6/3/2010 - As the world economy struggles, Latin America finds itself relatively unharmed by the current economic crisis. IM Trust Executive Director Guillermo Tagle believes that the region’s economic resiliency is a result of grim experience.
|| || |
“Part of the reason Latin America didn’t suffer much from the current crisis is because of how much it suffered from its own personal crisis,” Tagle, who also serves as director of accountancy in Chile, said during a panel discussion on finance at the Kellogg School’s 2010 Latin American Business Conference. “We were just emerging [from that crisis]. We had huge problems, and we learned a lot.”
One of those problems, the lack of an integrated financial market, actually helped insulate the region when world markets took a hit, Tagle said.
“We never had the benefit of having a flexible, innovative market in our region,” he said. “We fought with the government for many years to be more flexible. They never allowed us to do it. Because of that, there was no financial exposure to what happened in the rest of the world.”
The impact of the financial crisis was a hot topic during the panel discussion, which addressed the economic climate and business opportunities in the region. Close to 200 Kellogg alumni, students, professionals and experts in the field attended the conference May 15 at the James L. Allen Center.
One of those experts, panelist and Cosan S.A. CEO Marcos Lutz KSM ’01, echoed Tagle’s view that the prime reason that Latin America has weathered the financial storm is because it hasn’t yet seen the sun.
“Not only did we have the previous crisis, we’ve always been in crisis,” Lutz said.
Although the problems of the past may have insulated the region, recent regulatory reforms and efforts to strengthen financial systems also served as buffers, fellow panelist Roger Ingold, managing director of Accenture in Brazil, said.
“The strong internal market helped a lot — we had some internal investment,” he said. “The transparency of the system has also helped.”
Despite the challenges Latin America faces, there are many opportunities for investment, Ingold said.
“We are very optimistic,” he said. “We have a lot of business going on in every sector. There is a young, growing workforce with a lot of people entering the marketplace, which is good for all kinds of businesses.”
That growing workforce is one of the things that drew McDonald’s to the region, McDonald’s Latin America and Canada President Jose Armario said during his keynote address.
“One of the benefits of Latin America is labor — it has a very young population,” he said. “We like to consider ourselves a great first-time job opportunity.”
Managing an established United States brand in Latin America presents opportunities to expand the brand to include new products that reflect local tastes and cuisine, Armario said. But companies should remember to stay true to what made them successful, regardless of where they are in the world, he added.
“We’re offering more menu items, trying to meet the needs of the consumers … and when we do, we are rewarded,” he said. “But if you try to sell too much, too many local products, you lose your identity. You lose what makes you different. I think people [go to McDonald’s because they] want a taste of America.”
In addition to Armario’s keynote address on McDonald’s path to success in Latin America, conference participants also attended panel discussions on driving growth in Latin America and matching funding with winning business ideas. David Besanko, the Kellogg School’s Alvin J. Huss Professor of Management & Strategy, also gave a welcome address.