Brightstar Corp.'s strategy concentrates on those customers who might not previously have had access to cellular service because of bad credit. In the 16 Latin American countries where the company operates, roughly 85 percent of its customers use pre-paid service – the alternative to subscribing to calling plans, which demand a relatively good credit record. The company believes that the pre-paid market segment will show the strongest growth in the United States in the next few years.
"You have 50 percent penetration in the U.S. now, but people have focused on the creditworthy customers," Mr. Fumagali says. "The next wave is to go after the creditworthy-challenged individuals. You do that through the pre-paid market. That is something we clearly learned in Latin America."
Besides its clear market focus, Brightstar hopes its fulfillment systems will replicate well in the U.S. market. "It's a value proposition – we have the ability to provide services over and above your typical wholesale distribution," Mr. Fumagali says. "We have put in place integrated supply chain processing. We've done that successfully in Latin America, and we're working with Verizon and some other customers to do that in the U.S."
Not Business as Usual
It is noteworthy that Brightstar turned traditional business wisdom upside down. Most companies establish domestic markets first and then build their exports by copying a U.S.-based sales and distribution model. Instead, Brightstar decided to start out selling cellular phones in Latin America. In 2002, the company sold $420 million worth of phones and services abroad.
With expected revenues of $1.2 billion this year, Brightstar offers proof that some traditions were meant to be broken. And that spirit of re-invention offers another strategic advantage for small U.S. exporters.
"We have changed the paradigm of how business is done in Latin America – at least in our space," Mr. Fumagali says. "There are a lot of people who are traditional exporters – they sell to the customers from the U.S. and provide support from here. Even though the product flows from here to Latin America, I'm not sure we're an exporter in the traditional sense of the word. We operate as a local company in each of the markets we operate in, providing local support and acting as a vendor from here to our legal subsidiaries. Doing it this way has made the difference." Previously, customers typically had to wait as much as two months to receive a new phone, Mr. Fumagali says, but Brightstar can deliver the goods within 48 hours.
Yet another strategy that has helped small businesses compete against larger companies is manufacturing abroad. The Commerce Department study indicates that NAFTA helped spur small companies to export to Mexico and Canada – such exports increased by 127 and 118 percent, respectively, between 1992 and 1997. But the move by many large U.S. companies to manufacture more goods in Mexico has been mirrored by many small companies, and not only in Mexico but around the world.
About 40 percent of HUSCO's exported goods, for example, are manufactured abroad. The company has two foreign factories – in England and China – that cater primarily to foreign markets.
"The most ideal situation," Mr. Ramirez says, "is to manufacture a product for each major market at that market," to avoid duties and to reduce freight costs. "We try to do that when we can. Over time, we expect to be manufacturing 60 percent of all goods abroad."
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