Enhancing Social Capital in Latin America

Since its formation, the Latin America Research Center (LARC) has worked to enhance intellectual capital creation by working with academics as well as business leaders in the region.

Programs in this area, supported by the LARC include:

The Global Colloquium on Participant-Centered Learning (GloColl), is an HBS course for faculty at business schools in emerging economies who are trained in interactive methods of teaching and learning.

The Social Enterprise Knowledge Network (SEKN), a consortium of eleven business schools that research and develop teaching cases on social enterprise in leading Latin American business schools.

Executive Education
in Latin America

Latin America

Archives

Bunge: Food, Fuel and World Markets

Khanna, Tarun, Santiago Mingo, and Jonathan West
October 2007

In 2007, Bunge, an agribusiness company, had over $26 billion in worldwide sales and was considered, along with Cargill and Archer Daniels Midland (ADM), one of three very integrated worldwide agribusiness companies. Headquartered in White Plains, NY, the company has traditionally possessed a strong presence in Brazil. Describes Bunge's tradeoff between efficiency of global operations and local responsiveness in an uncertain business environment. New world developments were effecting Bunge directly: high oil prices, a growing demand in emerging economies like China and India, and the possibility of agribusiness companies competing successfully in the production of biofuels. Bunge had traditionally followed an organizational model that was integrated but decentralized, trying to strike a balance between the efficiency of a global entity and the speed of local businesses. What would be the best strategy for Bunge to respond to the external changes imposed by high energy prices and increasing demand from emerging economies? How aggressively should Bunge invest in the rising biofuels markets?

Tetra Pak Argentina

Khanna, Tarun, Krishna G. Palepu, and Gustavo Herrero
September 2007

Deals with the hands-on management of a difficult situation facing the subsidiary of a multinational corporation (Tetra Pak) in a developing country (Argentina). The situation arises from a major economic, social, and institutional breakdown that jeopardizes the subsidiary's existence. Argentina defaulted on it sovereign debt and devalued the peso by over 200%, but it differentiated the treatment of the FX rate to be applied to various transactions, depending on the jurisdiction of creditors and debtors. Local dollar-denominated credits and liabilities were converted on a 1:1.40 ratio, while obligations held with foreign entities continued to be enforceable at the new rate of 1:3. The crisis led to the impoverishment of a large portion of the Argentine population, and to an institutional breakdown where the rule of law was shattered in the country, thus posing challenges not just related to the current situation, but also to the future of the operation. The crisis bore consequences for Tetra Pak Argentina on both ends of its value chain, involving suppliers and customers. Tetra Pak focuses growth on developing nations where it feels there is room for a valuable business, and it attains leading market positions. Shows how the foreign firm must cope with difficult domestic situations, where the levers of control are beyond its reach. The existence of value after the crisis turns out to be a relevant consideration.

Ernesto Tornquist: Making a Fortune on the Pampas

Jones, Geoffrey G., and Andrea M Lluch
September 2007

Examines the career of Ernesto Tornquist, a cosmopolitan financier considered to be the most significant entrepreneur in Argentina at the end of the 19th century. Tornquist created a diversified business group, linked to the political elite, which integrated Argentina into the trading and financial networks of the first global economy. Provides an opportunity to understand why Argentina was such a successful economy at this time, and to debate whether its very success laid the basis for the country's subsequent poor economic performance.

Satelite Distribuidora de Petroleo

Applegate, Lynda M., and Andrea M.A.F. Minardi
September 2007

Marcelo Alecrim, the owner of SAT, a gas distribution company in Brazil, envisioned many growth opportunities but lacked financial resources to pursue them. He was approaching an American private equity fund to raise money. Describes Alecrim's challenge in creating SAT and the way he leveraged his vision and a sound business model.

Codelco Copper Mines

Upton, David M., Virginia A. Fuller, and Bradley R. Staats
September 2007

Codelco was a Chilean copper-mining company, widely considered to be one of the most professionally managed firms in South America in spite of the fact that it was 100% government-owned. A $10.5 billion company in 2005, Codelco faced the challenge of incorporating information technology into its production processes, which had historically been very manual in nature. CEO Juan Villarzu's initial turnaround attempts introduced a customer-centric corporate culture to his ranks, but he was still challenged by how to create an outsourcing strategy given his location and the traditionally low IT-to-total-spending ratio in the mining industry. Villarzu envisioned moving to a robust IT architecture, enhancing the solutions that were available, identifying further needs in the company and deciding how to fix them, and working together with Codelco's business processes to assess, plan, and build new IT projects.

Endesa Chile: Raising the Ralco Dam (A)

McGinn, Kathleen L., Paula J Lashober, and Dina Pradel
August 2007

Endesa Chile, the largest electricity generation company in Chile, is building a major power plant on the Biobio River in Southern Chile. A historic conflict involving the indigenous people of the Biobio River, the Chilean government, and international conservation groups results. The conflict threatens the completion of the project and the longstanding culture and community of the Penhuenche, the indigenous people of the Upper Biobio.

Endesa Chile: Raising the Ralco Dam (B)

McGinn, Kathleen L., Paula J Lashober, and Dina Pradel
August 2007

Supplements the (A) case.

Banca Regional Andino: Facing the Globalization of Microfinance

Chu, Michael, and Jean Steege Hazell
July 2007

Three leading Latin American microfinance banks join forces to face the new challenges of globalization, competition, and politics while common shareholder ACCÍON 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.

SAP: Industry Transformation

Hagiu, Andrei, Pai-Ling Yin, Daniela Beyersdorfer, and Vincent Dessain
June 2007

SAP seeks growth in the small- and medium-sized enterprise market. To do so, it has created a platform strategy with SAP Netweaver. What are the advantages and challenges for an incumbent entering a new market? What are the benefits and challenges of implementing a platform strategy?

Microfinance in Bolivia: A Meeting with the President of the Republic

Chu, Michael
April 2007

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.

Edelnor (A)

Siegel, Jordan I.
April 2007

Fernando del Sol, president of F. S. Inversiones in Chile, had just bought himself a headache as a New Year's present. On December 31, 2001, he purchased a Chilean electricity generation and transmission company called Edelnor that was in danger of becoming insolvent within months. del Sol had six months to restructure the company before it would become completely insolvent, and his headache was compounded by the fact that the process for company reorganization in Chile typically dragged on in the courts, often for two or more years. Any debtor, no matter how small, could hold up the process at any point by issuing written complaints to the court. del Sol needed to figure out whether the company was worth saving, whether it had a business strategy that could succeed if the company's debt was restructured, and whether he could find some means of saving the company in time.

Edelnor (B)

Siegel, Jordan I.
April 2007

Supplements the (A) case.

Parmalat Uruguay (A)

Marshall, Paul, and Gustavo Herrero
April 2007

Three young MBAs create a partnership to acquire the assets of Parmalat in Uruguay. Focuses on their analysis prior to submitting a bid and their plan for improving the operations once their bid is accepted. In addition to improving operations, they must negotiate with creditors to reduce the debt burden on the company.

Parmalat Uruguay (B)

Paul Marshall, and Gustavo Herrero
April 2007

Supplements the (A) case.

Farmacias Similares: Private and Public Health Care for the Base of the Pyramid in Mexico

Chu, Michael, and Regina Garcia-Cuellar
March 2007

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.

Bolivia and Evo Morales

Di Tella, Rafael, Laura Alfaro, and Ezequiel Reficco
March 2007

Amanco: Developing the Sustainability Scorecard

Kaplan, Robert S., and Ricardo Reisen de Pinho
April 2007

Describes the challenges of using the Balanced Scorecard to implement a triple-bottom-line strategy for delivering excellent economic, environmental, and social performance. The owners and senior executive team of Amanco, a producer of plastic pipe and complete water treatment systems, want strong financial returns but are also deeply committed to improving the environment and making a difference in people's lives. Robert Salas, CEO, wants a management system that communicates and motivates Amanco's three high-level goals. Initially, he creates a simple scorecard of measures, but he soon migrates to developing a strategy map and Balanced Scorecard that places economic, environmental, and social objectives as the highest-level objectives. He faces the challenges of cascading the corporate Balanced Scorecard to operating units throughout Latin America and how to develop better measures of social and environmental impact. Salas must also address whether he can sustain Amanco's balanced strategy while entering the Brazilian market, where he faces an entrenched and much larger competitor.

Brazil Under Lula: Off the Yellow BRIC Road

Musacchio, Aldo
March 2007

Covers President Lula's challenges to reduce "Brazil cost" and grow like other BRIC countries (Brazil, Russia, India, and China). Experts agreed that for Brazil to grow like other BRIC countries, the Brazilian government would have to reduce the cost of doing business in the country ("Brazil cost"). At the same time, President Lula's challenge is to develop programs that accelerate growth without undermining the progress achieved in reducing inequality and poverty. Can the Brazilian government reverse inequality and grow at the same time? What development strategy should Lula follow in his second term? Does Brazil belong in BRIC? What do these countries have in common?

Monsanto: Realizing Biotech Value in Brazil

Bell, David E., and Mary Shelman
February 2007

In 2003, Monsanto's patented "Roundup Ready" technology was used illegally on 70-80% of the soybean area in southern Brazil. Under pressure from U.S. soybean growers, who were paying to license the technology, the firm implemented an innovative delivery-based collection system in Brazil. Growers paid a post-harvest "indemnity" fee for those soybeans grown with illegal seed. Although there were initial concerns by farmers and grain companies--who collected the fee on Monsanto's behalf--the system worked smoothly, with over 97% of the farmers "self-declaring" their Roundup soybeans the first year. Jerry Steiner, executive vice-president of commercial acceptance, must decide if the situation in Brazil is stable enough to support a significant increase in breeding and biotech spending to develop products specifically designed for the Brazilian market. In addition, outlines situations in Argentina and India, and asks if the world's leading biotechnology firm should develop similar delivery-based systems.

Embrapa

Bell, David E., and Mary Shelman
January 2007

Brazil's national agricultural research corporation, Embrapa, has developed an integrated crop and livestock production system that will allow farmers and ranchers to intensify production and improve profitability. Broad adoption of the technology would provide the country with greater agricultural production, a major source of exports, without the need to convert additional areas of the Cerrado or Amazon to farmland. However, producers have been slow to adopt it due to the initial costs of the system and the fact that many of the benefits are beyond the farm gate. Embrapa's director of technology transfer must develop a plan to encourage adoption.

Cinco de Mayo

Retsinas, Nicolas, Arthur I. Segel, David Margain, and Andres Caldera Radonski
December 2006

In 2004, Adrian Pandal is seeking financing for a residential conversion of a building in Mexico City's historic center district. He must convince potential lenders that the project is viable and that it makes sense to bet on the future potential of an area that, until recently, has not attracted substantial real estate investment.

Empemex

Applegate, Lynda M., and Regina Garcia-Cuellar
November 2006

Studies an entrepreneurial venture in Mexico City. The protagonists, two MBAs from HBS, started a pawn shop chain funded from their private equity office after finishing business school. This is timed at a point where the protagonists have to decide how to grow the pawn shop chain in order to compete with other Mexican and U.S. pawn shop chains that are growing aggressively in the country. Central is the decision of how to finance growth. Different growth alternatives are explored, each entailing different funding needs and exit strategies. The setting in Mexico illustrates the differences in entrepreneurship in Latin America or other developing regions compared to the United States. The difference lies in the difficulty of finding institutional funding. As a result, most of the funding has to come from "angel investors".

Natura: Global Beauty Made in Brazil

Jones, Geoffrey G., and Ricardo Reisen de Pinho
October 2006

Explores the globalization strategies of Natura, Brazil's largest cosmetics company. Founded in 1969, Natura grew using a direct selling model. Led by its three founders, the firm made distinctive use of Brazil's diversity and became characterized by high ethical and environmental standards. Natura began to seek international markets in 1982, but experienced many setbacks until surviving the economic crisis in Argentina in 2001. The company opened operations in France and Mexico in 2005, and the three founders are now exploring opportunities in Moscow. To pursue further globalization, Natura must now decide whether to continue to rely primarily on the direct sales model or to experiment with other models--and whether to make acquisitions or become part of a larger group.

Creditor Activism in Sovereign Debt: 'Vulture' Tactics or Market Backbone

Alfaro, Laura, and Ingrid Vogel
October 2006

The role of distressed debt funds, also known as "vulture funds," in sovereign debt restructuring was a hotly debated topic, especially after the success of Elliot Associates in converting an $11 million investment in Peruvian bonds worth $21 million into a $58 million cash payout from the country, representing the full face value of the bonds plus past-due interest. Highlights the problems associated with debt restructuring coordination. On the one hand, many observers derided firms such as Elliot and Dart as "vultures" or "rouge creditors" who sought to profit on sovereign debt restructurings at the expense of countries suffering economic hardship and of the majority of bondholders whose cooperation allowed the restructurings to take place. Critics believed that these holdout creditors created "collective action problems" and presented a major obstacle to successful sovereign debt restructurings. On the other hand, other observers argued that activist investors actually improved the market overall by demonstrating the enforceability of contracts. In fact, they argued that creditors faced too many hurdles in collecting against countries after receiving favorable judgments in support of claims.

Patrimonio Hoy

Chu, Michael, Arthur I. Segel, and Gustavo Herrero
October 2006

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.

Patrimonio Hoy: A Financial Perspective

Chu, Michael,, Arthur I. Segel, and Gustavo Herrero
October 2006

Patrimonio Hoy, a program targeting the housing needs of low-income families launched by CEMEX, a major Mexican corporation and a leading global cement company, has gone from a market research project to a highly visible initiative in 22 cities and has earned public recognition. The president of Cemex North America must decide whether it is corporate social responsibility or a new business line. In the process, it allows analysis of the Patrimonio Hoy program versus the traditional alternatives from the perspectives of both the end-user and of the corporation.

DentalCorp

Hamermesh, Richard G., and Ricardo Reisen de Pinho
September 2006

DentalCorp is the fifth largest provider of dental insurance in Brazil and has tripled its sales in the past two years. Whether to expand to Chile or to continue expansion in Brazil is the major strategic choice facing the company at the end of 2004.

The Barber of Buenos Aires: Argentina's Debt Renegotiation

Maurer, Noel, and Aldo Musacchio
July 2006

Tells the story of Argentina's aggressive strategy for renegotiating its sovereign debt from 2003 to 2005. Most creditors accepted the offer to swap their debt for new securities worth 35 cents on the dollar, with no recognition of all past-due interest. Many holdouts, however, remain outside the deal. Some experts believe that Argentina's stance will have negative consequences for the country's private sector and gives a worrisome signal about public policies; others maintain that circumstances beyond the government's control had placed the country in an unsustainable situation, and the successful renegotiation opens up new opportunities. The case presents the story of Argentina's debt saga from the point of view of the country's creditors (foreign and domestic), its government, and private Argentine companies that had to do business in the post-renegotiation environment. Also, discusses the larger issue of how the international financial community should handle sovereign debt workouts.

Ancora: A Private University Providing Health Care for the Poor

Chu, Michael, Mladen Koljatic, and Monica Silva
June 2006

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.

AIDS in Brazil

Deshpandé, Rohit, and Ricardo Reisen de Pinho
May 2006

Abbott Labs has reached an impasse with the Brazilian government in negotiations over the pricing of a new anti-AIDS drug, Kaletra. The Brazilian government threatens compulsory licensing unless Abbott drastically reduces the price of Kaletra.

MercadoLibre.com.

Martínez-Jerez, F. Asís , Joshua Bellin, and James Dillon
April 2006

MercadoLibre.com, eBay's Latin-American partner, needed to decide how far it was going to follow eBay's practice of offering "free listing days" and discounted special-feature days. Was this type of promotion prudent, given MercadoLibre.com's customer base, revenue expectations, and position in the Latin American market?

Magazine Luiza: Building a Retail Model of "Courting the Poor"

Frei, Frances X., and Ricardo Reisen de Pinho
March 2006

Describes the innovative retail model of the Brazilian firm Magazine Luiza. Magazine Luiza enables low-income consumer credit by applying a flexible and nuanced evaluation system. Additionally, its dedication to customer service, employee motivation, and progressive use of technology have driven its success and expansion.

Banco Real: Banking on Sustainability

Kanter, Rosabeth M, and Ricardo Reisen de Pinho
March 2006

ABN AMRO REAL made corporate social responsibility central to its brand, adding to customer focus and reflecting its values. Leaders developed the Bank of Value theme and implemented it through activities such as microfinance in poor communities, environmentally oriented lending products, socio-environmental screening of customers and suppliers, employee diversity, and reduction of waste and recycling. Now the fourth largest private bank in Brazil, its top leaders are assessing the first four years and wondering what to do next, as competitors adopt similar practices, reducing its competitive advantage, and as it wants to ensure its impact on social change in a country with daunting social problems.

Los Grobo

McAfee, Andrew, and Alexandra de Royere
December 2005

Los Grobo, a grain farming company based in Argentina, must decide whether to expand internationally to neighboring Paraguay and Uruguay. Los Grobo has built an IT-facilitated network with hundreds of participants who work together to produce corn and soybeans. Los Grobo controls this network while owning very few elements of it.

Arcor: Global Strategy and Local Turbulence

Ghemawat, Pankaj, Michael G. Rukstad, and Jennifer L. Illes
December 2005

Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, recovering from the Argentine financial crisis, thwarts globalization plans. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions, such as North America, Europe, and Asia. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis.

The Octopus and the Generals: The United Fruit Co. in Guatemala

Jones, Geoffrey G., and Marcelo Bucheli
December 2005

Examines the overthrow of President Jacobo Arbenz of Guatemala in 1954 in a U.S.-backed coup in support of the United Fruit Co. Over the previous half century, United Fruit had built a large vertically integrated tropical fruit business that owned large banana plantations in the "banana republics" of Central America, including Guatemala. Examines the impact and role of United Fruit in the Guatemalan economy, one of the poorest in the world, and the reasons for growing hostility toward the company, culminating in Arbenz's agrarian reform policies aimed at redistributing some of the land held by United Fruit. The United States, which regarded Arbenz as pro-communist, supported United Fruit in the context of the Cold War.

Aguas Argentinas: Settling a Dispute

Wells, Louis T., and Alexandra de Royere
October 2005

The French-owned Aguas Argentinas faces a demand from the Argentine government that it renegotiate its concession to operate the Buenos Aires water and sewage services. The company must decide whether to continue with efforts to settle on a new contract or to exercise its rights to go to international arbitration. Either way, it must decide on its strategy going forward.

Grupo Martica

McAfee, Andrew
October 2005

Grupo Martica commissions a computer security expert to conduct an audit of its systems, network, and processes. This audit reveals that Martica is quite vulnerable, and the company's de facto CIO must decide what steps to take to improve security. He wonders how complex, tightly coupled systems like computers can ever be made secure and robust.