Feasibility Analysis: Chilean Subsidiary
Matthew Dommer
Cornerstone University

Introduction GMS Inc. is a privately held manufacturer of premium outdoor apparel based in the United States. At present, corporate headquarters and the company’s sole 80,000 square foot manufacturing facility are located in Charleston, South Carolina due to shipping port access and the state’s right-to-work status. Raw fabrics are purchased from international vendors and US suppliers and include nylon/natural weaves, Gortex, manufactured high efficiency liners, and down fillers. GMS products are sold through upscale retail outlets generally specializing in performance outdoor apparel used in alpine skiing. Annual sales are at 100,000 units per year with gross revenue of $20,000,000. Total current employees are 100. GMS has developed plans for a new line of outer apparel utilizing a liner made from an Alpaca premium long fiber weave with a Gortex laminate. Alpaca was chosen for its superiority to wool and other natural fibers. It has higher durability, softness, water repellency, and broader thermal properties than wool. It is flexible at very cold temperatures, has inherent stretch for mobility, retains thermal properties when wet, and is hypoallergenic. It is therefore better suited to this intended purpose than most manufactured fibers. As a renewable resource and biodegradable product, alpaca fiber is consistent with GMS environmental policies and offers the opportunity to market it as a “Green”, environmentally friendly product.
Purpose:
This study will explore the feasibility of creating a subsidiary company in Chile. The company, GMS Chile, would produce the appropriate alpaca fiber with a target of being the sole supplier for this product line. This will allow superior in-house quality control and selective breeding practices for required fiber production. Operations will include ranching, sheering of the required number of alpacas, and appropriate milling of the raw product into pre-production bolts. The product will be subsequently shipped to the Charleston facility. The following study will explore the advantages and challenges of this venture, including cultural issues, Chilean ownership and property rights, capital availability, human resource implications and leadership training program, supply chain analysis, transportation challenges, insourcing and outsourcing optimization, and political and economic implications. Finally, the overall key challenges to GMS will be assessed along with implications to our core values and Christian Worldview.
Cultural Assessment To summarize, Chile is an advanced Latin American country with strong democratic, free market, and Christian ideals. It is a country learning about its history and capitalizing on its resources. Chile was colonized by Spanish, German, and English settlers, subsequently deriving its cultural attitudes predominantly from Spanish tradition and to a lesser extent from the other European settlers and a small indigenous population. The official language is Spanish, but English is widely spoken as well as enclaves of German. Ninety percent of the population identifies as Christian, with an overwhelming majority being Roman Catholic. The government of Chile maintains a close relationship with the Catholic Church. The population of just over 17 million is made up of predominantly people aged 25 to 54. With another 10% in the 55 to 64 year range, a large segment of the population remembers the political and economic upheaval of the 1970s and 80s (CIA, 2013). After this period, marked by rapid swings between the socialist government of Salvador Allende and the authoritarian government of Augusto Pinochet, as well as a centrally planned economy versus free market reforms (Cran, 2002), the population has generally embraced democracy and capitalism. In addition, most likely secondary to this political and economic construct, the work ethic in Chile is generally quite intense with an average workweek of 45 hours (Government of Canada, 2005). Life expectancy is on par with other developed countries, but commitment to education, as noted by spending about 4.2% of GDP, lags behind. Cultural challenges to the GMS expansion into Chile will be anticipated and should be relatively minor. English-Spanish bilingual employees are numerous and practical, business oriented, Spanish language courses are readily available and can be outsourced. The overwhelming predominance of Christianity, in general, will allow for minimal conflict with GMS’s biblically oriented core values as discussed later in this study. Some allowances for Roman Catholic holidays will need to be made, as the vast majority of the population is of this denomination. Observance of Catholicism’s holidays is ingrained in the fabric of the country, supported by the government, and expected of the business community. The tradition of siesta does not necessarily need to be observed in agriculture and manufacturing. Working into the late evening is common practice in the office setting. The remainder of cultural differences from US practices are a matter of education and sensitivity and can be addressed in a training program, as outlined later in this report. In day-to-day business practice, a 48-hour workweek is common, punctuality is stressed, dress is formal, and work ethic is generally more intense than other Latin American countries. Managers are expected by their subordinates to have a higher level of experience or education and decisions made by superiors are rarely challenged. Decision-making is typically left to superiors. Input from labor positions is generally minimal, and desired input must be directly elicited. Passive aggressive interactions are pervasive. “Machismo” beliefs still exist, with women generally filling more supportive roles. Regardless, women with advanced degrees and experience function in positions of authority and are universally respected. Overall, working conditions and recognition drives motivation. Chilean communication egocentricities include minimal observance of American recognized perception of personal space, touching the shoulder or arm during conversations, and animated expression (Government of Canada, 2005). Conversation about religion or politics should be avoided. Training on Chilean communication, as well as American communication training for Chilean managers, for leaders will be necessary. It is beneficial to develop personal connections and relationships with business contacts, and accordingly, expectations among colleagues related to promotions or contracts become more complicated. Finally, there continues to be a degree of bigotry on the part of Chileans toward Peruvian immigrants. They are perceived as taking jobs, rightfully Chilean (Government of Canada, 2005). This may pose hiring issues for GMS. Overall, transition to manufacturing in Chile does not pose insurmountable challenges.
Chilean Ownership and Property Rights Analysis completed through Michigan State University's Global Edge, The International Property Rights Index, and The Heritage Foundation's Index of Economic Freedom shows a country at the forefront of South and Central American personal and corporate property rights protection. Foreign ownership of industrial and real property is allowed under Chilean law. It is regulated under the Civil Code articles 1793 through 1896 (“Property Rights Index in Chile,” n.d.). Licensing a foreign business in obtaining title to real property is similar to processes in the United States. Foreign entities are allowed to obtain the equivalent of a US Tax Identification Number, a RUT, from the Chilean National Tax Service (Foreign Investment Committee, 2013), following which the purchase of property parallels that of the Chilean domestic process. Evaluation of the International Property Rights Index shows Chile ranked number one in the region and 26th in overall global rankings. This ranking was made up of the main indices supported by subcategories as follows. General property rights are compiled as a composite of judicial independence, the rule of law, in prosecution of corruption. Chile scored number one in all categories except the rule of law, in which it scored number two. The next primary category, Physical Property Rights, is determined by scores garnered for protection of physical property and registration of property processes in which Chile scored second in fifth respectively in the region. Finally, legislative, intellectual property protections, patent laws, and copyright laws determine the last general category, Intellectual Property Rights. Chile scored number three in the region overall in this category (International Property Rights Index, 2013). Findings by the Heritage Foundation were similar as indicated by their Index of Economic Freedom. In the categories of Property Rights and Investment Freedom, Chile garnered a score of 90 out of 100, which placed it in the “Very Free” category. Further study showed improvements in anticorruption and transparency laws with the continued support of property rights an avoidance of expropriation. Overall, Chile was ranked seventh in the world on the Index of Economic Freedom (“Index of Economic Freedom,” n.d.). Control of corruption, limited government interference and minimized imminent domain issues, as well as strong support for corporate in personal property rights create a positive environment for GMS expansion into this market. Anticipated expenses in this area are commensurate or less than corresponding US issues.
Raising Necessary Capital Although this venture will draw the majority of its funding internally, an initiative presently exists in Chile that seeks to expand new businesses and entrepreneurship within the country. Total initial startup costs are estimated to be $20,000,000 as defined below. It is estimated that half of this could be raised from government and private capital funding programs. Analysis of projected capital needs is required, along with an appropriate business plan in order to obtain external funding. Primary initial capital needs include initial animal heard of 1000 (average of $10,000 per animal), 1000 acre ranch to allow for growth (The current market price of Chilean Patagonia grazing land is $1000 per acre by current real estate analysis. There is a Value Added Tax on leased property (“Property Rights Index in Chile,” n.d.)), as well as ranch facilities and mill facility (190,000 square foot facility on market for $1.4 million). Total of these one-time expenses is projected at $12.4 to $13 million. Veterinarian expenses are typically $100/animal/year (initially $100,000 increasing as heard grows). Food required is $50/animal/week ($2.5 million). Current factory labor wages in Chile are $32/day/employee (total labor costs of $848,000 for 100 manufacturing and agricultural positions; similar expenses are anticipated for 15 management positions). Healthcare is generally not provided. Further purchase of transport vehicles, equipment, regulations, and miscellaneous expenses will total $1 million. In total, initial capital layout is estimated at $20,000,000. Each alpaca will average four kilograms of product per year for an initial output of 4000 Kg. This is the equivalent of 4000 jacket liners. At optimal operation, the herd will be increased to 8000 (The 1000 acre ranch will sustain eight animals per acre) (Spearman, 2000).
There are roughly 27 different funding, grant, and loan programs made up of private investors, universities, and government agencies through new business, which is encouraged in Chile. These entities are coordinated to offer start-ups and expansions financial, human, and social resources, thus creating non-profit business “incubators” (Chandra, Silva, & Alejandra, 2012). These business incubators are further organized and represented by two primary groups. First, Chile INCUBA is an association, representing the incubators, within the Chilean government. In addition, CORFO, the Chilean Economic Development Agency, is the government agency responsible for the promotion of business and entrepreneurship support. Chile has further removed many institutional, regulatory barriers that had previously choked the flow of equity (Chandra et al., 2012). Overall, the philosophy behind granting funding follows a preference toward potential trade volume and job creation. The following is a listing of potential capital resources ($US equiv.):
Seed Capital (CORFO) 75% of total project to $82,000
Secondary Capital (CORFO) 75% of ongoing needs to $1.4 million
Tech Package (CORFO) 80% of budget to $370,000
Angel (Angel network) average of $30,000
Gov’t backed bank loans up to $80,000
Direct Gov’t Investing $300 million invested between 1991 and 1996
Risk Capital (CORFO) average $3 million
Direct Bank Loans Variable
(Chandra et al.)
Newly formed Aurus is a venture capital group of Chilean businessmen with resources exceeding $35 million (“ChileDigital 2013,” n.d.). It is likely, that with the application to the appropriate investment and incubator programs, that GMS will obtain one-half of the estimated initial capital requirements or $10,000,000. The application to these individual programs should commence immediately following approval of this venture. As noted, assistance with bureaucratic navigation can also be accomplished through INCUBA and CORFO.

Human Resource Implications
GMS Inc. will be creating agricultural, ranching and mill jobs in Chile beginning with the introductory phase of operations. GMS Inc. will follow all Chilean fair employment practices during the recruitment and selection processes (Chile, Bureau of Democracy, Human Rights and Labor, 2007). GMS Inc. has specialist’s that comprehends the laws of employment and will recruit based on the country and local regulations, relating to fair employment practices. GMS Inc. is dedicated to fair employment practices and prohibits any form of illegal discrimination. Additionally, we observe all labor, health, safety and employment laws wherever we operate. GMS Inc. employment standards are directed by the principles provided by the United Nations and the International Labor Organization (Chile, Bureau of Democracy, Human Rights and Labor, 2007). These principles apply to GMS Inc. operations and are the workplace behaviors required for all of our employees. At all of our company facilities, we are continually engaged in third-party audits as part of an ongoing approach to improve our practices affecting human rights.
Fair Employment Practices
GMS Inc. will recruit and select employees by publishing internally and externally throughout the company. The roles and responsibilities will be clearly defined in the recruitment process and a job profile description will be developed for each vacancy. Chilean legislation requires employers to comply with universal regulations such as, signing a labor contract, paying the minimum wage or higher, supplying a safe and healthy workplace environment, and contributing to social security (Chile, Bureau of Democracy, Human Rights and Labor, 2007). The minimum wage currently is 193,000 pesos (386USD) per month and employees are paid bi-weekly. The ordinary workweek cannot exceed 57 hours, including overtime, but the traditional workweek is 45 hours and overtime cannot exceed 12 hours per week. Employers and employees must contribute to the social security system. The social security benefits include pension, unemployment insurance, health insurance, and workers’ compensation insurance. The total contribution from a worker’s paycheck is 24% of the system and another 12% to the pension (Economy, 2004). GMS Inc. will pay wages that approximate the median for the job title and description in Chile and will include 15 days of vacation and all national holidays paid for all employees. The workweek for all employees will not exceed five days, and some job descriptions will be required to work rotating Saturdays. All employees will be given a paid one hour lunch break and have the option to take an un-paid half hour break throughout the working day. All hourly employees are paid in compliance with The Labor Agency, who is responsible for all labor laws, enforcement, and interpretation. Chile is a right to work nation that forbids collective bargaining and the right to strike (Investor's Business Daily, 2011). An effective grievance program is vital to keep employees at GMS Inc. productive. We will receive feedback on issues and concerns from individuals and work groups in order to resolve complaints and problems.
Training and Development
The GMS leadership-training program was designed to enhance the development of leadership skills globally for all management. The global economy has many academically talented individuals, but many are lacking in leadership skills to move companies to the next level of competition. The goal of the GMS leadership training is to create a network of managers between emerging markets and western markets. This program will prepare managers and executives to: * Understand how to use the leadership frameworks and pillars to contribute effectively in the working areas of finance, marketing, branding, and operations. * Learn the correct leadership skills necessary to make efficient and effective decisions in a global organization. * Understand cultural differences between different countries and knowing which leadership styles and behaviors are necessary to compete in a global organization.
This program will create a results-driven environment by developing leadership styles and ethnic awareness to propel global operations. GMS leadership will provide management and senior executives with a customized training to build successful teams, leaders, and managers.
Health and Safety
GMS Inc. views employee health and safety as a priority of our corporate culture. Workplace safety is crucial to the overall welfare of our employees, and it will be measured as a gauge of our operational success. At GMS Inc., we comply with the U.S. Department of Labor Voluntary Protection Program (VPP) and we received a certificate from the Occupational Health and Safety Assessment System (OHSAS). GMS Inc. will comply with The Chilean Ministry of Health and Labor in addition to implementing the VPP and OSHSA regulations to our overseas operations in Chile. GMS Inc. will measure our safety performance with the U.S defined recordable incident rate (RIR) in Chile. Our workplace will maintain hazard-free conditions and our workers will not be exposed to dangerous substances and chemicals. Additionally, GMS Inc. will enforce U.S. fire safety codes in Chile.
Performance Management The GMS leadership-training program was designed to enhance the development of leadership skills globally for all management. The global economy has many academically talented individuals, but many are lacking in leadership skills to move companies to the next level of competition. The goal of the GMS leadership training is to create a network of managers between emerging markets and western markets. This program will prepare managers and executives to: * Understand how to use the leadership frameworks and pillars to contribute effectively in the working areas of finance, marketing, branding, and operations. * Learn the correct leadership skills necessary to make efficient and effective decisions in a global organization. * Understand cultural differences between different countries and knowing which leadership styles and behaviors are necessary to compete in a global organization.
This program will create a results-driven environment by developing leadership styles and ethnic awareness to propel global operations. GMS leadership will provide management and senior executives with a customized training to build successful teams, leaders, and managers.
Pillars of GMS GMS leadership has adopted a simple principle of pillars for the company’s bases of citizenship, corporate efficiency, and evidence based. GMS believes that their strong pillars are the core foundation for all decisions and procedures within GMS. The pillars are to build fundamental principles and use as guiding core values in all levels of decisions. GMS uses the reminder statement of “stand strong, stand tall” for a routine reminder of our pillar core values. GMS leadership also believes that all leaders within GMS are the pillars for their people, which in return create pillars for the company. It is the mandate within GMS that all levels of leadership will participate in a rigorous training on the fundamentals and principles of our pillar management. Our leadership will emerge with the ability to “stand strong, stand tall” and immediately begin providing an environment of change and empowerment. The training will also allow them to provide an analytical analysis using GMS’s pillars of success. GMS has deployed a companywide graphical interface that aids in an employee’s desires to embrace the pillars of GMS.

In the pursuit to continually, grow GSM’s profit margins we are stretching our business globally. Although the location will change around the world, GMS will maintain its principle of pillars to organically local employees within our foreign operations.
New Leader Investment: GMS will invest in its new leaders through a consistent, comprehensive program providing external hires and internal promotions with the skillset to perform at a high level of reliability in the United States and Chile. This will consist of outsourced professional learning sessions integrated with on-the-job training and support. All learning resources will be available on the corporate intranet.
One-Up Responsibilities The manager of a new leader is responsible for guiding the orientation process, monitoring ongoing performance, and overseeing the departmental and cultural orientation. Please review the class syllabus for all leadership-training classes. Before each session, meet with your new leader and review their expectations and what they hope to learn. After each session, ask what the leader gained from the event.
Leadership Training Syllabus
New Hire Orientation * Two-day general corporate orientation for external hires.
Leader Resource Training (One-hour session in month 1) * Review leader resources including peer support, HR support, and intranet resources. * Review GMS strategic initiatives and administrative organization. * Common leader questions. * Review leader responsibilities related to risk management and compliance.
General Leadership Elements (One-hour session in month 2-3) * Review management HR issues. * Review key aspects of GMS HR policies. * Review behaviors that create or reduce lawsuits, compliance issues, and low morale. * Review general leadership expectations. * Review methodologies for providing constructive, fair, and factual employee criticism. * Review general legal principles. * Review GMS compensation philosophy.
GMS Strategic Leadership Issues (Two-hour session in month 3-4) * Review GMS’s mission, vision, core values, culture, and key metrics for success. * Review strategic goal planning and data analysis methodologies. * Review metrics data presentation and analysis. * Review GMS policies on diversity, sustainability, quality, safety, process improvement, and process management. * Homework: identify three areas for further individual professional development with completion accountability and presentation to One-Up.
Specific Department Orientation (Two-hour session with One-Up) * Review responsibilities and expectations specific to department. * Review performance analysis form and process. * Review ongoing leader reports and standard meetings. * Review payroll responsibilities and processes. * Review budget responsibilities and processes. * Review department interdependencies and relationships. * Review department goals and objectives. * Review computer applications, equipment, supply procurement, and capital request procedures. * Develop specific continuing education and personal development plan with ongoing review meeting with One-Up. * Review department specific safety issues.

Advanced Leadership Curriculum (One day session within first year) * Behavioral Preferences (DiSC) * Leading by Example. Leading Through Inspiration. Leading Through Acknowledgment and Encouragement * Interviewing Methodologies * Evidence Driven Improvement Methodologies * Effective Communication in Business * Constructive Criticism and Coaching * Team Leadership * Conflict Management * 360 Evaluations * Change Management and Leadership
Leadership Chile (Individualized language and cultural training for domestic leaders with responsibilities in Chile and transfers. One-day session.) * Conversation and communication * Etiquette, punctuality, dress, and work ethic * Chilean management * Catholicism * Socioeconomic issues and norms * Trans-cultural issues and immigrants from Argentina and Peru
Leadership US (Individualized language and cultural training for Chilean leaders with responsibilities in the US. One-day session.) * Conversation and Communication * Etiquette, punctuality, dress, work ethic * Management in the United States * Multiculturalism, Judaism, Islam, and other religions * Socioeconomic issues
GMS Inc.’s leadership training focuses on developing talents to create comprehensive organizational leaders to shape our future. As our company grows, developing strategic thinking skills with our employees is paramount in staying a step ahead of our competition.
Global Supply Chain The United States-Chile Free Trade Agreement (FTA) went into effect on January 1, 2004 (Economy, 2004). The FTS is an agreement that removes tariffs and opens free markets, which will reduce trade barriers for: * Services * Provisions for intellectual property protection * Regulatory transparency * Trade of digital products without discrimination * Maintains anticompetitive business conduct * Implements and requires labor and environmental enforcement
In 2004, 80 percent of exports to Chile became duty free, and tariffs on other products have been phased out (Carrigg, 2004). To become eligible for tariff-free usage through the FTA, products need to meet the “Rules of Origin”. GMS-Chile will vertically integrate with GMS Outerwear in Charleston, South Carolina; however, as an alpaca ages the micron count increases and it produces wool that does not meet GMS Outerwear’s standards. GMS – Chile will work with vendors globally who will sell our lower quality wool to other manufacturers. Chile is located on the southwestern coast of South America with approximately 20 seaports (Global Edge, 1994-2014). The location of Chile makes it accessible to the global supply chain using sea freight. GMS-Chile spins all of their alpaca wool into yarn and ships it in various colors. The vertical integration of GMS-Chile with GMS-Outerwear in the U.S. allows our company to keep our supply chain to a minimum. GMS-Chile does not reside in a duty-free zone and is required to contract the services of a customs agent when exporting yarn valued at over $1,000.00 (Carrigg, 2004). Current Chilean export policies allow for GMS-Chile to defer import duties up to seven years on the spinning mill equipment purchased in the U.S. and shipped to Chile (Estimated cost for the spinning mill is $25,000) (Carrigg, 2004). Additionally, Chiles’s Value Added Tax (VAT) reimbursement policy allows GMS-Chile to recoup the VAT paid when purchasing goods intended for the development of alpaca yarn (Economy, 2004).
The alpaca yarn will be shipped from the Port of Valparaiso in Chile to Charleston, South Carolina and GMS Inc. will incur the shipping, freight, labeling, insurance, and non-trade barrier costs. All vendors purchasing low quality wool from GMS-Chile will bear the responsibility of costs associated with shipping and arranging their own supply chain. To avoid tariffs from Chile to the U.S., all alpaca wool will adhere to the “yarn forward” rules requiring yarn production in Chile or the U.S (Carrigg, 2004). Our Alpaca farm shears, two times a year because of the large number of alpacas on the farm. The costs incurred with non-tariff trade barriers, freight, packaging, labeling, and shipping costs will be offset with the increased demand for alpaca wool in GMS-Outerwear clothing. It is the goal of GMS-Chile to produce the highest quality alpaca yarn in effort to increase demand for our outerwear clothing line. As the demand increases in the outerwear line, consequently GMS-Chile’s global supply chain expenses will also increase. Our long-term goals include efficient production in Chile to reduce the non-trade barrier, freight, packaging, insurance, labeling and shipping costs in supplying alpaca yarn to U.S. operations.
Transportation Implications
Chile is more than 4,000 km from north to south with the metropolitan areas located in the middle (Global Edge, 1994-2014). The majority of its diverse manufacturing takes place in Santiago, Chile and the surrounding regions to capitalize on reduced transportation costs to the primary seaports. Along the southwest coast is the Pacific Ocean, which has roughly 15 small seaports and five large seaports. At Chiles exit points, 45 percent of shipped exports go through Valparaiso and Biobío because of their large capacities and centralized locations (Volpe & Blyde, 2013). Chile has a strong transport infrastructure and is ranked 37th of 139 countries worldwide. In the mid 1990’s, Chile began a concession’s program to expand and modernize roads, airports, and seaports. Included in this program was expanding Highway five (Panamerican Highway) which is one of the primary roads connecting the north and south regions. In addition to expanding Highway five, Santiago has added four new highways with an electronic toll system to keep traffic flowing (Volpe & Blyde, 2013).
When goods in Chile are ready for export, trucks from the manufacturing site to the intended seaports or airports transport them. GMS Inc. is scouting the outskirts of Santiago, Chile for the feasibility location of GMS-Chile because of the easy access to seaports, highways, and airports. The intended seaport for GMS-Chile would be Valparaiso approximately 100km north from the potential location in Santiago (Global Edge, 1994-2014). Direct flights are available from JFK in New York, U.S. to A. Merino Benitez in Santiago, Chile. The feasibility, location in Santiago, Chile, is a great location for accessing seaports, highways, and airports for exporting our product. Additionally, Santiago, Chile is readily accessible to employees from GMS Inc. to GMS-Chile to monitor and improve business operations.
Insourcing and Outsourcing
GMS Inc. will outsource the startup of GMS-Chile to build the operations for a farming ranch with a spinning mill. Outsourced personnel will oversee the startup operations from start to finish, but will have scheduled meetings with GMS Inc. management. Our challenges for this phase include building relationships in Chile and implementing project timelines. After the startup phase is complete, a full staff of ranchers and a manager will be employed by GMS-Chile. Shearing alpacas is an occurrence that takes place two times a year. However, skilled shearers are vital to maintain the integrity of the alpaca wool prior to processing. Outsourcing the shearers and operators of the spinning mill is necessary to keep labor costs low, but presents possible quality and timeline problems. All facets of shearing, sorting, spinning, and packaging will be reviewed on a regular basis to determine if the objectives are being met.
All entities in product development will remain with GMS Inc. employees. Some of the product development responsibilities include contacts for purchasing our products, determining the variety of the product produced, marketing and advertising. Quality Control will remain the responsibility of GMS-Chile to ensure consistent and ample production of supplies for GMS Outerwear. A transport company will pick up the finished product from GMS-Chile in Santiago and deliver the goods to the Port of Valparaiso for shipping. As GMS Outwear grows and demand for alpaca yarn increases, insourcing and outsourcing responsibilities will be re-evaluated to ensure optimal productivity and profit.

Economics of Chile
Many analysts have determined Chile to be the most fundamentally sound and competitive economy in South America. Chile’s successful economical system starts with their sound policies created for many decades (CIA, 2013). These policies have allowed the country secured access to foreign markets, strong investments, and have reduced the impact of external economic shocks. Some of their most recent economic success has been demonstrated by their minimized impact from the global financial crisis, along with the massive earthquake in February 2010 (CIA, 2013). Chile’s strong economic growth has been accompanied by targeting social assistance programs, which has caused a great decrease in the poverty level. The only continued struggle for Chile’s economic system is the large gap between the rich and poor (CIA, 2013). The backbone of Chile’s economy is its market-orientated policies, which induce high levels of foreign trade, as well as its solid financial institutions controlled by robust proven policies. This combination of economic structure gives Chile the strongest sovereign’s bond scores in South America (CIA, 2013). Chile’s exports add up to one third of the GDP, of this, three quarters are commodities. The strongest of these is copper, which alone provides 19% of the revenue to the Chilean government. Though the recent global financial crisis, Chile has maintained a 10 year average of 5% growth overall. This growth is the billboard for Chile’s strong economic system (CIA, 2013).
Global Trading Chile has taken proactive actions to advance their globalization through utilization of free trade agreements, most recently opening trade with the USA in 2004. They have also established trade agreements with 60 other countries, including China, India, Mexico, South Korea, Mercosur, and the European Union. Chile has also joined the Trans Pacific Partnership trade agreement with the United States and nine other countries (CIA, 2013). Over the course of 2012, Chile set a record of direct foreign investment flow of $28.2 billion; this is a 63% increase over the previous record year of 2011 (Meyer, 2014).
Chilean Financial Chile’s government uses a countercyclical fiscal policy, which accumulates surplus of sovereign wealth funds during periods of high commodity prices along with economic growth. They typically allow deficit spending only when commodity prices are low as well as economic growth. These sovereign funds, which equate to $20.9 billion, are mostly kept out outside of Chile and separate from Central Bank reserves. Chile recently used these funds to finance stimulus packages during the downturn of 2009 (Meyer, 2014). In 2010, Chile became the first South American country to sign the OECD Convention. This commitment shows foreign nations, they will not partake in illegal or unethical financial practices.
Summary
Chile has established itself as an economic power in South America and a political leader in the continent. Following liberal economic reform and social activism Chile has managed to reduce the gap between the rich and the poor it is far from eliminated, but it was able to expand its middle class, bringing prosperity to more Chileans. Along with greater economic status, Chileans have become better educated and more involved in politics demanding a more representative government and stronger democratic institutions.
Evaluation
Chile has been applying methodical improvements to their economic structure. They have been gaining substantial wealth and gain of GDO for over thirty years. They have successfully secured their financial future when compared to fellow emerging countries (Meyer, 2014). This strong growth eases any concerns of near future economic downturns and provides comfort that Chile has a solid economic system for many years to come.
Politics
The United States has maintained friendly relations with Chile since their civilian democratic rule in 1990. Even today, the Obama administration continues to rely on these traditionally strong ties and mentor Chile’s leadership within the Western Hemisphere. Reciprocal commercial relations remain predominantly strong; since the free trade agreement, the amount of goods traded has surpassed three times since 2004 (Meyer, 2014). The Chilean government has also become an advocate for regional stability along with fostering the development of clean energy.
Political Situation The current president, Sebastián Piñera, is completing a four-year duration of the presidency. Through Sebastian’s term, he has lacked the majorities in both Chilean’s government houses, to advance his business friendly items. Although Sebastián has won support for numerous incremental policy reforms, he struggled to manage a series of popular protests of concerns over the education system and energy policies (Meyer, 2014). Analytical researchers continue to support that the Chilean population has resorted to these tactics to fully capture the governmental attention of their dissatisfaction for the government’s decisions, which is viewed as being non responsive to the voters and not supportive to lessen the gap of the high inequalities. The previous President, Michelle Bachelet, was reelected for a new four-year term, which will start in March of 2014. Her center-left “New Majority” campaign has won the majorities in both Chilean houses of government. The predominate components of her campaign revolve around reform of education, as well as fiscal policies that will reduce inequality and improve social mobility. Bachelet will encounter many obstacles to hold her ideological diverse collation together. The toughest challenge will be to gain the support from nonaffiliated and opposition legislators.
Evaluation
The current politic environment within Chile has proven a solid history of improvement and successful transformation. Based on the information provided, there is proven evidence of a solid government that welcomes foreign growth and capital gain for its country. Currently, we are not aware of any known political obstructions that would prevent GMS from successfully establishing a Chile branch of manufacturing.
Religious Beliefs Chile has a long-standing history and culture of Roman Catholicism, and subsequently the majority of the population considers themselves Catholic. Since 1970, there has been a mild downward trend of Catholics; however, there has been an increase in protestant population. In 1970, 90% of the population was Catholic, and only six percent were protestant. In 1992, only 76.9 % declared they were Catholic, and 13.1% were Evangelical or Protestant (Meyer, 2014). According to a 1992 census survey, seven percent of the population is indifferent to religion and is an atheist. Although this number has increased since 1970, it’s only risen by four percent and not believed to be an accelerating trend. The remaining religions in Chile include Christian Orthodox and Jewish.

Evaluation
Chile has a very established, and although separate from government, recognized religious foundation. The majority of the country is a believer of God; versus only 7% are atheists. This strong religious foundation will allow for a mutual understanding of our higher power and to work in accordance with our biblical charter. There are no perceived issues with biblical clashes and GMS can assume a frictionless acceptance.
Key Challenges
In an effort to mitigate possible risks associated with conducting business on foreign soil, GMS conducted a thorough feasibility study utilizing verified research methodology. This study focused on seven primary areas of business development including: Cultural challenges Ownership and property rights Methods of raising capital Human resource implications Global supply chain Transportation implications Insourcing and outsourcing issues
The research conducted provided GMS with additional insight and business intelligence needed for the operation of a successful Chilean company. At this point, no additional research or verification will be necessary. Based on the findings of the feasibility study, GMS did not identify any key challenges that would hinder the growth or performance of the company. Additionally, the study further supported the decision made by GMS to operate within the country of Chile.
CONCLUSION
The feasibility study indicated strong parallels in the business behavior, political, and socioeconomic influences to those found in the United States. Throughout the many phases of this feasibility study, data has been collected that supports Chilean expansion. Indications are that this venture would prove to be successful for GMS as well as provide business growth for the country of Chile. Based on the results of the feasibility study, it has been determined that GMS has identified a feasible business opportunity. The GMS feasibility high performance team recommends moving forward with the next phase of business implementation.

References
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