The other is corruption. While Transparency International has France listed as one of the more corrupt Western European nations (at #23 worldwide), Bolivia is ranked #102. The lack of effective rule of law in Bolivia is a significant impediment to business development.
In terms of business operating resources, France is superior. As one of the largest markets for construction equipment, not only is there an ample customer base, but the institutions are well-developed. Transportation networks and financial institutions are relatively strong. It is easy to do business in France, as there are few restrictions on capital flows, financing, and few impediments to business development. In contrast, Bolivia has many issues. The financial sector is poorly developed. While it appears to function for resource exploitation firms, it is safer to conduct transaction in other jurisdictions. The infrastructure is poor. Bolivia is a landlocked country so it is difficult to get equipment in and out. Capital flows are not as easy in Bolivia and the currency is not liquid.
Of the two countries, France has the most potential. Although Bolivia has more mineral and fossil fuel wealth, there are significant risks associated with entry into that market. By contrast, the French market is not only large but it is becoming more open. This provides sufficient opportunity for a new entrant. There is opportunity in Bolivia, but with foreign investment declining, the opportunities to gain a foothold in the market are slim. The rewards of Bolivia do not justify the substantial risks. In France, the competition might be more intense, but the opportunities are stronger and the risk level is low.
The most effective strategy for getting into the French market would be to establish a subsidiary. This is the typical method of entry into this market for heavy equipment firms.
There are no discernible benefits to setting up a joint venture and this is not the norm in the industry. Setting up a dealership would allow the firm to bring in equipment and set up a typical marketing structure for the industry in France. Because of the importance of after-sales service to French contractors, we should enter the market with a network of dealers, warehouses for parts, and a good-sized staff. A minor presence will not fill our potential customers with confidence and will make it more difficult for us to meet their needs.
The focus should be on construction equipment since that is by far the best market in France for heavy equipment. There is already significant competition. Therefore, the company should leverage some of its existing customers to determine if any of them have operations in France we can service. This would give us the opportunity to enter the market.
In terms of market penetration, we will need to price below our competition. Remember that the established competitors have been able to forge relationships with firms in the industry, and in order to win market share we will need to break these relationships. Price competition is the most effective way to doing this, because many firms are price-sensitive. In terms of product, we should focus on smaller equipment, where we are able to provide strong, high-demand product and a quality service offering (BuyUSA.gov, 2009).
CIA World Factbook: France. (2009). Retrieved May 3, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html
CIA World Factbook: Bolivia. (2009). Retrieved May 3, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/bl.html
No author. (2009). Market Research Briefs — Construction Best Prospect 2008. BuyUSA.gov. Retrieved May 3, 2009 from http://www.buyusa.gov/france/en/70.html.