- 18 Apr 2007
- HBS Case
How Magazine Luiza Courts the Poor
Brazilian retailer Magazine Luiza has developed an innovative strategy for selling to the poor, combining technology with great service that please both customers and employees. The question of how the company can grow without sacrificing the special qualities that have made it successful is at the heart of a case study developed by Harvard Business School professor Frances X. Frei. Key concepts include: The case "Magazine Luiza: Building a Retail Model of 'Courting the Poor'" looks at the Brazilian retailer's innovative approach to selling to the poor. Magazine Luiza sells a mix of furniture, consumer electronics, and white goods. The retailer's flexible procedure for credit approval employs nontraditional metrics, which enables customers with lower, less easily established incomes to make purchases. Students who discuss the case in the HBS classroom must assess the viability of Magazine Luiza's acquisition of another Brazilian retailer and consider future growth initiatives. Can the company retain the qualities that have made it special to both customers and employees? Closed for comment; 0 Comments.
- 04 Apr 2007
- Research & Ideas
The Business of Global Poverty
Nearly half of the planet's population subsists on $2 a day or less. What role should business play as the world confronts what may be the most explosive socioeconomic challenge of the new century? Closed for comment; 0 Comments.
- 19 Mar 2007
- Research & Ideas
Handicapping the Best Countries for Business
India? South Africa? Russia? Which are the best countries for a firm to invest in? In a new book, Professor Richard Vietor looks at the economic, political, and structural strengths and weaknesses of ten countries and tells readers how to analyze the development of these areas in the future. Read our Q&A and book excerpt. Key concepts include: Governments create the overall environment for successful competition in the global economy. Bad government can only lead to less competitive businesses. To be competitive, countries need to offer businesses sound fiscal and monetary policies, secure property rights, high savings and investment, an absence of corruption, and exports that are competitive in enough areas to eventually balance imports. Business people must understand where markets and countries are headed by analyzing the present and then extending current performance trends forward three to five years. Although each has issues, Singapore, China, and India are currently the best bets for FDI and, pending political stability, so is Russia. Closed for comment; 0 Comments.
- 05 Mar 2007
- Research & Ideas
Risky Business? Protecting Foreign Investments
After a string of forced nationalizations of private enterprises in the 1960s and 1970s, the pendulum swung back and companies were again encouraged by host countries to build and run major infrastructure projects such as power and water. But a set of new property protections has done little to manage the risk in many of these politically unstable environments. Professor Louis T. Wells, coauthor of a new book on making foreign investment safe, discusses the current landscape. Key concepts include: Although property rights protections for investors in developing nations have improved since 1980, the new instruments are failing to satisfy the interests of either host countries or their business partners. Protections can be improved by developing a real consensus on the part of investors' home countries, host countries, and investors themselves. Business managers must take a significant role in pushing for a multilateral agreement on foreign direct investment, or at least become active in promoting lesser changes that will lead to more balance and security in the current system. Otherwise businesses will lose profitable opportunities and find themselves in the middle of disputes that hurt their future prospects. And poor countries will fail to benefit from what investors can bring them. Absent strong protections, managers must ask themselves a series of questions before investing in developing countries, such as: Is my investment project politically sensitive? If so, will the country continue to need my participation in the project? Closed for comment; 0 Comments.
- 13 Dec 2006
- Research & Ideas
Improving Public Health for the Poor
Microfinance may offer a window on new methods for widening access to healthcare for the poor, says Harvard Business School's Michael Chu. He and colleagues at the Harvard School of Public Health have embarked on a new project to serve this critical sector. Bringing together public healthcare and market forces "could have huge impact," he says. Key concepts include: Poverty is defined by three billion people in the world living on less than $2 a day. Public health as a private good should be complementary to public health as a public good, not in opposition to it. Project Antares wants to take high-impact initiatives and deliver them through commercial means. Part of its measure of success is whether a higher percentage of the population is helped than would be otherwise. Poverty cannot be tamed with a single solution. It needs an arsenal comprising education, healthcare, housing, access to basic services, and access to capital. Closed for comment; 0 Comments.
- 06 Dec 2006
- Op-Ed
India Needs to Encourage Trade with China
Although India and China have increased bilateral trade over the last five years, the amount is far less than what would be expected. Harvard Business School professor Tarun Khanna says India has primarily itself to blame. From The Economic Times. Key concepts include: China and India recorded $19 billion in bilateral trade in 2005, much less than would be expected of countries similar in size, within geographic proximity, and with shared cultural ties. Indians' fears about Chinese competition and unease over past border wars result in procedural and other roadblocks to increased trade, at India's disadvantage. China benefits from the trade more than India, both by selling more and better products to India and by welcoming Indian investment in China. Closed for comment; 0 Comments.
- 17 Aug 2006
- Working Paper Summaries
Corporate Governance and Networks: Bankers in the Corporate Networks of Brazil, Mexico, and the United States circa 1910
Brazil today looks like a typical case in which business groups and close relations between companies and banks play an important role to overcome information and monitoring problems. This was not always the case. To study how the development of financial markets can change the interaction between banks and corporations, Musacchio compared the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico, and the United States at the turn of the twentieth century. This paper and previous research support Musacchio's hypothesis that financial markets in Brazil were sustained by an institutional framework that protected investors, enforced credit contracts, and promoted regular financial disclosure of company accounts. The development of bond and stock markets, and the relatively good corporate governance practices in Brazil before 1930, made connections with bankers less necessary. Key concepts include: Even though Brazil, Mexico, and the United States had very different network structures, all three achieved rapid industrial growth before 1910. Connections with bankers might be good in an environment where access to credit is limited or where close relations help to reduce asymmetries of information. But once financial markets develop, these connections to lenders are less necessary. The development of good disclosure and corporate governance practices in Brazil circa 1910 allowed companies to depend less on connections with banks in the form of corporate bond interlocks. In Brazil, bankers were less central in the network of corporate board interlocks than in Mexico and the United States. In Mexico, foreign companies had access to financial markets abroad and fewer connections with banks. This strong, dense network in Mexico substituted for some of the institutions that promoted financial development and growth in Brazil. While most people see networks and financial markets as substitutes, networks in the United States functioned as complements to financial markets. Networks may successfully substitute for some institutions and generate the credible commitments that are necessary for the expansion of markets. Closed for comment; 0 Comments.
- 19 Jul 2006
- Research & Ideas
Political Turmoil and Mexico’s Economy
Professor Noel Maurer's historical research into Mexico and other countries with unstable governments shows that their economies perform better than might be expected. Why? Key concepts include: A country's political instability does not necessarily take down the economy—rules matter. The final outcome of Mexico's disputed recent presidential election will tell how far the country has moved toward democracy. U.S. attempts to reform domestic institutions of other countries have sometimes been sidetracked in favor of economic expediency. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
What Roosevelt Took: The Economic Impact of the Panama Canal, 1903-29
The Panama Canal was expected to bring great economic benefits to the people of Panama. Instead, the United States received most of the benefits. This was a deliberate act on the part of the U.S. The U.S. didn't allow Panamanian businesses to sell goods or services in the Canal Zone, it avoided the employment of Panamanian workers, and it used its military leverage to force Panama into accepting a low payment for the Canal territory. Key concepts include: The Panama Canal's greatest benefit was its effect on transportation between the east and west coasts of the U.S. The main benefit for Panama of canal construction was the introduction of new healthcare technologies. Developing countries should be wary of large infrastructure projects such as today's pipeline and land bridge projects. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Bankers, Industrialists, and Their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization
Mexico and Brazil had different institutional structures in the early 20th century. Did entrepreneurs in these two countries organize their business networks differently to deal with the different institutional settings? And, how can we compare the impact of the institutional structure of Mexico and Brazil on the networks of entrepreneurial finance and entrepreneurship in general? In this research, Musacchio and Read look at the networks of interlocking boards of directors of major joint stock companies in two large Latin American societies in 1909. Key concepts include: Business networks were more important for entrepreneurs, bankers, and politicians in Mexico, supplanting formal institutions to the great benefit of connected Mexican elite. In Mexico, informal monitoring and enforcement provided by the network compensated for the relatively weak rule of law. The Mexican network successfully substituted for formal institutions because it included many politicians. In Brazil, politicians were uncommon in the network because of the stronger formal institutions. At low levels of development, there is no significant difference in how a country grows, either through strong formal institutions or by substituting networks for some of those institutions. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Why IT Matters in Midsized Firms
What does IT actually contribute to a business? Is IT a commodity like electricity or is it a crucial element of competitive advantage? In a study of over 600 medium-sized global firms to analyze the business benefits that IT can enable, the authors found that IT capability was key to profitable business growth. This was true in both the U.S. product and services sectors as well as in Germany and Brazil. Key concepts include: IT matters. IT enables firms to scale. The amount a company spends on IT is a poor indicator of IT functionality and business impact. Firms with business process scalability find it easier to overcome obstacles to growth, differentiate themselves from competitors, and quickly capitalize on opportunities. Closed for comment; 0 Comments.
- 29 Aug 2005
- Research & Ideas
How Organizations Create Social Value
A study of smart practices by social and business organizations in Iberoamerica. Research by HBS professor James Austin, HBS senior researcher Ezequiel A. Reficco, and UNIANDES professor Roberto Gutiérrez. Closed for comment; 0 Comments.
- 10 Jan 2005
- What Do You Think?
Public Pension Reform: Does Mexico Have the Answer?
Mexico may have found a formula for avoiding most of the misfortunes that could arise when individuals invest their own funds. What's the right way to support an aging workforce? And why is it that a concept—life-long security—that should bring comfort to all of us is so distasteful to address in public? Closed for comment; 0 Comments.
- 26 Jan 2004
- Research & Ideas
What Developing-World Companies Teach Us About Innovation
A mini case study by professor Donald N. Sull and coauthors on how three businesses in developing countries overcome a lack of resources to succeed. From Strategy & Innovation. Closed for comment; 0 Comments.
- 17 Nov 2003
- Research & Ideas
Lessons from a Nasty Trade Dispute
Even if the World Trade Organization rules in favor of your country’s government, it may not mean the end of a business dispute. HBS professors Rawi Abdelal and Laura Alfaro explain why. Closed for comment; 0 Comments.
- 02 Jul 2001
- Research & Ideas
George C. Lodge
Whether the subject is Third-World development or national competitiveness, George Lodge, Jaime and Josefina Chua Tiampo Professor of Business Administration, Emeritus, has exercised his talent for seeing the big picture in a prolific outpouring of books, cases, and articles. Closed for comment; 0 Comments.
- 30 Apr 2001
- Research & Ideas
Big Companies, Big Opportunities—Big Questions
Markets that were once protected in Latin America are suddenly open to competition from all sides. For large companies, this new playing field presents wonderful opportunities—but great risks, too. Closed for comment; 0 Comments.
- 16 Apr 2001
- Research & Ideas
Making the Most of Government Upheaval
Why do some firms in emerging economies quickly rise above the rest? What are their competitive secrets? New research by HBS professor Rogelio Oliva and his colleague Fernando F. Suarez suggests a few answers. Closed for comment; 0 Comments.
- 11 Mar 2001
- Research & Ideas
Group Therapy
By filling gaps in the infrastructure of emerging economies, business groups can both foster and deter entrepreneurship in various ways. Peter K. Jacobs explores the research of HBS associate professor Tarun Khanna in this article from Working Knowledge. Closed for comment; 0 Comments.
How Property Ownership Changes Your World View
When Argentine squatters were granted property title it changed the way they viewed the world. HBS professor Rafael Di Tella discusses his research into how property ownership affects our beliefs and also our attitudes toward capitalism. Closed for comment; 0 Comments.