Commercial Strategy Remains Top Priority for Brazil Execs

Frontier Strategy Group recently held an executive breakfast event in São Paulo, Brazil which gathered over twenty senior-level leaders of Latin America businesses, representing many US and European-based multinationals.  The event provided an opportunity for our executive clients to gain a deeper understanding of how Brazil is likely to perform over the coming quarters, along with key scenarios for Brazil’s upcoming elections.  Ryan Brier, FSG’s Head of Latin America research and moderator of the event, provided practical advice on how to position Brazil and make the case for investment relative to other emerging markets in LATAM and on a global scale.  Below are several of the key takeaways from the event:

Key Takeaway #1: Realigning Expectations around Targets for Brazil Will be Crucial Moving Forward
  • Confidence around the ability of multinationals to hit their 2014 targets is at a new low. 66% of executives in attendance have low or no confidence in their ability to hit their 2014 top-line targets for Brazil, while 72% of executives in attendance had low or no confidence in their ability to hit bottom-line targets. This is the lowest level of confidence that FSG has seen since it began polling clients around targets in 2011
  • Many executives voiced concern around rising costs in an environment of mediocre top-line growth, with several stating that they were forecasting flat or declining bottom-line growth this year despite an increase in top-line revenues. Rising energy and logistics cots were among the top reasons cited for this trend
  • Despite this poor performance, only 31% of the executives in attendance expected their 2015 targets to be lower than their 2014 targets, underscoring the need to realign corporate expectations around the potential for Brazil over the coming years
Key Takeaway #2: Executives Are Hopeful for Political Change, but Skeptical over Its Potential Impact
  • Executives are increasingly optimistic that Dima faces a serious challenger in Marina Silva, with many citing strong desire for change among the pragmatic voto útil as possibly providing a boost to Silva over Aécio Neves
  • The consensus was that a Silva victory would likely lead to a near-term boost in investment, which could serve to blunt the impact of declining government spending in 2015. However there was also a fair amount of skepticism that Silva would be able to tackle many of the structural reforms that multinationals feel Brazil requires
Key Takeaway #3: Setting the Right Commercial Strategy Remains the Top Priority for Executives
  • 42% of the executives in attendance reported that their top internal challenge over the next 18 months would be to set the right commercial strategy. This was in large part due to the fact that the top external challenge cited by executives was expected weak customer demand
  • For most executives, setting the right customer strategy went beyond rethinking customer segmentation and commercial resource allocation to also include ensuring that the targets they set for their teams were realistic in order to avoid a deterioration of morale among commercial staff

If you are an FSG client and would like more information about future events, please contact your client services director.  Not a client? Click here for more information about our services. 

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