Dr. Lourdes Casanova
When many other researchers were focusing on Asian markets, Dr. Lourdes Casanova steered her research for the past 12 years in an unprecedented direction to research emerging markets and multinationals in Latin America. Dr. Casanova was invited to speak at the Olayan School of Business (OSB) on June 2, 2010, on the “Rise of Emerging Multinationals: The Case of Latin America.” A lecturer at INSEAD since 1989, Dr. Casanova has been instrumental in developing the corpus of research on Latin American markets. When Casanova began her research, only two cases studies on Latin American companies existed, but now there are research centers dedicated to developing Latin American economic research in Brazil and Buenos Aires.
Economically speaking, the world has changed drastically since fall of Lehman Brothers in 2008 and the markets have had to learn to respond in new ways. Predominantly Western economic models, once taken for granted and imposed on the world, are now questioned. The world was used to the G8, but now the G8 is “missing in action,” as Dr. Casanova candidly stated, and their ideas and actions in the market economy are about to become obsolete. As the structure of the economy changes, multinational companies are growing in importance. Latin America, traditionally in the shadow of the US, has grown to form their own economic commission, the Comissão Econômica para a América Latina e Caraíbas (CEALC), independent of the traditional “father” country. This initiative marks a new era of economic significance for Latin America. According to Casanova, 20% of all multinationals in the Fortune 500 come from emerging markets. China is a key player in emerging markets: in market capitalization (as of December 2009), China held 3 of the top 10 companies, and PetroChina beat out Exxon Mobil by $30 billion. Other significant emerging markets include South Korea, Russia, Mexico, Brazil, India, and Taiwan.
Another indicator of emerging markets’ importance is recognition from the world powers on other global issues. When at the 2009 Copenhagen Climate Summit only 20 of 192 represented countries declared their intentions to combat global warming, the United States reached a deal with the BASIC group, comprised of Brazil, South Africa, India, and China, concerning climate changes. That the U.S. asked to work alongside the BASIC group on climate change indicates that emerging markets are gaining noteworthy attention for pioneering programs and proposals independent of the world powers’ behest.
What drives multinationals from emerging markets forward is that, according to Casanova, “multinationals do not behave exactly the same,” and their exponential growth makes their behaviors a “standard for excellence.” These companies have learned to navigate major crises, make fast acquisitions, to quickly adapt to new circumstances, and have strong leadership at the top. It is worth noting that Western multinationals are dependent on the growth of emerging markets, as more beer, TVs, cell phones, refrigerators, and soon cars, are sold in emerging markets than in the West.
In the 21st century, emerging markets started to take shape, particularly Global Latinas, which Casanova defines as Latin American multinationals which have succeeded in the United States, Europe or Asia, and companies that have an “unambiguous Latin American nationality” whose headquarters, ownership, and primary assets reside within Latin America. Starting in 2009, “natural markets” began to develop. Casanova identifies natural markets as those which share language, historical ties, or geographic proximity. “We are in a moment where natural markets offer opportunities for growth,” stated Casanova.
Casanova remarked that successful Global Latinas exemplify business practices that encourage effective and efficient growth. These companies understand that internationalization is a learning process that will take time and patience. Their business model is innovation, and Casanova cited CEMEX (Mexico) and Petrobras (Brazil) as models of innovative corporate strategy. CEMEX was one of the first companies to “brand” cement, and through expanding their IT support infrastructure, CEMEX used GPS to deliver products on time and to better serve their customers’ needs. “Nowadays, GPS is used extensively, but at that particular time, this was really innovative, particularly for an emerging multinational company.” By focusing on integrated growth, profitability, and socioenvironmental responsibility, Petrobras has become a leader in energy supply. Notably, Petrobras focuses on contributing to the development of Brazil itself, typifying a quality of the natural market. Concha y Toro (Chile), a wine exporter, now produces one of the world’s most important wine brands. Concha y Toro achieved its status by “enhancing the distinctive characteristics of each original vineyard,” thus promoting the essence of Chile through wine production.
Global Latinas also demonstrate efficiency in operations and “seek to understand the needs of consumers at the bottom of the pyramid,” as Casanova described. Carlos Slim epitomizes these qualities. Slim developed the pre-paid cellular plan in Mexico. Though this model was unsuccessful in the U.S., the concept had not yet been introduced to Mexico, and Slim sought to seize this market opportunity. By developing the technology internally and making it accessible to Mexican consumers, Slim took the Mexican cellular market by storm. Grupo Luksic (Chile) was first involved in the mining industry in Chile, specifically in the mining of copper, which is a primary natural resource in Chile. But Grupo Luksic expanded their interest to capitalize on other strategic segments of the Chilean economy, and by getting involved in metals, electricity, and manufacturing, and Grupo Luksic successfully extended their operations into Argentina, Colombia, and Brazil.
Restaurant development has been a popular means for Global Latinas to grow into multinational companies. Restaurants, observed Casanova, offer opportunities to “overcome branding difficulties through food,” and provide owners and patrons with a sense of “pride in their own agricultural products.” Casanova added, “When you market cuisine, you market the country.” The engrossed audience agreed with Casanova, and joked that instead of potatoes, the Middle East would market hummus, foul, and falafel.
Casanova named several Latin American restaurants that have established themselves on the global market, including Pollo Campero (Guatemala), which produced a new concept in flavor: a tender, juicy and crispy chicken, and Astrid y Gastón (Peru), a restaurant that experiments with local traditions and ingredients, and aims to inspire the world through Peruvian cuisine.
Casanova closed her lecture by reiterating the foundational questions of her research: What is the future role of Latin America in the global economy? Will Latin America become a key player in the global economy? Or will Latin America remain a peripheral player, always with potential, but never a player in its own right? Casanova concluded, “We certainly need to keep our eyes on Global Latinas.”
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