/69

To Capture Domestic Demand, MNCs Must Innovate

MNCs must adapt their products/services and value proposition to make significant gains against increasinglysophisticated local competitors in emerging markets

For this reason, innovation has emerged as a critical business challenge for MNCs attempting to capture domesticdemand in emerging markets

Questions for discussion:

Organizational structure

Should innovation be managed by a dedicated team or dispersed throughout the organization?

How centralized/decentralized should innovation process management be?

Brand management

How can I lower the cost of my products or services without damaging my brand?

How should the local imperative to adapt be balanced with corporate mandates to protect global brands?

When is it preferable to launch a new brand in the market? What are best practices around managing sub-brands?

Market research How can I most effectively test new ideas in the marketplace?

When are traditional market research techniques no longer valid?

17


18/69

Brazil Taking Center Stage on Environmental Issues

Brazil is playing an increasingly important role in international debates over environmental management and climatechange

Brazils energy mix is relatively clean compared to most large economies Approximately 45% of all energy produced comes from renewable sources

(hydropower for electricity and ethanol for transportation fuel)

However, Brazil is the 4th largest global emitter of greenhouse gases, primarily due to deforestation and land-use change

Brazil is expected to play a leading role in the upcoming UN climate summit in Copenhagen in December

Questions for discussion:

Minimizing operational exposure

How can I manage my organizations environmental exposure in the face of uncertain local and global regulations?

What are effective strategies for working with supply chain partners and customers to mitigate environmentaleffects?

Balancing regulatory costs and new profit opportunities Where are the most promising opportunities for cost savings around energy and resource usage?

How do I measure the ROI on sustainability initiatives?

What new products and services can we develop to profitably contribute to the regions environmental priorities?

Aligning with governments and other key stakeholders

How should I engage local regulatory agencies, my customers, and NGOs to proactively manage risks andopportunities?

18


19/69

The New Normal: Drivers for Success in Latin America

Tap new sources of demand

Target government spending (PPPs)

Focus on local consumption, de-emphasize export sales

Explore global services market

Redesign sales-force composition (reorient for government relationships)

Innovate on business and service models

Tailor to local preferences

Target low-end customers as well as the growing middle class

Organize for agility and minimum scale

Platform your business (and service) model to enable scalable local customization

Empower local autonomy and drive regional best-practice dissemination

Build culture beyond structure

Improve leverage of corporate center

Leverage parent credit rating for carry-trade financing

Communicate to improve global M&A pipeline and big bets

People leadership

19


20/69

20

Regional Roundup:Variations inPerformance acrossLatin America


21/69

Mexico: Deepening Contraction Showing Some Signs of Bottoming Out

21

-0.7

-3.7

-6.3 -6.8 -7.1

-10

-8-6

-4

-2

0

2

4

68

10

Jan 09 Apr 09 Jul 09 Aug 09 Sep 09

Mexico

Low 2009

Mean 2009

High 2009

2010

Monthly Forecasts of 2009 and 2010 GDP Growth (%)

Date Forecast Released

Mexicos outlook remains grim through the end of 2009; manufacturing exports, tourism, remittances, and oil revenuesremain depressed

FSG expects to see signs of a Mexican recovery 6 months after the US returns to growth

Long-term fundamentals remain strong and should allow the country to return to its previous growth trajectory by 2012

Sources: Consensus Economics, FactSet, FSG analysis


22/69

Experts Echo Pessimistic Outlook of Mexicos Short- to Intermediate-Term Prospects

22

Least

Most

Mexico lags US

by 56 months

If the financial system stabilizes in the US, Mexico will recover with a lag of 56 months. Given the strongconvergence of Mexican and US business cycles, if the US faced deflation Mexico would be tightly linked to

that probability. Dr. Francisco Gonzalez, Associate Professor of Latin American Studies, Johns Hopkins University

Low fiscal revenuesin 2009

Taxes [were] deferred until June because of H1N1, but even [after that] collection will be slow. Thegovernment doesnt collect as much as it should anyway, and it will be even worse this year.

Joseph Salazar, Economic Section, US Embassy in Mexico City

Mexicos oil industryfaltering

Mexicos oil industry is heading down a bad path. They havent invested in the necessary technology forproduction and they have big troubles with unions. The issue is not so much oil prices, but how muchMexico can actually pump.

Dr. Riordan Roett, Director of Western Hemisphere Affairs, Johns Hopkins University

Exports down

8085% of Mexican exports go to the US and 65% of imports come from the US, mostly capital goods formanufacturing. This segment has been hit particularly hard by the crisis. Manufacturing exports are the mainsource of foreign exchange for Mexico. They overtook oil as the largest forex source in the late 1990s.

Joseph Salazar, Economic Section, US Embassy in Mexico City

Retail hit byH1N1 virus

Were holding our breath, waiting for the fallout from the flu. Were concerned about when consumers willstart to spend again. Were not sure what the medium-term effects of the shutdown in Mexico City are.

Major consumer goods multinational


23/69

Short-Term Pain Balanced by Longer-Term Positive Fundamentals

Despite short-term economic pain, Mexicopossesses strong long-term fundamentalsfor multinationals considering investment

and growth

Demographics

76% of the population lives in urban areas, easingdistribution for consumer goods companies

40%+ of households are now considered middleclass

Natural manufacturing hub

Mexicos well developed manufacturing sector, low-

cost labor, and close proximity to the US ensure thatit will continue to be a natural hub

Financial system

The prime lending rate is expected to remain in thesingle digits, even under pessimistic assumptions

The exchange rate against the dollar has stabilized,and inflation is expected to remain in check

23

Mexicos Dependence on US Economy

Sources: FSG analysis, Thomson Reuters, US Department of State

Mexican Peso to US Dollar(July 1, 2008 to September 1, 2009)

Stabilization in Q2Q3 2009

Lehman Brothers fails

Correlation Between US and MexicanGDP Growth

19902000 0.25

20002009 0.92

Correlation Between Quarterly Industrial Productionin US and Mexican GDP

20032008 0.86

20032008(1 Quarter Lag) 0.95


24/69

Brazil: Back on Track for Growth in Q4, with Accelerated Recovery in 2010

24


Brazil will continue to drive growth in Latin America in the short to medium term

Domestic consumer demand has moved Brazil out of recession; Q2 saw positive quarterly growth of nearly 2%

Additional government stimulus is likely in the run-up to the 2010 election

Currency has strengthened nearly 30% this year, boosting imports and providing a more level playing field for importingMNCs against local producers

1.7

-0.6 -0.8 -0.4-0.1

-6

-4

-2

0

2

4

6

8

10


Brazil

Low 2009

Mean 2009

High 2009

2010




25/69

Macroeconomic Snapshot and Outlook: Domestic Demand Fueling Recovery

Brazil will see a contraction in 2009 but is expected to grow 3.7% in 2010

Increased consumer confidence and domestic demand are obvious drivers of economic recovery. Retail salesexceeded expectations and car sales jumped dramatically over the summer, spurred by government tax rebates andother incentives

A rise in prices of key commodity exports such as steel and agricultural products will spur production and growth indomestic markets

Loans from national development bank BNDES are helping Brazil out of the crisis

BNDES loans have accounted for 20% of total bank lending, or about 8% of GDP, since January 2009

Increased trade and investment ties with China and India are impacting domestic industries and reshapingexternal geopolitics

China became Brazils largest trading partner in 2009, overtaking the US

25Sources: Consensus Economics, Fundacao Getulio Vargas, Independent Brazilian pollster

Bottom Line for Investors

Though the overall investment climate is looking more favorable, government assistance in the short term will likelyfocus on attracting investment in consumer product industries

Financing and access to credit will remain favorable by Brazilian standards

Brazil is the best near-term overall investment opportunity in Latin America


26/69

Argentina: Political and Economic Confusion Continues; Mild Recovery Expected in 2010

26


Argentina is struggling under the weight of anti-business policies and an interventionist government

Inflation, increased public spending, and risk of default by provinces and the federal government undermine stabilityand confidence in the near term

Defeat in the legislative elections loosened the Kirchners stronghold, but real change will only come after 2011

Extreme underreporting of inflation deters potential investors

The government made an early payment on sovereign debt in July, allaying concerns over fiscal soundness for now

0.5

-1.3-2.3 -2.2

-2.9

-8

-6

-4

-2

0

2

4

6

8

10


Argentina

Low 2009

Mean 2009

High 2009

2010




27/69

Insider Perspectives

27

Least

Most

Hesitant to invest

in Argentina

Most Argentine businessesfear that something is about to go wrong in Argentina, and multinationals pick upon that feeling. Since many firms are not entirely confident in Argentina, theyre not maximizing their

investment level therethis creates some opportunity for us. We continue to invest heavily, though we doplan conservatively and systematicallywhen it comes to Argentina. Senior CEM executive, CPG company

Kirchners toappropriate oil

reserves?

Capital flightremains a top

concern

This year the government appropriated pension funds to cover campaign expenditure and debt payments.There is some speculation that the government might appropriate oil reserves next year in order to makeits debt payments, although I doubt that will come to pass.

The main economic problem over the last 18 months has been capital flight. The central bank has reserves

but theyre not infinite. At some point, we will reach a point where the market has doubts about the banksability to control the exchange rate and there is a possibility of a currency rush.

Martin Krause, ESEADE professor and FSG Expert Advisory Network member

Struggling withrising inflation

We are having a serious problem with pricing in Argentina. Even raising prices, itsimpossible to keep upwith inflation at 1620%, no matter what the government says. Our profit pool is currently very small inArgentina.

Senior CEM executive, Food, beverage, and tobacco company

Shift to rightin the next election

The Kirchner government effectively lost this midterm electionthey were not politically intelligent aboutgetting consensus around their policies. They have changed policies so often due to the downturn, and themedia has been unusually aligned against them. I expect the next government to be much lessinterventionist in the economy. They definitely cant go any further to the left than the Kirchners.

Minister, Embassy of Argentina, Washington, DC


28/69

The Pendulum of Argentine Politics Limits Fundamental Reform

Political power has oscillated within the Peronist framework between pro-business and populist since 1947 and isexpected to shift back to the right in 2011

Swings between the two extremes in the party are predominantly reactionary, with each new government undoing many ofthe previous governments policies

28

A shift toward openness in the 2011 election is universally expectedbut does not represent a fundamental change

There is no clear political distinction between different opposing groups,and many new legislators are former supporters of the Kirchner faction

Sources: Business Monitor Online, EIU, FSG analysis

Bottom Line for Investors

The next government is unlikely to break from the Peronist paradigm; expect minimal economic reforms

Rules and regulations remain unstable

The Peronist framework is a cap on growth

Its too much to assume that the recentelection represents a shift in theideological mindset of the country. Thenew candidates are Peronist as well.Theyre just going to try and swing thependulum back toward capitalist Peronism.To make a true change they mustreengage the international community.

Bureau Chief, The Economist


29/69

Venezuela: Turbulent Road for Foreign Firms Not Expected to Rebound

29


President Hugo Chavez has increased the pace of revolution with more nationalizations, tighter price controls, andsuppression of political opponents

Restricted access to dollars has paralyzed importation of raw materials for foreign MNCs

Venezuela is considering restrictions on company profit margins for primary consumer goods to reduce cost of living.A proposal under review in the National Assembly may limit margins to 34% if the bill is passed

0.6

-1.1 -1.5 -1.7 -1.4

-6

-4

-2

0

2

4

6

8

10


Venezuela

Low 2009

Mean 2009

High 2009

2010




30/69

Venezuela: At the Mercy of Global Oil Prices

Venezuelas economy is expected to contract 1.7% in 2009 before stabilizing in 2010

Forecasts are closely linked to revenue from oil exports and could be sharply affected by an unanticipated crash orjump in prices

Venezuelas basket of crude products dropped 42% from $86.49 per barrel to $49.79 per barrel between 2008 and2009

Venezuelas heavy dependence on the price of oil weakens the long-term investment climate

Higher prices give Chavez excessive leverage over MNCs, but catastrophically low prices will lead to economic andpolitical instability

Parallel exchange rates complicate capital flows and repatriation of profits

While the government is seeking to reduce the parallel rate to about 4 or 5:1, many critics see a devaluation that maybe closer to 7:1 by 2010

This volatility is very damaging to the manufacturing industry, which needs to import raw materials from abroad

Persistently high inflation

Sustained inflation hovers around 30%, the highest in Latin America Venezuela has responded to years of high inflation by instituting subsidies

30Sources: Consensus Economics, EIU, Reuters, Wall Street Journal


31/69

Insider Perspectives

31

Least

Most

Trending towarddictatorship

Venezuela will become a semi-dictatorship as policies shift toward the ideological left and government revenuesfluctuate with oil prices. Chavez still has a flow of dollars from US gas stations and has sufficient resources tomaintain power. He will continue to nationalize, as very little accountability exists.

Dr. Riordan Roett, Director of Western Hemisphere Affairs, Johns Hopkins University

Chavez skillfullynavigates Latin

American politics

Although other Latin American governments have come to understand that Chavez has not delivered on his[domestic] promises, Chavez has shown skill in buying influence in other countries and maintaining it in his own.

Jeffrey Davidow, Former US Ambassador to Venezuela

Political andeconomic modelis unsustainable

The model is doomed to fail. Resources are substantial and the money gave Chavez power and leverage, but itwont work in the long term because no investment for sustainable development has been made.

Former US Ambassador in Latin America

Venezuela is an oil story, but in recent years, it has also become a fiscal story. Despite growing fiscal spending,there hasnt been an acceleration in economic activity in recent years. The expanded reach of the governmentthrough nationalizations, price controls, and a fixed currency has affected the ability of the economy to produce.

Fitch Ratings

Oil remains keyto Venezuelas

economy

This is the economics of an oil economy. Oil makes or breaks Venezuela.

Senior Economist, RBS Securities Inc.

Repatriation offunds will remain

a criticalchallenge forforeign MNCs

Repatriation of funds continues to be difficult. Chavez will not be overly antagonistic to foreign MNCs but willseek to maintain power and tighten economic control.

CEM member executive


32/69

Recovery Should Pick Up Pace in 2010 Across Chile, Colombia, and Peru

32


1.6

-0.5-1.3 -1.4 -1.6

-10

-7

-4

-1

2

5

8


Chile

2.4

0.2

-0.4 -0.3-0.2

-10

-7

-4

-1

2

5

8


Colombia

53.4

1.8 1.51.4

-10

-7

-4

-1

2

5

8


Peru




33/69


Appendix: Macroeconomic Scenarios

ArgentinaBrazilMexicoVenezuela


34/69

Macroeconomic Scenarios for Argentina: Baseline

34Sources include EIU, FSG analysis, IMF, World Bank


35/69

Macroeconomic Scenarios for Argentina: Optimistic



36/69

Macroeconomic Scenarios for Argentina: Pessimistic



37/69





38/69

Baseline Scenario for Brazil



39/69

Optimistic Scenario for Brazil


S B


40/69

Pessimistic Scenario for Brazil



41/69




B li M i S i f M i


42/69

42

Baseline Macroeconomic Scenario for Mexico

Sources include EIU, FSG analysis, IMF, World Bank

O ti i ti M i S i f M i


43/69

43

Optimistic Macroeconomic Scenario for Mexico


P i i ti M i S i f M i


44/69

44

Pessimistic Macroeconomic Scenario for Mexico



45/69




Baseline Scenario for Venezuela


46/69

46

Baseline Scenario for Venezuela

For top of Pessimistic A slide:* While a sharp increase in oilprices strengthensmacroeconomic indicators, itheightens challenges related todoing business in the country


Optimistic Scenario for Venezuela


47/69

47

Optimistic Scenario for Venezuela



Pessimistic Scenario for Venezuela


48/69

48

Pessimistic Scenario for Venezuela



Very Pessimistic Scenario for Venezuela


49/69

49

Very Pessimistic Scenario for Venezuela




50/69


Appendix: Selected Data

Technology Markets Should Remain Healthy as Broader Economic Growth Resumes


51/69

Technology Markets Should Remain Healthy as Broader Economic Growth Resumes

2008

(US$mn)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

Change

2008

(000)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

Change

Argentina 3,455 4% 6% 8% Argentina 43,661 7% 5% 4%

Brazil 21,857 7% 11% 15% Brazil 150,641 13% 12% 9%

Chile 2,104 5% 9% 12% Chile 15,878 4% 5% 3%

Colombia 1,976 3% 6% 11% Colombia 41,365 9% 7% 5%

Mexico 12,753 -6% 7% 10% Mexico 77,935 7% 7% 8%

Peru 1,014 9% 11% 12% Peru 18,459 19% 11% 9%

Venezuela 1,566 1% 3% 5% Venezuela 27,084 7% 4% 4%

IT Market Size Mobile Phone Subscribers

Opportunities in Latin American technology markets continue, as growth has remained relatively robust, bolstered bygovernment stimulus spending in most cases

Growth is projected to accelerate overall for information technology

Growth in mobile-phone penetration is slowing

Sources: BMI, EIU, FSG analysis

Healthcare Spending Down in Many Markets but Should Rebound in 2010


52/69

Healthcare Spending Down in Many Markets but Should Rebound in 2010

Pharmaceutical sales are forecasted to decline this year in most large markets in Latin America. Robust growth shouldreturn in 2010, although not in Argentina or Venezuela

Overall expenditures on healthcare are also expected to fall in the largest markets (Brazil and Mexico)

All major healthcare markets, with the exception of Argentina, are forecasted to return to growth by 2010


2008

(US$bn)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

Change

2008

(US$bn)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

Change

Argentina 3.7 -10% -8% 6% Argentina 31 -9% -7% 8%

Brazil 17 -2% 23% 8% Brazil 143 -4% 24% 7%

Chile 1.2 -10% 17% 9% Chile 12 15% 10% 8%

Colombia 3.1 4% 14% 23% Colombia 17 -1% 10% 16%

Mexico 10 -10% 12% 11% Mexico 62 -8% 14% 11%

Peru 0.9 -2% 7% 14% Peru 6 2% 15% 19%

Venezuela 3.6 -2% -19% -12% Venezuela 28 11% 12% 13%

Pharmaceutical Sales Healthcare Expenditures


53/69

Consumer Spending Has Fallen in Most Markets; Partial Recovery Expected in 2010


54/69

Consumer Spending Has Fallen in Most Markets; Partial Recovery Expected in 2010

54

Consumer spending is expected to contract significantly in most markets this year, including 1020% reductions inspending on food, beverage, and tobacco products

Increased government spending and favorable commodity markets should contribute to consumer spending growthin Peru and Venezuela


2008

(US$bn)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

Change

2008

(US$bn)

2009 Y/Y

Change

2010 Y/Y

Change

2011 Y/Y

ChangeArgentina 72 -18% -14% 7% Argentina 189 -12% -9% 7%

Brazil 205 -11% 7% 5% Brazil 956 -9% 8% 7%

Chile 27 -10% 8% 6% Chile 100 -9% 9% 7%

Colombia 48 -11% 2% 5% Colombia 153 -9% 3% 6%

Mexico 193 -21% -3% 5% Mexico 713 -19% -3% 6%

Peru 38 6% 6% 6% Peru 81 5% 7% 7%

Venezuela 57 35% 3% 6% Venezuela 169 29% -2% 5%

Consumer Spend on Food, Beverage, and Tobacco Total Capital Expenditures


55/69

Tapping Domestic Demand: Localizing for the Emerging Latin

American Consumer


Session 2 Aligning for Effective Execution



56/69


Domestic consumer spending will be an increasingly important driver of economic growth in the short to intermediate termin Latin America

In order to expand their reach to consumers in the region, MNCs must answer three critical questions:

How can I make my products available to consumers in the places where they prefer to shop?

How can I make my products affordable to consumers, especially those with low incomes?

How can I make my products acceptable to consumers who have different preferences and expectations than US or European consumers?

56

How can I make my products availableto consumers in the places where they

prefer to shop?

7080% of consumers shop in smallneighborhood shops, while 2030%regularly visit large retail chains orsupermarkets

How can I make my productsacceptable to consumers whohave different preferences

and expectations than US orEuropean consumers?

Successful firms haveimplemented strategies forobjectively studying andmonitoring theserequirements

How can I make my productsaffordable to consumers,especially those with lowincomes?

Products must be engineeredand packaged to preservemargins despite a low retail price

point Strong word of mouth will

negatively impact any productthat sacrifices quality to achievea low price

Case Studies

Growth in Middle and Upper Class Will Return to Upward Trajectory Post-2009 Downturn


57/69

Growth in Middle and Upper Class Will Return to Upward Trajectory Post 2009 Downturn

57

0

20

40

60

80

100

120

140

160

180

2006

2007

2008

2009

2010

2011

2012

2006

2007

2008

2009

2010

2011

2012

2006

2007

2008

2009

2010

2011

2012

2006

2007

2008

2009

2010

2011

2012

2006

2007

2008

2009

2010

2011

2012

2006

2007

2008

2009

2010

2011

2012

Latin American Income Distribution (Millions of Households)

>US$1,000 p.a. > US$3,000 p.a. > US$5,000 p.a. > US$10,000 p.a. > US$15,000 p.a. > US$25,000 p.a.

Brazil Mexico Argentina Venezuela Colombia Chile

P&G: Adapt Products to Suit Local Needs and Preferences


58/69

58

Engineered to a lower price point

Contains fewer active ingredients

Packaged in single-use portions

Price is convenient for consumers. Mexican workers are often paid daily wages in 5-pesoand 10-peso coins; Ace Naturals is priced just under 5 pesos

High-visibility packaging touts unique product advantages

Due to its lower concentration of active ingredients, Ace Naturals is gentler on hands andeasier to rinse out of clothing compared to the traditional, more expensive variation of Ace

Reverse Engineering In Practice:Ace Naturals In Mexico

P&G has developed a uniqueproduct in response to marketdynamics called Ace Naturals, avariation of its traditional Ace brand

P&G: Adapt Products to Suit Local Needs and Preferences

Market Dynamics P&G Response

Prevalence of high frequency stores

P&G estimates that 7080% of consumers will visit theirneighborhood high-frequency store at least once per day, ifnot more often, while only about 2030% regularly shop insupermarkets

High-frequency stores tend to be very small (on average, lessthan 250 square feet) and are often poorly lit and poorlyorganized

Low-income consumers

Many workers are paid a daily wage in small bills or coins,which they use to make their purchases

Poor consumers lack the disposable income and householdstorage space necessary to buy in bulk. Even if per-ounce orper-unit costs are lower for bulk-packaged items, a single-useportion may be all that they can afford

Reverse engineering

Product development starts with a specific retail price point

This price point impacts the type and quantity of inputsutilized as well as the package/portion size

The retail price must take into consideration the total amountof cash that a consumer may be carrying as well as thedenominations of currency most commonly carriedaconsumer carrying 10-peso coin is less likely to purchase aproduct costing 11 pesos

High-visibility packaging To accommodate poor lighting and possible poor shelf

placement, packaging is brightly colored and labels are easilylegible

Maintain value: high quality and low price

Low-income consumers cannot afford to purchase productsthat do not deliver high performance

Positive or negative word of mouth spreads quickly

P&G: Build Scale by Focusing Resources on Core Retailers


59/69

y g

The Golden Store Program Retailers must carry 40+ different P&G products to be eligible and must display them prominently together (and not next to any competing

brands)

For participating retailers, there are numerous benefits:

P&G provides hands-on assistance through regular visits from its merchandisers, who help to organize store shelves, provide point-of-sale and othermarketing displays (including displays that can be hung from the ceiling, a direct response to dim and cramped conditions), and ensure that P&G productsremain prominently displayed

P&G also provides some basic operational consulting to retailers, both in-person and through a monthly magazine. For example, the company will explainhow to calculate profit margins. This service demonstrates that although P&G products may have a lower sales volume than food or soda, they offergreater profits to the retailer

The program allows P&G to focus its attention and resources on a core group of retailers 59

Market Dynamics P&G Response

Prevalence of high-frequency stores

Sales to mass-market retail and supermarket chains aredwarfed aggregated sales to high-frequency stores

Because each store is independently owned and operated,distribution and merchandising are extremely complex

P&G products are low-volume sellers

Household and health/beauty products represent only 10% ofsales for the average high-frequency store, which is quite smallrelative to food (35%) and soda (25%)

Poor shelf placement

Because household and health/beauty products sell in smallvolumes, they are given undesirable shelf space or onlypresented to consumers upon request

Large number of stores in far-flung and rural regions

Hundreds of thousands of stores are in regions where P&Glacks an on-the-ground presence

Implemented Golden Store Program

Retailers are rewarded for carrying a large selection of P&Gproducts

P&G can focus merchandising and direct-distribution efforts ona core group of high-performing retailers

Golden Stores receive a monthly magazine, Tu Negocio, whichpromotes P&G products, explains their benefits to retailers, andprovides helpful tips for retailers to improve their businesses

Recruited independent distributors and agents

Retailers in far-flung regions or those not qualified as GoldenStores can be serviced by entrepreneurs who sign on asindependent agents

These agents are given thorough training to protect the P&Gbrand and drive increased sales through effectivemerchandising

Because agents are local members of the community,relationships with retailers are already established


60/69

Penetrating the Modern Mass Retail Channel: Comparing Walmart and Carrefour


61/69

g p g

CEMRecommendations

for PotentialSuppliers in

LATAM

Empower sales organization at the local level

Position products as uniquely suited forneighborhood store format and their lower-incomeconsumers

Align with Walmarts emphasis on cost

Cut through the clutter; come to initial negotiationswith the best price you are willing to offer, tiered byvolume of order

Work across borders to increase order volumes.

Walmarts internal structure does not facilitatesuch opportunities for economies of scale

Coordinate between local organization and sales

team based in France

French-language capabilities are a plus, even inthe region

Be patient; work within the system to demonstrateperformance and compliance with Carrefours five-point framework

61

Carrefour almost always involves people from Europewhen we are negotiating deals in the region. The regionalCarrefour people do not make decisions on their own. Itlengthens the sales cycle considerably.

Sales executive, Leading consumer goods company

Wal-Mart wants to know your bottom-line best price,tiered by volume. We want visibility into why that is theprice. We dont even want to talk about ad allowances,slotting allowances, first-time promotions, or anythingelse. Open-book transparency is what we want frompartners.

Executive, Walmart Global Sourcing

We are trying to get buyers in the different countries totalk to each other to pool orders. Some suppliers, likeP&G and Coca-Cola, have people here [in Bentonville]that help us spot opportunities for doing this since ourown system is so decentralized.

Executive, Walmart Global Sourcing

Red Bull: Penetrating Premium Product in the Marketplace


62/69

g p

SOLUTION:

Maximize Limited Resources Capitalize on Momentum Dig in for the Long Term

Staffing

Red Bull entered Colombia in 2003, startingin Bogot with 3 sales executives

Strategy

Target the highest-potential accounts

Rely on partnerships with regionally focuseddistributors to serve smaller cities

Execution

Focus on exclusive nightclubs in Bogot

Use guerrilla tactics such as leaving emptyRed Bull cans on tables or providing freesamples to DJs and musicians

Results

The Red Bull brand is introduced toinfluential trend-setters, stimulating demand

and generating buzz within the targetdemographic

Staffing

By 2005, Red Bull Colombia had grown to 20sales executives in key cities

Strategy

Continue to target high-potential accounts,adding bars, restaurants, and petrol stations to

company-served distribution network

Shift partnership strategy from geographic focusto channel focus to improve penetration

Execution

Travel to universities and office parks to providefree samples and recruit brand ambassadors

Forge partnerships with liquor and CPGdistributors

Results

Brand awareness increases, stimulating demand New partners can leverage existing relationships

with bar, nightclub, and retail accounts

Staffing

In 2009, Red Bull Colombia expanded itsdirect sales force to 40 executives located inBogot, Cali, Medellin, and Barranquilla

Strategy

Expand distribution to traditional retail

Refine mix of distributors

Execution

Devote more attention to retail accounts

Invests in sponsorships of sporting, music,and other events targeting young people

Results

Brand awareness is extremely high, but pricepoints remains out of reach for lower-incomeconsumers

Struggling to serve mom-and-pop retailersdue to small order sizes (typically about $40),and low velocity (rotation per can of 2 timesper week)

62

CHALLENGE: Establishing a premium product in a new market with limited investment or corporate resources

Red Bull has found it challenging to reach the traditional channel with only one premium product. Red Bull is recognized by customers, butnot everyone is able to buy it since 80% of the country is so poor. Head of Marketing and Distribution, Red Bull Colombia



63/69

Government spending will be a major driver of growth in the short to medium term for B2B companies in emergingmarkets

In order to benefit from this spending, MNCs must answer three critical challenges:

Engaging the right stakeholders to identify opportunities

Positioning or adapting products or services to more effectively to align with government priorities

Effectively executing once opportunities have been secured

Government priorities differ from those of private sector customers. Governments expect MNCs to provide:

Job creation

Infrastructure investment

Skills and technology transfer

Contribution to the tax base

ENGAGEthe right stakeholders

ALIGNwith government priorities

EXECUTEeffectively

Involve C-suite executives to gainintroductions to the most seniorgovernment decision makers

Demonstrate value and thoughtleadership to gain broad-based supportwithin bureaucracies

Case Studies: General Electric SAP

Identify key government priorities andtailor value proposition accordingly

Communicate alignment by leveragingrelationships with decision makers

Case Studies: Intel FMC Technologies

Ensure a high level of service toposition for future contracts andexpand the relationship

Build a reputation as a trustedadvisor on key government priorities

Case Study: Motorola

63

GE: Leveraging Senior Leadership Engagement for Business Advantage


64/69

A top-down approach to networking, asutilized by GE, gains access to the mostsenior contacts

CEO travels to the region twice per year He and other high-level GE executives can

gain access to senior government andbusiness executives to establish an initialrelationship

That relationship will be extended to lower-level GE executives in the region, who nowhave the credibility and authority to speak onthe CEOs behalf

High-level relationships also serve to

demonstrate GEs commitment to doingbusiness in the country, which puts projectson a fast track

A bottom-up approach to networking isuseful but limits access to senior-mostgovernment and business executives

A mid or low-level manager in the region canforge relationships with low and mid-levelgovernment and business contacts

However, he cannot gain access to or formrelationships with the senior executivesmaking strategic decisions (e.g., thepresident and government ministers, or thepresident of a potential partner company suchas Petrobras)

64

GENERAL ELECTRICTop-Down Networking

CEO, GEJeffrey Immelt

President, GEInfrastructure

President, GE Energy

President, GEInfrastructure Latin

America

Director, GE EnergyLatin America

Product, Project, and Sales ManagersGE Turbines

President, LatinAmerican

COMPETITOR XBottom-Up Networking

Senior Governmentand Business

Executives

Highest-LevelGovernment andBusiness Executives

Mid and Low-LevelGovernment and

Business Executives

Regional GeneralManagerCompetitor X

Bottom-up networkingfails to gain access tothe high-level officials

making strategicdecisions

Product, Project, and Sales ManagersCompetitor X

In-Region Director-Level Executive,

Competitor X

You cant do it from New York. The CEO, division presidents, and regional headshave to get on the ground locally.

Senior executive, General Electric

SAP: Gain Access to Stakeholders in a Value-Added Setting


65/69

SAPs strategic objectives in Brazil SAP Brazil revamped its channel strategy in 2008 in an effort to

capture more SME opportunities

The company restructured its territorial and vertical sales

organizations and is increasingly relying on channel partners

SAP has established an annual SAP Forum in Brazil thatbrings together more than 4,500 attendees who arestakeholders and decision makers within keyorganizations, including: Current and prospective SAP customers

Current and prospective SAP partners

Industry press and associations

Government officials

The forum is structured around 10 unique cohorts thatmeet concurrently in separate rooms during the secondtwo days of the three-day event The day is structured around a number of one-hour sessions that

typically feature a keynote speaker

Keynote speakers could include SAP practitioners, executivesfrom SAP customer/partner companies, or independent experts

SAP provides local and multinational companies withopportunities to sponsor the event and specific hour-long

sessions

65

The SAP Forum is structured around 10 unique cohorts, which allowsattendees to gain more specific value

Cohort Illustrative Hour-Long Session

SustainabilityGreen Supply Chain: Using SAP Products toMeet Sustainability Demands

Consumer GoodsCase Study: Whirlpool Implements a New Modelfor Managing Logistics in Brazil

Education Accelerating Learning and Optimizing Training

Telecommunications Case Study: VIVO MINAS Achieves SuperiorBusiness Results Through Improved BusinessIntelligence Practices

Public SectorUsing E-Government to Improve Agility andVisibility for Citizens

The SAP Forum engages a range of partner and customerorganizations. Sponsors of the 2008 forum included:

Key benefits of the SAP Forum

For attendees: Access to insights and network with industry peers

For sponsoring companies:Opportunity to position theirorganization as a thought leader on a particular topic

For SAP:Positions SAP as a driving force behind technologicalinnovation in Brazil aligned with key government priorities and localstakeholders

Intel: Aligning With Government as a Trusted Advisor and Solution Provider


66/69

Intel observed the following government challenges:

Education is a priority area forstimulus spending

No tailored end-to-end solutionavailable for government needs

Difficulty of balancingcost and value

Challenge

The Brazilian government wanted a highlyeffective solution to bring technology intoBrazilian classrooms

Solution

Using a successful project in Portugal asan example, Intel proposed a solution toprovide 350,000 low-cost computers toBrazilian schools

Intel is already delivering 500,000 low-cost,Intel-powered computers to Portugueseschools through the Magellan project. Aspart of this project, Intel supports thegovernment in managing, promoting, andimplementing the program

Challenge

Governments are very price sensitive andunwilling to commit to partial solutions

No single local manufacturer can deliver acost-effective finished product to thegovernment

Solution

Intel coordinated commitments to meetgovernment requirements with multiplesuppliers. Intel evaluated suppliers to ensurethat they had the necessary productioncapacity

By offering a cost-effective solution for themass production of low-cost computers, Intelsecured a commitment from the government

Intel earned significant goodwill from thegovernment for its coordinating role in the

project and is well placed to win future bids

Challenge

The Brazilian government wants to reach thegreatest number of students possible with alimited budget

Borrowing costs have soared during thecredit crunch, putting pressure on distributorsthat rely on short-term credit

Solution

To keep costs low, Intel is introducingvirtual desktops that allow students to workfrom a stripped-down computer with data andapplications stored on a remote server

Virtual desktops are substantially cheaperthan traditional PCs, with cost savings of60% on up-front costs and 80% on annualpower costs

Intel assists its distributors in obtaining

letters of credit based on their contractualrelationship and works with distributors tocreate quarterly reviews to ensure financialstability

66

Intel used an example of pastsuccess to pitch a large-scale project

to the government

Intel molded its offering around thegovernments need for a complete,

low-cost solution

Intel kept prices and costs low byusing new technology and

supporting distributors

Sources: Computing.co.uk, FSG interviews with Intel, WimaxDay, ZDNet

Motorola: Reorganizing for Effective Client Management Through a Downturn


67/69

67

Challenge The economic downturn in Latin America is affecting the budgets of Motorola Enterprise

Mobility Groups most important clients: large companies and governments

Solution To avoid potential revenue loss and create opportunities for up-selling, Motorola isreorganizing client service around its top 15 accounts across Latin America

Strategy

Client Interface

Instead of relying solely on relationshipmanagers, Motorola created a multi-disciplinary team to engage its top 15accounts

Each team includes personnel from acrossMotorola, including experts in engineering,logistics, finance, marketing, solutions andsales

Tailored Performance Measurement

Instead of using standardized scorecardscreated by sales teams and seniormanagement, Motorola asks top clients tooutline the specific metrics that they would

like Motorola to use to evaluate itself in termsof service performance

Motorolas senior management compile andreview these criteria on a quarterly basis

Results

The teams are able to determine whichdiscipline is best suited to service specificaccounts

For example, Motorola found thatmanagement at a Brazilian oil companyresponded best to engagement byMotorola engineers

Motorola understands precisely how to serveeach client and can point to specific metricsto prove:

Areas of high performance Cases of improvement in service

Service areas in need of attention

Motorola aligns its goals with those of itsclients

Final Output Increased client retention and revenue per account through the crisis compared to

other regions

Motorola: Five-Step Process for Top Account Management


68/69

Client responds best to interactionwith Motorola professionals from:EngineeringMarketingSalesLogisticsFinance

Service Team:Mark Schulz (Engineering)Pablo Escobar (Engineering)Steve ONeil (Logistics)Jason Resendez (Logistics)Felipe Lerman (Sales)

Q1Value

Q2Value

CurrentQuarterValue

Trend

Cause forImprovement/

Decline inService

Next Steps

IndividualResponsible

forFollow-Up

Total systemdowntime (hours)

14 16 20Failure of key

server

Installredundant

serverM. Schulz

Average time torespond to technicalservice calls (hours)

12 9 3Implementeduse of pagers

N/A P. Escobar

Number of trainingsessions offered per

month3 3 3

Client satisfiedwith current

levelN/A J. Resendez

Average delay for

spare parts (hours)

36 38 27Better trackingof anticipated

parts needs

Continue

tracking

S. ONeil

Average signalstrength acrossterritory (dB)

60 62 74Brought new

antenna onlineN/A M. Schulz

kWh saved per month 175 178 160Seasonalvariance

Continuemonitoring

P. Escobar

Identify top accounts

Identify which function isbest suited to serve client

Create an appropriate

service team

Engage with client to createscorecard

Quarterly monitoring withclient and leadership

Scorecard for Motorola Client Alpha Illustrative Example

68


69/69

Frontier Strategy Group

Council on Emerging Markets

1150 18th Street NW

Suite 350Washington, DC 20036

Phone: +1 202.741.1333

www.frontierstrategygroup.com
http://www.frontierstrategygroup.com/http://www.frontierstrategygroup.com/

Documents

Next Phase in Latin America - 22 Oct Sao Paulo - Council on Emerging Markets (2)