Building a brand

¿Eternos emergentes?
Asia y América Latina
Lourdes Casanova
Strategy Department
INSEAD
Email: [email protected]
Casa de América
Observatorio Iberoamericano de Asia Pacífico de Casa Asia
27 de marzo 2008
Globalization is a 2-way street
As economic and political power shifts
worldwide, ‘new champions’ are emerging
regionally that force us to rethink solutions to
global and industry challenges. How can old and
new champions collaborate in a highly
competitive global environment? Where are the
natural areas of collaboration?
World Economic Forum. Davos. 26 Jan 2008
‘far behind’ ‘me-toos’ ‘low-cost’
Brazil sugar cane based ethanol
the "Chang"solar-powered cell phone
EBITDAs > 50% in all new champions
Emerging markets Hardships Î Training ground to expand
In Accenture 2008
In Accenture 2008
The new ‘JAGUARS’
EMERGING MULTINATIONALS FROM LATIN
AMERICA
• 334 of the top 500 Latin American MNCs > US$ 1 billion
• OFDI (2006) US$40 billion (source: ECLAC 2007)
• Phases
•
•
•
•
1: 1970 – 1982 Natural market
2: 1982 – 1990 Lost decade
3. 1990 – 2001 Privatization and deregulation: competition
4. 2002… China and India demand of commodities
• Competition
• Economic boom
Joined IDB/INSEAD research project
• From Multilatinas to Global Latinas. Ad hoc sample
• Investments in US or EU
• Excluded 100% state-owned, financial institutions
• Variety of sectors, sizes, public/private and countries
• Starting at the ’90s
• Mexicans: América Móvil, Bimbo, Cemex
• Brazilians: CVRD, Embraer, Petrobras
• Emerging Global Latinas (SMEs)
• Concha y Toro, Natura, Politec, Pollo Campero and Astrid
y Gastón
Not much public information about the companies/opacity
1. DRIVERS: Macro and firm
• MACRO
•
•
•
•
Economic volatility
Liberalization policies Î competition at home
Trade Agreements: NAFTA, Mercosur (FTAs very important)
Economic bonanza since 2002: commodities, increase demand from China
and India
• Government role
• FIRM
•
•
•
•
Seeking (stable) markets Î growth
Competition at home Î best defense is to attack
Perception of an opportunity
Learn
• To compete
• Competitive advantage Îvirtuous circle
2. International Strategies
• Geographic diversification as hedging more than by product
• Where?
1st phase: Natural Market: language, history, proximity
2nd phase: US/EU/Asia
3rd phase: Rediscovery of natural market
• Brazilian companies more geographical diverse expansion (but
started in Mercosur) than Mexicans (focused in US)
• How
• Domestic: Greenfield
• International: Acquisitions, JV (oil-mining)- alliances-network
3. Global Latinas Uniqueness
•
•
•
•
•
•
Dominant positions in home market
Family owned conglomerates/’national champions’
Entrepreneurial drive
Strong (and long) leadershipÎ fast centralized decision-making
Beyond efficiency: Branding and Innovation
Survive harsh environment, different perception of risk
• Economic volatilily
• Strong competition in home market: local and MNCs
• Management:
• Not always professionalized management (network or family control)
• Stand alone international operations (not integrated)
• Take advantage of crisis cheap assets from ‘foreign MNCs’
• To acquire competitive advantage
CONCLUSIONS
• Fierce competitors that excel at efficiency, innovation and risk
management
• Internationalization
•
•
•
•
Tap new markets, Build economies of scale
Spread risk geographically
Compete with multinationals
Access to knowledge: technology, cheaper capital
Some questions for discussion
• Should governments encourage Outward Foreign Direct Investment?
• CVRD’s public discussion
• Impact in host country
• Will they cooperate more?
• Will they have a development angle?
• Do they owe anything to their home country?