Multinationals vs. Multilatinas Latin America's Great Race

Multinationals vs. Multilatinas Latin America's Great Race...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: content strategy & competition 1 strategy+business issue32 by Alonso Martinez, Ivan De Souza, and Francis Liu Multinationals Latin America’s Great Race VS. Multilatinas Illustration by Robert Goldstrom content strategy & competition 2 Established global companies and emerging locals are battling for dominance. Here’s how to handicap the winners. content strategy & competition 3 strategy+business issue32 A land of political and economic extremes, Latin America has long been among the world’s most chal- lenging regions in which to do business. But corpora- tions, some headquartered within the region and some outside it, have been undeterred, with many both fos- tering and profiting from Latin America’s vast market potential. Although a resurgence of disorder in such major markets as Argentina, Brazil, and Venezuela has recently dampened some companies’ regional ambi- tions, Latin America’s multinational moment remains ripe. Firms will only succeed, however, if they adjust their objectives to the territory’s real opportunities. Through the 1990s, foreign multinational corpora- tions (MNCs) seemed unrelenting in their quest to invest in and conquer this culturally rich land of more than 500 million people, upwardly mobile consumers, and promising industrial markets. Between 1991 and 2001, the ownership of the 500 largest companies in Latin America changed dramatically, with non-Latin multinational ownership growing to 39 percent from 27 percent. (See Exhibit 1.) The rising foreign competition pressured local Latin companies, which historically served only their home-country markets, to consolidate and expand into other Latin American countries, trans- forming themselves into “multilatinas.” Some multilatinas are expanding within subregion free-trade areas, as defined by the Mercosur Pact (Brazil, Argentina, Uruguay, and Paraguay) or Andean Pact (Colombia, Venezuela, Ecuador, Peru, and Bolivia); others are growing panregionally — throughout Latin America. The most ambitious are aiming to compete with the world’s largest companies beyond Latin America. Brazilian multilatinas Gerdau, a steel con- glomerate, and Embraer, a maker of small passenger jets, to take two examples, have acquired or built manufac- turing assets in the United States, Europe, and Asia. However, to date few local Latin firms have taken on the world or tried to create large multilatinas. In fact, very few Latin American companies earn more than 50 per- cent of their revenue outside their domestic market. The post-2000 stock market collapse, currency devaluations, mounting political disorder, and the prospect of defaults on debt obligations have consider- ably reduced both the rate and the value of foreign investment in Latin America. In 2000, there were 166 merger and acquisition (M&A) deals initiated by MNCs, for a total value of $102.6 billion, according to Thomson Financial. In 2002, the total value of M&A activity by non-Latin companies was only $38.9 billion.activity by non-Latin companies was only $38....
View Full Document

This note was uploaded on 09/21/2011 for the course ECON 101 taught by Professor Flah during the Spring '10 term at Punjab Engineering College.

Page1 / 12

Multinationals vs. Multilatinas Latin America's Great Race...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online