Michael Chu

Senior Lecturer of Business Administration

In his academic research and teaching as well as a practitioner, for the last two decades Michael Chu has focused on business in low income segments in general and the use of commercial platforms as a response to social issues in particular.

Michael Chu was appointed a Senior Lecturer in the Social Enterprise Initiative of the General Management Group of the Harvard Business School in July 2003. He is also Managing Director of the IGNIA Fund, a venture capital firm dedicated to investing in commercial enterprises delivering high impact goods and services to low-income populations in Mexico, which he co-founded in 2007. He continues to serve as Senior Advisor of Grupo Pegasus, a private equity firm headquartered in Buenos Aires, which he co-founded in 2000.

Chu teaches the second year elective Business at the Base of the Pyramid, a course introduced jointly with Professor V. Kasturi Rangan. He is Faculty Co-Chair of two Executive Education programs, Strategic Leadership for Inclusive Finance and Business Innovations in Global Healthcare. In the past, he has taught the course Investing and Managing in Emerging Markets, and Effective Leadership of Social Enterprises. Chu is co-head of Project Antares, a collaboration between HBS and the Harvard School of Public Health focusing on commercial platforms to deliver high-impact health care interventions to low-income populations. 

Before Pegasus, as President & CEO of ACCION International, Chu participated in the founding of several regulated microfinance banks throughout Latin America, including Banco Solidario, which under his chairmanship has been the most profitable bank in Bolivia, Mibanco in Peru and Compartamos Banco, which following its IPO in the Mexican Stock Exchange in 2007 has been incorporated into that exchange's index.

From 1989 to 1993, as an executive and limited partner in the New York office of Kohlberg Kravis Roberts & Co, Chu was one of sixteen professionals deploying KKR’s $5.7 billion private equity fund and managing an investment portfolio with aggregate annual revenues in excess of $60 billion. He joined the private equity firm from PACE Industries, a KKR-sponsored leveraged buyout, where he served as Senior Vice President & CFO, and listed by Forbes as one of the twenty largest private companies in the United States. Previously, he held senior management positions in U.S. corporations and was a management consultant with the Boston Consulting Group. Chu currently serves on the boards of Arcos Dorados (NYSE-ARCO), Sealed Air Corporation (NYSE-SEE), on the Economic Advisory Board of the International Finance Corporation IThe World Bank Group) and is a Trustee Emeritus of Dartmouth College.

Chu graduated with an A.B.(Honors) from Dartmouth College and received a M.B.A. with highest distinction (Baker Scholar) from Harvard Business School.

Chu was born in Kunming, China and grew up in Montevideo, Uruguay. He and his wife Victoria Cowling Chu reside in West Newton, MA.

Journal Articles

  1. Setting Health Priorities: Strategy versus Tactics

    Health decision makers throughout the world are faced with a multiplicity of challenges. As resource limitations are a fundamental fact of life, choices necessarily have to be made about which challenges to address, and the best way to tackle them. In this piece, we discuss the distinction between these distinct components of priority setting in health: the strategic and tactical.

    Keywords: Strategy; Decision Making; Health Care and Treatment; Problems and Challenges; Health Industry;

    Citation:

    Chu, Michael, David E. Bloom, and Elizabeth Cafiero. "Setting Health Priorities: Strategy versus Tactics." Impact, the Magazine of PSI, no. 12 (April 2013).
  2. Private Enterprise for Public Health

    By many measures, the world today is a healthier place than ever before, yet a daunting set of deficits and disparities remains to be tackled. For various reasons, it is not clear that the traditional tandem of government and civil society are up to those challenges. This creates an opportunity for private enterprise to fill the breach. Indeed, evidence on the actual and potential contribution of private enterprise to public health is growing.

    Keywords: Private Ownership; Social Enterprise; Public Sector; Private Sector; Health Care and Treatment; Health Industry;

    Citation:

    Chu, Michael, and David E. Bloom. "Private Enterprise for Public Health." Global Investor (Credit Suisse) (February, 2012), 14–16.
  3. Segmenting the Base of the Pyramid

    The bottom of the economic pyramid is a risky place for business, but decent profits can be made there if companies link their financial success with their constituencies' well-being. To do that effectively, you must understand the nuances of people's daily lives, say Rangan and Chu of Harvard Business School and Petkoski of the World Bank. Start by dividing the base of the pyramid into three segments according to people's earnings and related personal needs: 1) Low income: 1.4 billion people, $3 to $5 a day; 2) Subsistence: 1.6 billion people, $1 to $3 a day; and 3) Extreme poverty: 1 billion people, less than $1 a day. Next, consider the roles of various groups in the value-creation relationship: consumers, coproducers, and clients. Specific strategies work best with people in certain roles and at particular income levels. Success requires appreciating the diversity at the base of the pyramid and the importance of scale in undertaking ventures there. Witness Manila Water's success in the Philippines and Hindustan Unilever's in South Asia. Failure to appreciate those elements can foil base-of-the-pyramid ventures, as Microsoft and Procter & Gamble each discovered.

    Keywords: International Finance; Risk and Uncertainty; Value Creation; Human Needs; Income Characteristics; Poverty; Profit; Relationships; Economics; Segmentation;

    Citation:

    Rangan, V. Kasturi, Michael Chu, and Djorjiji Petkoski. "Segmenting the Base of the Pyramid." Harvard Business Review 89, no. 6 (June 2011).
  4. Las Microfinanzas: Creación simultánea de impacto social y valor comercial

    Microfinance is the best known and most successful expression of inclusive business. When the disbursement of financial services in small sizes to enterprising people in the informal sectors of the economy is capable of yielding superior commercial returns, it enables an initiative started by NGOs and philanthropy to beocme an effective component of the response to poverty.

    Keywords: Microfinance; Economy; Investment Return; Service Operations; Giving and Philanthropy; Poverty;

    Citation:

    Chu, Michael. "Las Microfinanzas: Creación simultánea de impacto social y valor comercial." Negocios Rentables con Impacto Social. Debates IESA XV, no. 3 (August–September 2010): 26–30.
  5. Profit And Poverty: Why It Matters

    Commentary on investing in microfinance

    Keywords: Microfinance; Profit; Poverty; Financial Services Industry;

    Citation:

    Chu, Michael. "Profit And Poverty: Why It Matters." Forbes.com (December 20, 2007).
  6. Commercial Returns at the Base of the Pyramid

    Keywords: Profit;

    Citation:

    Chu, Michael. "Commercial Returns at the Base of the Pyramid." Innovations: Technology, Governance, Globalization (winter–spring 2007): 115–146.
  7. Incubating Social Change

    Keywords: Change; Society;

    Citation:

    Chu, Michael. "Incubating Social Change." Intervening at the Inflection Point. Viewpoints (2007), 25–29.
  8. Business and Low-Income Sectors: Finding a New Weapon to Attack Poverty

    Keywords: Poverty; Business Ventures;

    Citation:

    Austin, James E., and Michael Chu. "Business and Low-Income Sectors: Finding a New Weapon to Attack Poverty." Art. 1. Social Enterprise: Making a Difference. ReVista 6, no. 1 (fall 2006): 3–5.

Book Chapters

  1. El Sector Privado y las Responsabilidades Públicas: El Rol de las Soluciones Comerciales en la Temática Social

    In today's world, certain goods and services are considered so basic that, regardless of culture, they are accepted as public responsibilities. However, for the low-income populations in developing countries, which constitute the majority of the world, access to these takes place through cash markets, which often overwhelm the supply from public sources. Recently, the insertion into this world of business models incorporating advanced management expertise have demonstrated that commercial success is possible while significantly improving access to these basic services for the base of the pyramid. This is illustrated through examples in water, healthcare, and microfinance. In the process, a case is made that these disruptive commercial models are a key component in the response to poverty, and that there is a social role for financial returns. Accordingly, the basic goods and services of society must be defined both as public and private, each complementing the other.

    Keywords: Business Model; Developing Countries and Economies; Private Sector; Public Sector; Management Practices and Processes; Human Needs; Poverty; Commercialization;

    Citation:

    Chu, Michael. "El Sector Privado y las Responsabilidades Públicas: El Rol de las Soluciones Comerciales en la Temática Social." Chap. 1 in Negocios inclusivos y empleo en la base de la piramide. Estudios Internacionales. Madrid: Universidad Complutense de Madrid, 2011, Spanish ed.
  2. Microfinance: Business, Profitability, and the Creation of Social Value

    The chapter examines the development of microfinance from its NGO origins to the present stage in which it is characterized by regulated commercial institutions capable of superior financial returns. It then looks at the creation of social value under these circumstances, advancing a role for profit in the generation of social value. In the process, it sets forth the conditions under which profit is positive and when it is negative from a societal perspective, and why business at the base of the pyramid may matter.

    Keywords: Microfinance; Investment Return; Profit; Governing Rules, Regulations, and Reforms; Social Enterprise; Non-Governmental Organizations; Perspective; Value Creation;

    Citation:

    Chu, Michael. "Microfinance: Business, Profitability, and the Creation of Social Value." Chap. 28 in Business Solutions for the Global Poor: Creating Social and Economic Value, by V. Kasturi Rangan, John A. Quelch, Gustavo Herrero, and Brooke Barton, 309–320. John Wiley & Sons, 2007.
  3. Microfinance: The Next Ten Years

    A review of the history of commercial microfinance and a view on the key developments in the next decade.

    Keywords: History; Microfinance; Financial Services Industry;

    Citation:

    Chu, Michael. "Microfinance: The Next Ten Years." In Microbanking: Creating Opportunities for the Poor Through Innovation, edited by A. Pakpahan, E. M. Lokollo, and K. Wijaya. Jakarta: Bank Rakyat Indonesia, 2005.

Cases and Teaching Materials

  1. Aspada: In Search of the Right Structure for Impact Investing

    Citation:

    Chu, Michael, and Rachna Tahilyani. "Aspada: In Search of the Right Structure for Impact Investing." Harvard Business School Case 314-099, April 2014.
  2. Ancora: A Primary Healthcare Model for Chilean Public Health?

    Citation:

    Chu, Michael, Thomas Bossert, Mladen Koljatic, and Monica Silva. "Ancora: A Primary Healthcare Model for Chilean Public Health?" Harvard Business School Case 314-121, April 2014.
  3. Día Día Practimercados: Meeting the Daily Needs at the Base of the Pyramid (B)

    Citation:

    Chu, Michael, Regina Garcia-Cuellar, and Rosa Amelia Gonzalez. "Día Día Practimercados: Meeting the Daily Needs at the Base of the Pyramid (B)." Harvard Business School Supplement 314-085, January 2014.
  4. Morella Mendoza de Grossmann Foundation & the Joslin Vision Network—Venezuela

    Citation:

    Chu, Michael, Maria Helena Jaen, and Mercedes Briceno. "Morella Mendoza de Grossmann Foundation & the Joslin Vision Network—Venezuela." Harvard Business School Case 314-035, October 2013.
  5. Embrace

    Citation:

    Chu, Michael, David E. Bloom, and Alison Berkley Wagonfeld. "Embrace." Harvard Business School Case 814-001, July 2013.
  6. Omidyar Network: Pioneering Impact Investment

    Omidyar Network, having deployed to date over $500 million in ways ranging from donations to commercial equity capital, must decide whether to back Anudip, an Indian organization dedicated to providing the rural unemployed and marginalized with livelihoods linked to the modern world. The immediate issue at hand is the tension between the high social impact of Anudip and its lackluster financial performance. Is this a suitable project for the Omidyar Network? Being able to deploy all the tools along the capital curve of impact investing, are there any that are appropriate for Anudip? If so, which are optimal for Anudip? Established by eBay founder Pierre Omidyar and his wife Pam, Omidyar Network (ON) is the successor to their first philanthropic organization, the Omidyar Family Foundation (OFF). The case recounts the transition from OFF to ON and the conceptual and organizational evolution from a traditional grant-making organization to a pioneer of impact investing: the application of investment practices in the delivery of high impact social interventions, with the intent of providing positive financial returns to the investors. The case is intended to: • Examine the key elements underpinning the concept of impact investing. Through a unique organization that mirrors the entire spectrum of the social impact capital markets, the case allows an analysis of the role of each piece of the capital curve in the furtherance of social objectives: when are donations appropriate versus capital seeking market risk-adjusted returns, and all the variations in between? • Provide an opportunity to analyze a potential investment from the perspective of an impact investment fund, dealing with such issues as the analysis of business and social models and the uncertainty inherent in future projections. In the process, gain insight into key considerations for both a social investor as well as a social entrepreneur. • Expose class participants to the practical deal structuring challenges involved in taking an actual social impact initiative in the field to an investible transaction by an impact investing fund.

    Keywords: Social Enterprise; Social Entrepreneurship; Investment; Giving and Philanthropy; India;

    Citation:

    Chu, Michael, and Lauren Barley. "Omidyar Network: Pioneering Impact Investment." Harvard Business School Case 313-090, January 2013.
  7. Día Día Practimercados: Meeting the Daily Needs at the Base of the Pyramid (A)

    Keywords: Venezuela; South America;

    Citation:

    Chu, Michael, Regina Garcia-Cuellar, and Rosa Amelia Gonzalez. "Día Día Practimercados: Meeting the Daily Needs at the Base of the Pyramid (A)." Harvard Business School Case 313-071, August 2012. (Revised August 2013.)
  8. Mibanco: Meeting the Mainstreaming of Microfinance (TN)

    Teaching Note for 309-095.

    Keywords: Microfinance; Banks and Banking; Banking Industry;

    Citation:

    Chu, Michael. "Mibanco: Meeting the Mainstreaming of Microfinance (TN)." Harvard Business School Teaching Note 312-019, August 2011. (Revised August 2011.)
  9. Mibanco: Meeting the Mainstreaming of Microfinance (MM)

    Facing an increasingly competitive microfinance market in Peru, Mibanco must continually optimize its product offerings, marketing operations, and human resource management to stay on top. This multimedia courseware provides visual orientation to enable viewers to more fully understand the nature of microentrepreneurs and the microfinance market in Peru, as well how Mibanco attracts and retains clients, balances efficiency and risk management in its loan portfolio, and works to build an organization capable of sustaining rapid growth. The courseware includes five video segments: Introduction, Competition, Marketing, Operations and Human Resources, with a total run time of 52 minutes.

    Keywords: Microfinance; Markets; Change; Problems and Challenges; Management Teams; Employees; Marketing; Operations; Human Resources; Financial Services Industry; Peru;

    Citation:

    Chu, Michael, Gustavo Herrero, and Jean Hazell. "Mibanco: Meeting the Mainstreaming of Microfinance (MM)." Harvard Business School Video Case 310-701, August 2011.
  10. Farmacias Similares: Private and Public Health Care for the Base of the Pyramid in Mexico

    Farmacias Similares, serving Mexico's low-income sector, grew to $600 million sales and 3,400 drugstores while deep reforms to help the poor swept the public health system. Adjacent to each store, for $2 per visit, medical clinics provided access to doctors for 2.3 million people a month. Narrates the growth of the chain, examines the reasons for its success, and projects a pro forma of the company's financial returns. Places Farmacias Similares in the context of Mexico's public health system and the pharmaceutical industry.

    Keywords: Private Sector; Public Sector; Health Care and Treatment; Growth and Development Strategy; Poverty; Pharmaceutical Industry; Retail Industry; Mexico;

    Citation:

    Chu, Michael, and Regina Garcia-Cuellar. "Farmacias Similares: Private and Public Health Care for the Base of the Pyramid in Mexico." Harvard Business School Case 307-092, January 2007. (Revised April 2011.)
  11. Banco Compartamos: Life after the IPO (TN)

    Teaching Note for 308-094.

    Keywords: Banks and Banking; Initial Public Offering; Investment Return; Financial Institutions; Microfinance; Capital Markets; Competition; Decisions; Banking Industry; Mexico;

    Citation:

    Chu, Michael. "Banco Compartamos: Life after the IPO (TN)." Harvard Business School Teaching Note 311-089, January 2011.
  12. Ancora: A Private University Providing Healthcare for the Poor

    Project Ancora signals the entry of the private sector in primary health care for the poor in Chile. On a commercial basis, it seeks to deliver a more effective, efficient, and user-friendly primary health care model than the prevailing public health system, while operating under the same revenue structure (per capita payments from the Ministry of Health). A highly visible landmark initiative of the Medical School of the Catholic University, success would prove that quality health care is possible for the poor at no additional cost, serving as a national model. Failure, on the other hand, would have high institutional costs. Dr. Joaquin Montero, the head of Ancora and its intellectual father, must address the controversial project in the context of a presidential election. Reviews the current Chilean health care model for the poor and the political realities surrounding it. As the seed money for Ancora comes from one single individual, it also illustrates an example of thoughtful philanthropy.

    Keywords: Private Sector; Giving and Philanthropy; Government and Politics; Health Care and Treatment; Business and Government Relations; Social Enterprise; Poverty; Chile;

    Citation:

    Chu, Michael, Mladen Koljatic, and Monica Silva. "Ancora: A Private University Providing Healthcare for the Poor." Harvard Business School Case 306-088, February 2006. (Revised December 2010.)
  13. YES BANK: Mainstreaming Development into Indian Banking

    YES BANK, founded in 2003 and highly successful, has consistently been profitable meeting the Indian government's Priority Sector Lending (PSL) requirements, unlike virtually all other private sector banks, which view PSL activity as a necessary but loss-making part of their portfolio. To do this, YES BANK created a distinct Development Banking practice, under the purview of the Corporate Finance division. But now, the Development Banking team is contemplating going to the board to take the concept one step further: pro-actively investing in PSL-qualifying activities not as a matter of regulatory compliance but as business. Should the bank devote significant financial and human resources into an ambitious Financial Inclusion Program to serve previously unbanked rural populations through a rapid expansion of its branch network and the use of nonbank business correspondents? In addition, should the bank commit part of its scarce capital to Tatva Capital, a private equity venture focused on renewable energy, clean technology, waste management, water and sanitation, food and agribusiness, affordable housing, healthcare, and education and livelihood creation? Is the board ready to incorporate development banking into the mainstream of the bank, or will this turn out to be a major error in judgment?

    Keywords: Development Economics; Private Equity; Microfinance; Investment; Governing and Advisory Boards; Corporate Social Responsibility and Impact; Environmental Sustainability; Expansion; Banking Industry; India;

    Citation:

    Chu, Michael, and Namrata Arora. "YES BANK: Mainstreaming Development into Indian Banking." Harvard Business School Case 311-063, October 2010. (Revised November 2010.)
  14. Aaron's: Household Goods for the U.S. Base of the Pyramid

    With $2.5 billion system-wide revenues, Aaron's, a major rent-to-own supplier to the U.S. base of the pyramid, continues to grow in the recession, but CEO R.C. Loudermilk, Jr. wonders how long the company can sustain the fast growth rate of its past. Founded in 1955, and publicly listed since 1982, Aaron's success has paralleled the emergence of the rent-to-own industry as a major channel for the lower income U.S. population to access durable household goods. In this space, Aaron has only one other large national rival, Rent-A-Center. As he faces Aaron's future growth, Loudermilk must consider continuing with the basic business model, follow his competitor into expanding the product line, or tap into underserved foreign markets. At the same time, the entire rent-to-own industry in the U.S. is coming under attack by consumer advocates and politicians as the nation continues to battle a deep economic crisis.

    Keywords: Fairness; For-Profit Firms; Renting or Rental; Financial Crisis; Demand and Consumers; Social Enterprise; Income Characteristics; Goods and Commodities; Competitive Strategy; Growth and Development Strategy; Consumer Products Industry; United States;

    Citation:

    Chu, Michael, and Charles Augustus Smithgall IV. "Aaron's: Household Goods for the U.S. Base of the Pyramid." Harvard Business School Case 311-047, September 2010.
  15. Microfin

    The case presents the management dilemmas of a new institution in an undeveloped microfinance market in Latin America. Supported by a globally recognized industry player, it is the result of the efforts of two fledgling local entrepreneurs with a business model they believe can achieve a substantial and profitable share of a potential $150 million market. With the backdrop of the 2002 banking crisis, the governing leftist coalition is promoting microfinance as a means to reduce poverty, but banking authorities have so far issued no regulation to promote it. Another competitor with similar characteristics to Microfin started doing business a few months earlier, and there are rumors that the largest bank in the country is studying the possibility of a fully owned subsidiary exclusively dedicated to microfinance.

    Keywords: Business Model; Developing Countries and Economies; Social Entrepreneurship; Microfinance; Governing Rules, Regulations, and Reforms; Industry Structures; Competitive Strategy; Financial Services Industry; Latin America;

    Citation:

    Chu, Michael, and Enrique Kramer. "Microfin." Harvard Business School Case 309-126, June 2009. (Revised July 2010.)
  16. Mibanco: Meeting the Mainstreaming of Microfinance

    Mibanco, Peru's leading microfinance bank, faces intense competition as the banking industry rushes into low income segments. Companion video clips bring into the classroom the contemporary reality of a world-class microfinance institution, where the unpaved streets and cluttered markets of the loan officer coexist with the sophistication of technical financial analysis and premier professional management. Rafael Llosa, the General Manager of Mibanco, must find the way to maintain the financial performance of one of Peru's most profitable banks and meet the strategic growth goals set by his board while facing the most aggressive competitive scenario in the 25-year history of microfinance in Peru. Courseware No. 9-309-701, "Microfinance: An Operating Perspective," contains five chapters filmed at Mibanco: Introduction, Competition, Marketing, Operations and Human Relations.

    Keywords: Microfinance; Profit; Business History; Growth and Development Strategy; Management Analysis, Tools, and Techniques; Marketing Strategy; Service Operations; Performance; Competition; Banking Industry; Peru;

    Citation:

    Chu, Michael, and Gustavo A. Herrero. "Mibanco: Meeting the Mainstreaming of Microfinance." Harvard Business School Case 309-095, February 2009. (Revised June 2010.)
  17. A Note on Direct Selling in Developing Economies

    Informal and formal direct selling play a particularly important role in developing countries characterized by markets with limited retail sectors. This note explores the practice of direct selling for the company, the sales person, and the consumer, as well as the potential of direct selling as a means of reaching the base of the pyramid for both commercial and social purposes.

    Keywords: Customers; Developing Countries and Economies; Marketing Channels; Marketing Strategy; Emerging Markets; Sales;

    Citation:

    Chu, Michael, and Joel Emilio Bregman Segre. "A Note on Direct Selling in Developing Economies." Harvard Business School Background Note 310-068, January 2010. (Revised March 2010.)
  18. Banco Compartamos: Life after the IPO

    After an international IPO yielding extraordinary returns to original investors, Banco Compartamos, Mexico's leading microfinance institution, contemplates its future strategic and competing priorities: maintaining growth, defending industry, leadership, preserving social mission, and meeting the expectations of a demanding capital market. Additionally, Compartamos' Co-CEOs must decide how to face the highly polarized reactions in the microfinance industry to its IPO. In the process, the case examines the history of Compartamos, from its NGO origins to its license as a full-service bank; describes the competitive context of low-income sector of financing in Mexico; and reviews the decisions leading to the IPO in the Mexican Stock Exchange.

    Keywords: Business Model; Microfinance; Initial Public Offering; Non-Governmental Organizations; Competition; Value Creation; Banking Industry; Mexico;

    Citation:

    Chu, Michael, and Regina Garcia Cuellar. "Banco Compartamos: Life after the IPO." Harvard Business School Case 308-094, February 2008. (Revised July 2008.)
  19. The Omidyar-Tufts Microfinance Fund: Striving to Reshape the Social Enterprise Capital Markets

    Seeking to impact global poverty and philanthropy, eBay founder Pierre Omidyar donates $100 million to Tufts University for a trust restricted to investment in microfinance. Explores the origins of the initiative, the perspectives and objectives of the various parties involved, and the manner in which the key issues of structure, management, implementation, and accountability have been addressed. The Omidyar-Tufts Microfinance Fund seeks to have a catalytic effect on the expansion of an activity deemed to have high social value while applying a rigorous professional criteria to the deployment of the monies so as to yield an economic return equal to or higher than those of comparable assets in the Tufts endowment. In the process, the Omidyar approach is contrasted to more traditional ways of giving. Additionally, provides an overview of the microfinance industry and the challenges of investing in this new field of the emerging markets.

    Keywords: Capital Markets; Microfinance; Investment Funds; Giving and Philanthropy; Emerging Markets; Social Enterprise; Financial Services Industry;

    Citation:

    Chu, Michael, and Jean Hazell. "The Omidyar-Tufts Microfinance Fund: Striving to Reshape the Social Enterprise Capital Markets." Harvard Business School Case 307-078, January 2007. (Revised October 2007.)
  20. Banca Regional Andino: Facing the Globalization of Microfinance

    Three leading Latin American microfinance banks join forces to face the new challenges of globalization, competition, and politics while common shareholder ACCION investments considers its options. From an initial project to share costs in the revamping of their IT systems, the Banca Regional Andino develops into the possibility of a common operating platform across three separate institutions, BancoSol of Bolivia, Mibanco of Peru, and Banco Solidario of Ecuador. The Banca Regional is a response to forces that the banks perceive as potentially threatening to their long history of success. In the process, presents the evolution of the national microfinance markets of Bolivia, Ecuador, and Peru within the context of global microfinance.

    Keywords: History; Microfinance; Competitive Strategy; Globalization; Problems and Challenges; Growth and Development; Bolivia; Ecuador; Peru;

    Citation:

    Chu, Michael, and Jean Hazell. "Banca Regional Andino: Facing the Globalization of Microfinance." Harvard Business School Case 307-060, February 2007. (Revised April 2007.)
  21. Microfinance in Bolivia: A Meeting with the President of the Republic

    Herbert Muller, chair of leading microfinance bank BancoSol, has met with Evo Morales one year after the populist leader's inauguration as president of Bolivia and proceeds to write an email to his fellow board directors. The bank is world famous for pioneering microfinance while delivering superior financial performance. Evo Morales is an Amerindian who supporters see as a response to the white oligarchy that has long dominated Bolivia and as a champion of the downtrodden, in the poorest country in South America. In the first year of his administration, he has nationalized the oil and gas industry, created a constituent assembly to rewrite the constitution, and launched agrarian reform. The meeting between Muller and Morales takes place at the Bolivian banking association where the government officials, while committing not to mandate the reduction of interest rates in microcredit, express their expectation that rates will drop as quickly as possible. A week earlier, senior cabinet officials had met with the president of the banking association and expressed their wish that interest rates for loans in the banking system would decline to single digits.

    Keywords: Risk and Uncertainty; Race Characteristics; Government Administration; Business and Government Relations; Microfinance; Poverty; Interest Rates; Banks and Banking; Financial Services Industry; Bolivia; South America;

    Citation:

    Chu, Michael. "Microfinance in Bolivia: A Meeting with the President of the Republic." Harvard Business School Case 307-107, April 2007.
  22. Micro Insurance Agency: Helping the Poor Manage Risk

    The notable success of insurance products for low-income clients of its microfinance network leads Opportunity International to launch the first global specialized microinsurance company, the Micro Insurance Agency (MIA). Building on the experience in 10 countries across Africa, Asia, and Latin America of developing products appropriate to the sector and acceptable to risk carriers, and minimizing distribution and administration costs by going through Opportunity International (OI) partner microfinance institutions (MFIs), MIA must now define the strategy for its future growth. Facing both the need to achieve scale and profitability as quickly as possible, and increasing competition from international and local providers with few barriers to entry, MIA must grapple with a series of strategic choices: geographic expansion, continued product innovation, serving MFIs outside of the OI network, and new distribution mechanisms to reach market segments beyond MFIs. Wholly owned by faith-based nonprofit OI, MIA must also factor in OI's desired mission impact with commercial viability. Illustrates the challenges and tradeoffs inherent in pioneering efforts at the edge of microfinance, the emerging industry to serve the financial needs of low-income sectors in the developing world.

    Keywords: Developing Countries and Economies; Cost Management; Microfinance; Globalization; Growth and Development Strategy; Risk Management; Infrastructure; Nonprofit Organizations; Competition; Financial Services Industry; Africa; Asia; Latin America;

    Citation:

    Chu, Michael, and Jean Hazell. "Micro Insurance Agency: Helping the Poor Manage Risk." Harvard Business School Case 307-089, March 2007. (Revised April 2007.)
  23. Patrimonio Hoy

    Patrimonio Hoy is a program targeting the housing needs of the low-income population by CEMEX, a major Mexican company and a leading global cement producer. Originally conceived as a project to understand the customers in the self-construction segment better, a major component of Mexican home-building concentrated in low-income neighborhoods, Patrimonio Hoy has generated recognition and good will for the company. Its innovative approach reduces significantly the cost and time needed by the poor to improve their housing. Begun in 1998, the program has reached break-even in 2004, with strong prospects of growth in the future. The president of CEMEX North America wonders whether the program should be turned into a major line of business for the company. Provides a good understanding of financing mechanisms available to home builders in Mexico and represents an interesting application of microfinance and product design to open a new market segment based on the needs of low-income customers.

    Keywords: Housing; Construction; Product Design; Globalized Firms and Management; Microfinance; Income Characteristics; Market Entry and Exit; Emerging Markets; Entrepreneurship; Construction Industry; Mexico;

    Citation:

    Segel, Arthur I., Michael Chu, and Gustavo Herrero. "Patrimonio Hoy." Harvard Business School Case 805-064, November 2004. (Revised July 2006.)
  24. JA Worldwide: Managing Change in a Multi-governed Environment

    Post-merger, the head of Junior Achievement (JA) Worldwide must now oversee operations in 98 countries serving 6.6 million students, with over 7,600 local chapter board directors. President and CEO David Chernow's own board has increased to 111 members. Two separate organizations since inception, the U.S. and international JA operations were formally combined on July 1, 2004. Although all the leaders recognized the need for the merger, the process nevertheless proved to be highly sensitive and complex. As part of the compromise, all parties agreed to freeze the JA Worldwide structure for three years. By the end of that period, Chernow knows he must have in place a new model of operations that can accomplish three things: meet JA's mission in terms of its students, serve the internal needs of its members around the world, and be financially sustainable over the long term.

    Keywords: Mergers and Acquisitions; Business Model; Change Management; Cross-Cultural and Cross-Border Issues; Governance; Business or Company Management; Service Operations; Organizational Structure; Nonprofit Organizations; Balance and Stability;

    Citation:

    Chu, Michael, and Barbara Zepp Larson. "JA Worldwide: Managing Change in a Multi-governed Environment." Harvard Business School Case 306-025, February 2006. (Revised May 2006.)
  25. Tata Consultancy Services Iberoamerica

    To launch its Latin American operations, the Indian IT giant Tata Consultancy Services recruits a seasoned executive who becomes the only non-Indian member of senior management. Reviews the start-up operations, from the site selection to staffing and training, the challenges of operating in a Latin American context, the integration of two very different cultures, and the strategic rationale for an emerging market company to invest in another Third World region at a time in which it is launching an initial public offering. Identifies a series of challenges that must be addressed two years on and poses the question whether Tata Consultancy Services should pause or accelerate its presence in Latin America.

    Keywords: Business Startups; Developing Countries and Economies; Initial Public Offering; Investment; Globalization; Human Resources; Selection and Staffing; Management Teams; Emerging Markets; Problems and Challenges; Consulting Industry; Latin America;

    Citation:

    Chu, Michael, and Gustavo Herrero. "Tata Consultancy Services Iberoamerica." Harvard Business School Case 705-020, April 2005. (Revised November 2005.)
  26. Pegasus Capital: The Musimundo Decision

    The five managing directors of Pegasus Capital were meeting in June 2003 to make a go/no-go decision regarding the investment of Musimundo, one of the largest entertainment retailers in Argentina. Just four days before the planned closing of the sale, Pegasus' 50% partner in the purchase had dropped out, and Pegasus now had to decide whether to move forward with the purchase as a 100% investor. The Musimundo acquisition opportunity was the by-product of a massive economic crisis that had hit Argentina 18 months earlier. With a precipitous devaluation of the peso in January 2002, Argentina's real GDP had contracted by nearly 11% in 2002, the worst recession in its history. The Pegasus partners debated whether the Argentine economy would--or even could--rebound after such a disastrous fall and whether the music and entertainment market would ever again reach its precrisis levels. Furthermore, Pegasus' venture investment partner, a local retail chain, had dropped out due to nervousness about an increasingly volatile political and regulatory environment. Suddenly, Pegasus was thrust into the position of sole purchaser and needed to decide whether the risks were surmountable and whether the investment was worth making.

    Keywords: Acquisition; Debates; Decision Choices and Conditions; Economic Slowdown and Stagnation; Financial Crisis; Music Entertainment; Investment; Business or Company Management; Risk and Uncertainty; Opportunities; Entertainment and Recreation Industry; Argentina;

    Citation:

    Chu, Michael, and Barbara Zepp Larson. "Pegasus Capital: The Musimundo Decision." Harvard Business School Case 305-093, April 2005. (Revised September 2005.)
  27. ACCION International: Maintaining High Performance Through Time

    ACCION International has been a major innovator in microfinance for 30 years. Reviews organizational context under which key industry-shaping concepts were developed (from peer group lending, guarantee funds, equity investment funds, and regulated commercial banking institutions to joint ventures with banks) and assesses future challenges.

    Keywords: Joint Ventures; Equity; Microfinance; Employee Relationship Management; Non-Governmental Organizations;

    Citation:

    Chu, Michael. "ACCION International: Maintaining High Performance Through Time." Harvard Business School Case 304-095, March 2004. (Revised July 2005.)
  28. ACCION in Nigeria

    Keywords: Microfinance; Financial Services Industry; Nigeria;

    Citation:

    Chu, Michael, and Barbara Zepp Larson. "ACCION in Nigeria." Harvard Business School Case 305-079, April 2005.
  29. The Trustees of Reservations

    The executive director and chairman of the board of The Trustees of Reservations, one of the nation's oldest land conservation institutions, undertake a major governance restructuring. Reviews the forces leading to the change, the process by which its undertaken, and the resulting governance structure. It ends by identifying some challenges emerging from the new structure and raising the question whether to review governance again.

    Keywords: Restructuring; Governance Controls; Performance Effectiveness; Problems and Challenges; Social Enterprise;

    Citation:

    Chu, Michael. "The Trustees of Reservations." Harvard Business School Case 305-078, February 2005. (Revised March 2005.)
  30. FIRA: Confronting the Mexican Agricultural Crisis

    In fall 2003, Mexico's agriculture sector was facing a crisis brought on largely by a surge in cheap U.S. imports resulting from NAFTA and inaccessible and/or expensive terms of credit for Mexican agricultural producers. It was getting harder for Mexican producers to compete, and many were leaving farming for the city. Francisco Mere, director of FIRA, a second-tier development bank, was in the process of developing and implementing a new strategy that would more effectively and efficiently reinvigorate the Mexican agricultural system.

    Keywords: Development Economics; Public Sector; Trade; Financial Instruments; Crisis Management; Markets; Strategic Planning; Partners and Partnerships; Competitive Strategy; Agriculture and Agribusiness Industry;

    Citation:

    Austin, James E., Michael Chu, and Cate Reavis. "FIRA: Confronting the Mexican Agricultural Crisis." Harvard Business School Case 304-032, December 2003. (Revised March 2004.)