This case describes the decarbonization strategy of Arcos Dorados-McDonald's largest independent franchisee, operating in 20 countries and territories in Latin America and the Caribbean-and how the company measured its greenhouse gas (GHG) emissions, including those generated directly by the company and by all of its suppliers. Set in May 2022, the case also describes the challenges faced by the company to understand the composition of its carbon footprint, as well as the actions it has taken to reduce it. Under CEO Marcelo Rabach, Arcos Dorados was focusing on reducing its carbon intensity. While the company had made progress in reducing carbon emissions from its operations, it now needed to develop a plan to address emissions in its supply chain, which directly impacted the composition of its menu. Options to reduce the carbon impact of menu items included replacing (or mixing) the beef used in sandwiches with less carbon-intensive ingredients; shifting sales toward chicken-based meals; adding plant-based menu options; and increasing the share of sales driven by coffee and ice cream. The plan should align with the company's double-digit growth strategy while also controlling costs to maintain profit margins. Confronting these challenges, what was the best product mix and prioritization for these alternatives? Which products should get more resources to develop and market? How should the company forecast demand for these products? And how could they ensure that their efforts to reduce their carbon intensity would avoid hampering the company's growth, especially given its context of fierce competition and macroeconomic and social disruptions?
In 2020, Alejandro Simón, CEO of Sancor Seguros Group, a nearly 75-year-old cooperative that had become Argentina's insurance leader, had to decide about the Group's digital transformation strategy. The Group's values and history needed to be considered during the analysis, especially regarding its relationship with individual agents selling Sancor Seguros Group's products, who drove much of the Group's revenues. Sancor Seguros Group had always taken into consideration agents' input when making important decisions, which extended to the Group's recent efforts on its digital transformation. Yet, not all of them had adapted to new technologies. However, the use of digital channels to sell goods and services accelerated after almost two months of a mandatory quarantine that restricted out-of-home activities to buying essentials such as food and medicines. Would the momentum gained by these digital channels persist, serving as the platform for agents to catch up with the industry's newest global trends? Accordingly, how could Sancor Seguros Group help agents capture the value created by new technologies? How should the Group approach its presence on less personalized channels, like the ones offered by brokers or digital channels? The Group could also concentrate its efforts on long-term actions and focus on revamping its product offering.
In October 2022, Bruce Taylor (HBS MBA, 1981), Chairman and CEO of Taylor Farms, the leading producer of salads and healthy fresh foods in the United States, wondered whether this was the right time for Taylor Farms to venture into the Controlled Environment Agriculture (CEA). Taylor Farms' operations involved farming, processing, and distributing about 50 million pounds of fresh produce every week. To accomplish such a feat, Taylor Farms faced a number of ongoing challenges related to features such as food safety, climate change, labor shortages and wages, input prices, and logistics. CEA, either in high-tech, single-level greenhouses or vertical farms (multi-layer indoor crop cultivation systems), could not entirely help address environmental and logistic challenges, but its smaller geographic footprint enabled operations closer to consumption sites. Indoor farms were promoted as using far less water and requiring less transportation than traditional farms, but they required more power and were more expensive to build and run. With these solutions still under development, Bruce harbored some qualms about their actual benefits. After all, Taylor Farms had been able to sustain double-digit revenue growth rates by sticking to conventional agriculture. Yet, he did not want the company to fall behind in new technologies that could render its operations more efficient. Moreover, CEA producers might turn into a threat for Taylor Farms, eating into its market share by catering to consumers who favored "environmentally-friendlier" products. Was this the right time for Taylor Farms to venture into the CEA space, or should it wait for the technology to evolve further or the industry to consolidate?
In 2018, Francisco Staton, Managing Director of Arcos Dorados in Colombia had to decide on the company's strategy to expand its food ordering and delivery business in the country. Arcos Dorados stood as McDonald's largest independent franchisee, and Colombia was one of the 20 markets and territories in Latin America and the Caribbean where the company operated. Arcos Dorados had analyzed the conditions under which the company would offer delivery services at its restaurants, following the announcement of agreement entered into by McDonald's corporation for offering delivery globally through a last-mile delivery company. As there were local limitations not addressed by the global agreement, Arcos Dorados' Colombia's management team were considering two potential alternatives that could help to address them. The first alternative hinged on stepping up the company's efforts to consolidate its own delivery service. With the second alternative, the company would pursue partnering with last-mile delivery platforms under more favorable conditions than the ones agreed upon by the global agreement. What would be the best alternative to move forward?
Bodega Aurrera, serving the base of the pyramid and Walmart's main Mexican format, is considering launching a full eCommerce channel as Covid-19 has erupted in the country. In 2019, Bodega Aurrera accounted for 45% of revenues and 2,748 of Walmex's 3,416 stores. Having introduced eCommerce with the high-income segments served by its Walmart and Superama formats, Walmart Mexico (Walmex) had slated an online channel for Bodega Aurrera in the next three or four years, considering that its core clients belonged to the C and D socioeconomic segments. However, with the onset of the Covid-19 pandemic, retail store sales plummeted and analysts around the world began to note that sales on digital channels were surging. In late April 2020, Lilia Jaime, the CEO of Bodega Aurrera, wondered if this was an opportunity she had to seize. If so, she had to act right away, ahead of her competition. Yet, normally, the established procedure to introduce a full online channel involved the Walmart Bentonville, AR headquarters at both business and Information Technology (IT) levels, and it would take several months. The only way to launch quickly, the experienced Walmex eCommerce team told her, was by bringing in an outside firm with an eCommerce framework already in place and mounting Bodega Aurrera on top of it. To their knowledge, this had never been done at Walmart before. Also, she would have to carve the initiative out of her own approved budgets, at the expense of projects she already considered a priority. But were the families at the base of the pyramid ready to place grocery orders online and trust paying through digital channels? And if Lilia went ahead and it didn't work, she would risk inflicting serious damage to one of Mexico's most beloved brands.
In 2020, the Chilean government wants to promote green hydrogen, a technology with high potential to help mitigate climate change. President Sebastián Piñera, aware of the country's advantages to produce green hydrogen competitively, asks Energy Minister Juan Carlos Jobet to elaborate a mission-oriented strategy to promote the technology. The strategy was to match the government's center-right orientation and the country's political and economic trajectory. Chile was often praised for its strong macroeconomic fundamentals and a sound policy framework. However, the country was facing social and economic disruptions given the Covid-19 pandemic, which added pressure to an already difficult political backdrop. Chile still struggled with unprecedented political uncertainty after social unrest in 2019 led to a wave of protests that forced the government to agree to a constitutional reform and greater social spending.
By June 2021, Yummy had become Venezuela's first and largest food delivery app and last-mile logistics company. In Caracas, the nation's capital, Yummy held a 55% market share, while operations in other cities had already started to take place, including in three of the country's most populous ones. But this did not come without challenges - it had been a hectic year since the operations were launched in April 2020, when the Covid-19 pandemic broke out - with the direst one being the difficult task of raising money to start and grow a business in Venezuela, a country that ranked among the worst globally for doing business. However, the startup has just gained admission to an American seed money startup accelerator, allowing Yummy to attract institutional investors and to explore potential growth avenues. With a board meeting approaching, the company's CEO, Vicente Zavarce, reflected with co-founders on the possibilities that lay ahead. Should Yummy keep expanding geographically to other cities in Venezuela or even branch out into other countries, either in Latin America or worldwide? Should the company instead grow by expanding to new verticals, leveraging its customer base by offering additional services such as ride-sharing or financial services? And what would be the right sequence for these activities if Yummy's new vision was to become a super app?
Toyota Argentina (TASA) and the union representing automotive industry workers in the country had been working together since 2011 to address the challenges faced by Toyota's manufacturing plant in Zárate (Argentina). In 2019, after achieving all the goals set forward in its plan for the "Reborn Plant," Daniel Herrero, TASA's CEO, looked forward to the future.
Toyota Argentina (TASA) and the union representing automotive industry workers in the country had been working together since 2011 to address the challenges faced by Toyota's manufacturing plant in Zárate (Argentina). The strategy for moving forward was built on an agreement signed by both parties called the "Reborn Plant." In 2015, with slow progress at Zárate plant and the macro-conditions rumbling on, Daniel Herrero, TASA's CEO, reflected on what to do next.
In 2011, Daniel Herrero, CEO of Toyota Argentina (TASA) since 2010, was about to meet with the Secretary-General of the union representing automotive industry workers in the country. The company produced vehicles in Argentina since 1997 at their plant at Zárate, and, in 2005, Argentina became one of the four countries selected by Toyota Motor Corporation to assemble models using the Innovative Multipurpose Vehicle (IMV) platform. However, Toyota's manufacturing plant in Zárate (Argentina) had been performing poorly compared to similar plants, affecting its competitiveness, and TASA's management held the union responsible for most of the plant's inefficiencies. Anything was possible as a result of the meeting, from shutting down production at TASA and focusing on their distribution business, to complete capitulation to all the union's demands.
Arcos Dorados-McDonald's largest independent franchisee, covering Latin America and the Caribbean (LAC)-faced a pandemic that was disrupting the entire consumer foodservice business in 2020. With the exclusive right to own, operate, and sub-franchise McDonald's restaurants in LAC since 2007, the company served over 40 million customers a day at its almost 2,300 restaurants sprawled in 20 markets across LAC, reporting revenues of roughly $3 billion and $291.8 million EBITDA in 2019. Although results for 2020 had looked promising, in late March 2020, governments throughout the region implemented quarantine measures in response to a novel coronavirus disease (COVID-19), affecting the company's normal operations. Forced to withdraw a previously approved 2020-2025 plan for restaurant openings and reinvestments, the company had to focus on a strategy to reduce the impact of the pandemic on the company's finances. Based on its strengths vis-Ã -vis its competitors, Arcos Dorados' recovery plan hinged on five pillars: i) McDonald's restaurants' reputation for people care and food safety; ii) the company's capabilities to explore new channels for food purchasing and delivery; iii) McDonald's good "value-for-money" perception; iv) a consolidated brand with unique offerings; and v) a sustainable-minded company, with initiatives underway to enhance its brand image. Once the crisis was contained, the company had to draft a new six-year plan, including capital outlays for restaurant openings and reinvestments. Given its current position and strengths against its competitors, should Arcos Dorados grasp this opportunity to pursue an aggressive growth plan? Or, considering the post-pandemic economic downturn expected in the region, should the company come up with a more conservative plan or even contemplate downsizing? How should the plan differ by country?
Grupo Éxito, a leading South American retailer, faced declining market shares in Colombia in 2019 with the arrival of low-cost competitors and emerging digital trends. Originally founded in MedellÃn, Éxito had over the course of its seventy-year history evolved from a small textile shop into a retail powerhouse, with 1,533 stores and operations in 2018 across four countries in South America and $18.6 billion in consolidated revenues. In its home country, Éxito had grown through a series of acquisitions, consolidating a multi-brand and multi-store format strategy to cater to customers across all income segments. By 2018, the company had a total of 554 points of sale across the country. However, with the arrival of hard discount retailers, Éxito began to gradually experience a decline in its market shares, particularly at its low-cost store brands. Colombian consumers were also changing their grocery shopping habits, as they became more digitalized. Not only were retailers beefing up their digital retail platforms by launching new applications with personalized services, but they were also allying with partners such as Rappi-Colombia's largest last-mile delivery company- to speedily deliver products to customers' homes. Carlos Mario Giraldo, Éxito´s Chief Executive Officer since 2013, and top management were faced with the challenge of simultaneously maintaining Éxito´s vast operations in the country and battle the current and upcoming threats in the competitive Colombian grocery retail market. Should the company battle head to head with discounters or bet on differentiated strategies at its more premium stores and digitalized ways to serve customers? Would these strategies pay off and allow Éxito to gain more market share in the future?