Doing business in the Americas.

...

As 2004 drew to a close, Ailton knew that Compsis had several months of operating cash in the bank. Perhaps the best option was to wait out the current drought, expecting that the Brazilian government’s funding for toll concessions would rebound as predicted. On the other hand, once the government announced the reopening of concession grants, Compsis would have to wait for those contracts to be awarded, then delay while proposals were solicited by the concessionaires, then negotiate the prices and start the projects, assuming that Compsis won the bids at all.

It might be that Compsis had focused too intensely on electronic toll collection. Were Compsis to widen its product suite by focusing more on ATMS, SMV, or SGM, it could broaden its portfolio and spread the risk, albeit among much the same government and concessionaire buyers as for ETC. Compsis could even get away from its traditional higher-quality, higher-price strategy and aggressively pursue contracts for less expensive projects, such as setting up a series of emergency call boxes along a major highway.

But if Compsis really wanted to grow, then Brazil was ultimately a limited market. It was true that Compsis hadn’t been perfectly successful in its earliest international projects, but the team had learned crucial lessons about project management, cultural differences, and the complexities of finding a local partner. Yet Compsis had a small sales team, relatively inexperienced with international, public processes. Was Compsis ready to expand to the United States, where it could probably match the quality and beat the price of its competitors? If so, how should it enter? If not, should it go elsewhere instead, Latin America, Pakistan, Western Europe, or stay at home? Standing at this crossroads in the company’s history, Ailton evaluated the options. Which road should Compsis choose?

Many possible solutions can or could have presented Ailton and his company Compsis, some perhaps very simple and some others more complex that will take time to see results, despite these, one thing is certain and is that Compsis made the big mistake of focusing on a single product and rely on concessions that the Brazilian government would grant the time he wanted.

The service and product offers Compsis belongs to the tertiary sector and secondary being mainly toll collection on roads in brazil, it focuses on the production of technology products and programming services for various areas in which it operates. Its main suppliers of raw materials come from Brazil, but for patented electrical components the direct purchase is from manufacturers, the US being the main one and for distribution the company takes care of it for itself, but for smaller products those are purchased directly or through retail chains in that area. Apart from this company there are another 13 who are dedicated to create technology products and, like Compsis, fighting for government grants, but the only difference between these companies and Compsis is the magnitude of its operations, covering 33% throughout Brazil, and the fact the Compsis is the only one that has expanded its market to other countries.

Having said all this, it can be designed a business strategy focused on expansion into other international markets. This would be in Spanish-speaking countries, not only because of their developing road industry and technologies, but also in the work culture similarities that Brazil also features.

. A situation regarding the work culture and education, happened in India, when a construction company in South Africa allied to Compsis, proposed to outsource local technicians and engineers in India for installation, maintenance and updating of collector’s toll equipment. Unfortunately, the Indian contractor Compsis selected proved unable to do the job competently, necessitating four complete re-installations. Moreover, unlike the Australian customers who could afford high-cost systems, the Indian toll highway authorities were so sensitive to price that they would probably have been satisfied with a system far less sophisticated than the one they received. Lacking the experience of working in a developing economy so different from their own, Compsis ultimately completed the project having written a new iteration of software, but also having overrun the engineering segment of the budget by 100%. Instead of the comfortable margin Compsis customarily achieved on its other ETC implementations, the India project was a wash, no losses, but no profits either.

Continuing and concluding with the proposed business strategy, Compsis could take advantage of the free trade agreement MERCOSUR, which includes most countries of South America and Central America, that way could export their products and thus end the dependency of one alone. On the other hand, most of the Latin American countries are need simple and inexpensive solutions that would be easy for the system to integrator to implement. Bolivia, Peru and other countries had also advised Compsis to get a local partner in maneuvering around the corrupted system and received advance notices on bids.