Doing Business in Santiago, Chile

The case uses the example of the opening of the first IKEA furniture store in Chile – which is operated by Chilean group Falabella – to discuss the opportunities and challenges of doing business in the country. It gives readers an overview of Chile’s economic transformation since its colonial years until late-2022, when a new government, led by former student leader Gabriel Boric, faced the challenge to recover economic growth after the pandemic and as Chile advanced in a tortuous process to rewrite its Constitution. After three decades living under democracy, many Chileans seem to disagree with some aspects of the country’s liberal economic model (which started to be implemented during the regime of general Augusto Pinochet). However, it is still not clear whether the Chilean society will support a radical transformation or merely a mild reform in this model. The case invites readers to discuss, first, the strengths and disadvantages of the Chilean market. Second, how the constitutional process could change the country's environment for businesses, and what are the risks involved in this process for companies such as IKEA and Falabella.