Doing Business in Argentina

Doing Business in Argentina Argentina has a unchanging political structure and the government is working on bring outing economy. I would choose to produce and make do solar panels in Argentina through articulation Venture with an Argentina connection, which is one of the Investment entrance Mode. And I would send 1 in sales, 2 engineers, 1 accountant, 1 in shipping, 3 technicians, and 2 managers. Market reasons Firstly, Argentina has enriched solar resource. Argentinas eastern plains and north western regions atomic number 18 samplefor solar PV evolution.However, only 10 MW of solar hasbeen installed in Argentina to date, making it a great untappedresource (Grotz, Decundo and Ernst and Young). It indicates that the potential market for solar panels is huge. In addition, the efficient of solar ability is the most advert factor of solar panels, solar energy installations began as simple contraptions in Latin America precisely are increasingly led by technologically advanc ed providers deploying sophisticated equipment and expertise that makes contrasted troth almost indispens subject (Solar Daily).And my partnership has the best electronics package on the market it is a great hazard for my product to take a major part of market share in Argentina. Secondly, solar energy is one of the major renewable energy that Argentine government trying to develop. Argentina is the third-largest economy in Latin America, and one of the emerging markets around the world. However, the shortage in electricity is the major obstacle of the development. electrical energy demand continues to grow steadily in the fieldand forecasts suggest an ongoing annual increase of 6%.Estimates indicate that an additional 1 GW of new generationcapacity per annum will be necessary to quit this growingdemand (Grotz, Decundo and Ernst and Young). To solve the problem, Argentine government not only passed a law to check out that 8% ofelectricity demand should be generated by renewab le sourcesby 2016, but also actual the GENREN program to concentrate at least 1GW of renewable energy capacity (Grotz, Decundo and Ernst and Young). And 20 Mw of electricity are supposed to be converted by solar energy.With the encouraging and supporting of Argentine government, it is the best measure to introduce my product into the renewable energy industriousness. Why Joint Venture? The rattling first mend is from the companys interest. Since $5,000,000 has been spent in developing the electronics package and assembly machine, I need to stifle the costs of entering the new foreign market as much as possible. Through Joint Venture, I depose access to existing resources that the local company has in Argentina it takes slight judgment of conviction for my company to grasp familiar with the market and actual start my business.Time is money. Also, the advantages I have are the event technology of the business, human resource to train workers and jobs all I need is the local facility and less required workforce. I will send 3 technicians to Argentina to train limited workers before tidy sum and license my patents to the local company for a limited time. On one hand the business is able to operate smoothly once it started. On the other hand, given the fact that, Argentina is a country with high uncertainty avoidance, it shows my willingness of cooperating with the local company.Also, its necessary to sign a very detailed contract with the local company. Whats more, Argentina has a high Human Development Index and ranked forty-fifth among 187 countries (UNDP). Therefore, it will not take much time in training workers. Secondly, it helps my company to take a local go through. Argentina is an achievement oriented country, with a local company entering the market it disregards the perfume of unfamiliarity. In the mean time, since Argentina is a multi-culture country, when dealing with culture issue, a local company can provide support and reduce risks that due to unfamiliar of the culture.The most important is that, a local image represents local interests. The argument among nationalizing YPF S. A. , the oil and gas company owned by the Spanish energy monster Repsol (Romero), is the hottest issue recently. One reason for Argentine government to take over YPF S. A. is that YPF, hasnt produced enough to nourish up with Argentinas rapidly growing economythe companys proven reserves of oil and gas have also locomote substantially over the past few years (Weisbrot). From Argentine governments point of view, it pith YPF S. A. approximatelyhow did not represent the countrys interests. When corporate interests are not aligned with national interests, when companies are concerned only with profits, thats when economies fail, which is what happened globally in 2008 and what happened to Argentina in 2001 (Bronstein). In this case, it is crucial to form a local image in Argentina and being less foreign. Thirdly, it reduces the politic al risks in Argentina. IMF claims that in that respect is no nationalization trend in South America despite the moves in Argentina, its a very diverse region and we would not call what we are seeing a trend (Palmer).However, always being aware of potential political risks in Argentina is good to prepare ahead and reduce the passing as much as possible. Through Joint Venture, if a wide range of nationalization happens, it would reduce my loss of investing in establishing facility and share the risks with the local company. In addition, it allows me to be able to get involved into the relationship between the local company and local government. Fourthly, my company demand to get into the constancy as soon as possible.Since Argentina is a FDI favorable country and renewable energy industry is hot, it is a highly competitive industry currently. Argentina attracted US$743m (546m) in cleanenergy enthronization in 2010, ranking it 16th among G 20members. Its five-year growth rate for c lean energy enthronisationis 115% which places it second among the G 20 (Grotz, Decundo and Ernst and Young). As for solar energy, there are already some big companies involve in, like Sequel Power and Onyx Service and Solutions, Inc. , they admitted that South America is a horrendous growth region for utility-scale solar energy projects (Solar Daily).Not to mention when the EU begins to focus on the industry, the EU is the biggest foreign investor in Argentina, accounting for about half of the FDI in Argentina with EUs investment stocks worth 44. 1 one million million million in 2008 and important investments in areas such as telecoms, automotive or energy (European Commission), the competition would be drastic. At that time, the key point to win the battle would focus on technology. Through Joint Venture, not only my company would provide the latest technology in the U. S. , but also the local company is able to distribute the competitive product to local market in time.Fifthl y, through Joint Venture, it would be easier to send money back to the U. S. The financial issue would be the biggest problem to do business in Argentina. Due to the crisis in 2001, Argentina defaulted on its bonds and has since haddifficulty accessing the international credit market therefore, even though Argentine government is trying to develop renewable energy, A lack ofsupport for project development from financial institutionscontinues to be a barrier to renewable energy development inthe country (Grotz, Decundo and Ernst and Young).Without marcher from government, it is harder to develop a new company in a new industry. Therefore, the financial plan should be made in detail and carefully. The restriction on money transaction is tightened in Argentina huge amount of money need to go through the Central Bank to transfer to outside of Argentina. It would be easier for Argentina residents to do so. Argentina has placed trade barriers, like limits on payment of import services, to hold dear local industry and its trade surplus.And the critics described the policy as unbefitting any WTO member and oddly troubling because they limit the growth-enhancing prospects for trade (Miles). Also, the labor cost is much cheaper in Argentina than the U. S. , thus, I obstinate not to import products from the U. S. to Argentina, but to produce it locally. Last but not least, through Joint Venture, I am able to know the cost of living in Argentina, and provide my employees a reasonable hire while working in there.And the local company can assist my employees to get used to the smell in Argentina it will allow them to feel less culture shock. I will keep their positions in the U. S. , and ask the first group of employees that go to Argentina to share their experiences in the help of conterminous group of people to make full preparation. As the company in Argentina should be long-term, and I would like everyone in my company has the chance to work there, if I could. In this case, the coordination among the U.S. company and Argentine company will be better. One group of 10 employees in Argentina is fixed. And technicians are the most important, it needs 3 employees 2 engineers are able to develop our products suitable for Argentine circumstance 1 in sales, 1 accountant, 1 in shipping, and 2 managers would be enough to cooperate with the local company. All in all, considering the market factor and the business environment in Argentina, I would like to sell and produce my electronic package.I already have competitive advantage in my product, through Joint Venture it enables my business to develop smoothly and steadily in such a foreign market. Works Cited Bronstein, Hugh. Hugh Bronstein. 4 May 2012. 4 May 2012 . European Commission. Argentina. 18 April 2012. 3 May 2012