Archive for the ‘Argentina’ Category

Latin America’s emerging multinationals

April 15, 2009

“Latin American companies have fallen through the cracks,” says Lourdes Casanova, a lecturer in strategy at INSEAD and author of Global Latinas: Latin America’s emerging multinationals.

 

“Latin America has been undersold. This book wants to celebrate the success of the region and its multinationals.” Since 2002, Latin American firms have expanded aggressively on a global scale and investment in foreign countries has jumped accordingly. And commodities now account for less than 30%, with a range of products now accounting for the rest – IT services, steel, electricity, wine, cosmetics, oil and gas.


Until 1980, Latin American countries were the emerging market of choice. Brazil and Mexico had China-like growth. But during the 1980s (the ‘lost decade’ due to the debt crisis) the region’s growth stalled as Russia, China and India stepped up. Prompted by the strict policies imposed in the 1990s by the IMF and World Bank, Latin American governments began the privatisation of state companies, deregulation and tariff cuts.  

 

The deregulation brought a wave of foreign multinationals to compete against domestic firms. Latin American companies had to grow and expand internationally. “These companies had been growing in a protected environment before this,” Casanova says. “Now they felt threatened by foreign multinationals competing against them in their own region. The best defense was to attack.” During the 1990s, Latin American firms grew domestically and expanded into nearby regions and/or with the same language and shared history. NAFTA smoothed the way and enabled cross-border acquisitions. Now they are entrenched.

 

Source: INSEAD, Paris

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Genetically Modified (GM) crops

February 6, 2008

A huge debate has broken out in Australia with the foreshadowed lifting of the moratorium in NSW and Victoria on the growing of GM canola.

Growers of other crops are concerned about GM crops contaminating their investments. Canola growers themselves are concerned that their traditional export markets will not accept GM canola, and that the market will drop.

ABARE has just released a report ‘Market acceptance of GM canola’ that basically says no problem – go to www.abareconomics.com

People fail to realise that GM crops are now grown by more than 10 million growers in 22 countries. China, India, Brazil and Argentina are involved on a large scale, and the productivity benefits (less herbicides, higher yields) will provide them with a significant competitive advantage in domestic and export markets.

The consumer groups are another story. They are calling for full labeling of GM foods so that consumers can avoid them. The opportunity lies in the emerging global trend towards ‘truth in labeling’ – this includes eco-labeling, country of origin, and region of origin.

We predict that in five years time, the smarter food companies will be advising exactly what we are eating and from where it is sourced. They will be using this product information to strengthen their brand, to differentiate it away from generic brands and low-cost and low-quality imported product, and thus command higher prices.

Concentrate on sound infrastructure’ says Swiss-based body

October 24, 2007

The World Competitiveness Yearbook 2003 made some very interesting observations:

  • Nations should concentrate on sound infrastructure: for economic purposes e.g. Communication, Administration, and Sciences, and for social purposes e.g. Education, Health, and Security. Governments cannot escape this ultimate responsibility, even if implementation is sometimes delegated to the private sector.
  • Companies should rediscover the virtues of transparent, ethical behaviour. No enterprise can be successful, nor a nation be competitive, if public opinion is distrustful of the business community.
  • Of the 59 countries assessed, only 4 had negative GDP growth in 2002 – Argentina (-1.2%), Venezuela (-9.6%) Israel (-1.1%), Iceland (-0.5%).
  • Europe was a mixed bag. Larger economies encountered significant difficulties in adapting and reforming the role of Government – in France, Germany, and Italy, slower growth placed them on the borderline of recession.
  • Upcoming economies, such as Slovenia, Czech Republic, Hungary, Slovak Republic and Estonia had strong growth (between 3.2 and 5.8%). Their low cost base allows them to reap greater benefits from their entry into the EU.
  • This is not a good period for Latin America. Infrastructure, and capital investment in general, has slowed. Very few competitive industrial clusters are being developed, with the exception of Chile.
  •  Source: International Institute for Management Development: IMD World Competitiveness Yearbook 2003. Lausanne: IMD, 2003. 782p., graphs, ill., tables. ISBN: 2970012170 (via NPCC) 

    Argentina on the move

    October 15, 2007

    The International Economy Program of the CAEI (Argentine Center of International Studies) has announced the start of its research program. The CAEI’s research-oriented website analyses international politics from a pluralist point of view. Several Institutions from all around the world support our work.  You can collaborate with our debate on the most critical issues on International Economy by sending us some of your work.

    Graduate or Institutions who are interested in cooperate with the International Economy Program and the CAEI should send an email to economia@caei.com.ar 

    Contributed by Martin Guinart, Argentine Center of International Studies www.caei.com.ar

    Wine supply chains: Australia-South Africa-Canada?

    February 17, 2006

    Philippe Roy (Ottawa) writes ‘We continue to enjoy Australian wines in Canada, both reds and whites, all of a uniformly high quality, full bodied and lots of diversity in characteristics and flavours.

    Can you do an article on Australian wine clusters, and invite other countries and regions to respond with wine cluster study reports? I can see Australia, NZ, France, Italy, Spain, Portugal, USA, South Africa, Chile, Argentina, all over a longer period of time. Winemaking is a multi-billion dollar industry globally.’ Cheers! Philippe Roy, Cluster Pathfinders, Ottawa, Canada. 

    Professor Ian Marsh (Australian National University) replies
     
    Australian wine industry has achieved spectacular success internationally – in just over a decade. While a number of environmental and external factors helped, the progressive development of a cluster structure introduced the critical element.

    This is the central finding of a study Brendan Shaw and I conducted for the Australian Business Foundation. (See www.abfoundation.com.au).

    The process began with the formation of a strategic plan for the industry (Strategy 2020). It  demonstrated the scale of the business development opportunities, particularly growth from exporting, the requirements for realising these opportunities, and why collaboration held the key. The opportunities exceeded what any producer could achieve by solo action. This report provided the grounds for ‘buy-in’ and collective ownership by producers.

    The areas where collaboration and commitments were required from producers, researchers and marketeers were clearly specified. Industry leaders championed these proposals at industry conferences and forums.

    Research and marketing agendas were established – and crucially, the agencies needed to drive collaboration were established. Where they already existed, the institutions adapted their programs to the new strategies. Over the course of a few years, 8 agencies were established or reformed to manage implementation. The most critical were the Australian Winemakers Federation (overall strategy), the Wine & Brandy Marketing Corporation (international market development) and the Grape & Wine Research Board (R&D).

    In its appraisal of the industry, the respected Dutch assessor, Rabobank, scored the Australian effort against a variety of indicators e.g. natural advantages, economic context and the industry’s self-made capabilities. The Australian industry scored best in this latter category, clearly affirming the contribution of clustering to its ongoing success.   

    Nigel Gwynne-Evans reports from South AfricaThe Wine Industry Plan is hot off the press. It is a commitment by the South African wine industry to deal with the legacy of a highly regulated economic environment and the challenges of increasing global competitiveness and discrimination along racial and gender lines. Aims to establish a “vibrant, united, non-racial and prosperous SA wine industry”.The South African Wine & Brandy Company is the key body, with 5 offices involved – Social & Economic Development; Human Resources Development & Training; Technology Innovation & Transfer (Winetech network); Generic Market Development & Promotion via Wines of South Africa (WOSA) and SA Brandy Foundation; Knowledge & Information Systems through SAWIS.  An interesting notion is a Wine Industry Scorecard (WIS) – to manage the process and create synergies. Each signatory will implement transformation strategies to be monitored by the SAWB.   Black economic empowerment will be attended to within all of these indicators.  A proposed checklist of indicators and benchmarks will be developed in the 10 categories:– Human resources development
    –  Social upliftment & rural development
    –  Business development, service providers & input suppliers
    – Ownership & equity schemes
    –  Governance systems & participation
    – 
    Quality & integrity
    – Technology, innovation & transfer
    – Market development & promotion
    – Environmentally sustainable production practices
    – Economic performance, efficiency & competitiveness.
     
    The plan is available from South African Wine & Brandy Company – johan@sawb.co.za (Is there a window for technology transfer and supply chain initiatives between South Africa and Western Australia? Any interest, readers? – Editor).  

    Cooperatives – reinvention required

    June 6, 2001

    Professor Mike Cook of University of Missouri-Columbia (USA) gave a thought-provoking address to the Australian Agricultural Economics Society meeting in Canberra in March.

    H has over a decade of industry experience with Tenneco, Inc. (Houston), Farmland Industries (Kansas City) and the Rice Growers Association (SacramentoSome of his points were:

     ·          Most agricultural cooperatives in Australia were set up for defensive reasons, around State legal frameworks, between 1900-1940 – to address market failure of various types. Similar timing and trends in other British-influenced places (US, Canada, South Africa) and Argentina, Brazil, Paraguay etc.
    ·          Co-operatives can ‘tie you up’ because they make producers think horizontally. But the world in now operating very vertically as well – international VI supply chains etc. They have other flaws – free rider problem, short/long-term horizon differences, difficulty of exit.
    ·          Will see the slow death of co-ops unless a ‘new generation’ co-op can be developed. The US has developed sophisticated co-ops in some instances e.g. Ocean Spray – dominates world cranberry industry, Sunsweet in prunes. Dutch have got their act together too.
    ·          Nestle and Cargill will have it all in Argentina – because these two multinationals are very good. In 7-8 years there will be no local agrifood companies left of any significance –– countervailing action is required – unless of course people are satisfied with this.
    ·          Brazil will also be down to two local agrifood majors within a few years.
    ·          New forms of collective action are required. 

    What do you think? I am thinking about where the Bega Cooperative fits on the scale, having interviewed the Chairman a few months back, and being impressed that they’d cope with global pressures. I believe that the dairy market deregulation underway in Australia will expose weaknesses in organisational and governance systems – for both cooperatives and vertically-integrated corporates. For example, Bonlac is one of the latter, and is on the slippery slide as Professor Cook noted.