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Business As Usual Won't Work Anymore For Latin America's Multinationals

With slower demand expected in the world's raw materials and consumer markets, big Latin American firms must find new strategies.

The Sao Paulo stock exchange
The Sao Paulo stock exchange
Rodrigo Lara Serrano


SANTIAGO — One might say of Latin American multinational firms what a zoologist said once about domesticated animals: The question is not why they exist, but why we do not tame more animals.

Taming those different animals, however, has always been easier said than done. Not many management teams have the right local partners, the ability to fine-tune operations on a cultural level, or the backing of strong capital flows (or shareholders willing to cover initial losses) to sustain them until they have that winning combination.

From that perspective, the growth of Latin American multinationalsmultilatinas — is the fruit of a remarkable process that for the most part has taken place within a framework of economic acceleration and a general drop in poverty levels. The region's governments did their part by promoting exports of goods and services, steering away from "economic nationalism" and establishing legal frameworks to protect foreign investments. The availability of cheap and abundant credit helped too, as did real increases in people's incomes in many countries and a boom in new communication technologies allowing firms to manage their operations cheaply and in real time.

When future economic historians look back at this period they will surely be surprised by how easily all of the aforementioned conditions came together, how widely accepted they became and how natural and permanent they came to be seen.

Except they aren't necessarily permanent. The current situation may not deteriorate entirely, but certain aspects of it are likely to weaken or change.

One thing Latin American firms would do well to consider is how their businesses will be impacted by the more "normal" growth rates (4-5% annually) forecasted for China. The slowdown may not happen next year, but it will eventually take place. It's simply unrealistic to think that the 9-10% growth we're accustomed to seeing in China will continue. If it does happen again, it'll be in the form of a rebound following a bout of recession.

That said, the current paralysis in Europe won't last forever either. When it does lift, demand will likely recover. Latin American mining companies may also have reason for optimism. Tecnological innovations are making exploration and exploitation easier and more cost effective. Scientific advances are also, in some cases, creating new minerals markets. The current race to develop a new generation of batteries to store solar-generated electricity, for example, could boost demand for materials such as lithium.

Food and retail multinationals will also have to adapt to changing conditions. They should confide less in the seemingly steady rise in real incomes and also be more cautious regarding the vast amounts of household debt families are accruing to pay for all their new consumer goods.

One thing owners, directors and managers can do to prepare for these changes is adopt a business model that is costly now, but fruitful later. On the demand side, that means starting to view consumers as co-creators of the goods and services provided them. Rather than the "pushing" strategies of the past, which tended to be copied from the U.S. and involve big budget marketing and publicity, companies could focus more on rapid response strategies in the supply chain by periodically "re-creating," for example, their various products.

Multilatinas would also do well to place more emphasis on research and development. Subjecting the services offered in a supermarket, mall or clinic to scientific research may sound excessive, but only to an accountant. As the experience of other regions has shown, this approach facilitates the rise of unexpected spin-offs, new projects, previously unconsidered niches, and secondary firms whose profits end up becoming essential to the mother group or firm.

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Big Brother For The People: India's CCTV Strategy For Cracking Down On Police Abuse

"There is nothing fashionable about installing so many cameras in and outside one’s house," says a lawyer from a Muslim community. And yet, doing this has helped members of the community prove unfair police action against them.

A woman is walking in the distance while a person holds a military-style gun close up

Survellance and tight security at the Lal Chowk area in Srinagar, Jammu and Kashmir, India on October 4, 2022

Sukanya Shantha

MUMBAI — When sleuths of the National Investigating Agency suddenly descended on human rights defender and school teacher Abdul Wahid Shaikh’s house on October 11, he knew exactly what he needed to do next.

He had been monitoring the three CCTVs that are installed on the front and the rear of his house — a chawl in Vikhroli, a densely populated area in suburban Mumbai. The cameras told him that a group of men and women — some dressed in Mumbai police’s uniform and a few in civil clothes — had converged outside his house. Some of them were armed and few others with batons were aggressively banging at the door asking him to immediately let them in.

This was not the first time that the police had landed at his place at 5 am.

When the policemen discovered the CCTV cameras outside his house, they began hitting it with their batons, destroying one of them mounted right over the door. This action was captured by the adjacent CCTV camera. Shaikh, holed up in his house with his wife and two children, kept pleading with the police to stop destroying his property and simply show them an official notice.

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