The case gives readers an overview of key factors of doing business in Brazil, including Brazil's economic transformation since its colonial years until 2023, when leftist President Luiz Inácio Lula da Silva was sworn in for his third term, after the most polarized elections in the country's recent history and having to deal with an attack against government buildings in BrasÃlia. The case's ultimate goal is to foster a discussion about how political and economic uncertainty impacts consumer behavior and companies operating in Brazil. For that, it summarizes the key obstacles faced by these businesses, such as the country's logistical bottlenecks, complex bureaucracy and arcane tax system. At the same time, the case sheds light on the sectors that are thriving despite these difficulties and on some valuable opportunities offered by Brazil's huge consumer market and diversified economy.
Raizen, the world's largest sugar and ethanol producer, strived to find ways to expand the second-generation ethanol (E2G) market, which it pioneered. The company planned to invest R$24 billion (around $4.6 billion) in 20 production plants, with a total capacity to make approximately 1.6 billion liters of E2G. Paula Kovarsky, the company's Chief Strategy and Sustainability Officer, firmly believed that E2G was a readily available biofuel that could assist in the decarbonization of several industries, helping the world navigate the energy transitional and achieve its greenhouse gas emissions reduction targets. Ethanol had already transformed Brazil, where flex-fuel vehicles dominated the streets. Raizen sought to prove that second-generation ethanol, made from a byproduct of sugarcane, that did not compete with food production, could do the same for the world, especially in hard to decarbonize sectors, such as aviation and shipping.
Over a 105-year span, the ErmÃrio de Moraes family built Votorantim, one of Latin America's largest industrial conglomerates, and among Brazil's topmost businesses, also credited for helping "build" the country over decades. By early 2023, Votorantim included diversified operations in 19 countries worldwide, with a net income above $1 billion. The conglomerate was privately owned by the ErmÃrio de Moraes family, with its ownership evenly split across four family branches. Over time, the family established a corporate governance structure with separate boards for ownership, business, and family affairs, leaving business operations to a professional management team. At the heart of this governance structure was the family board, viewed by many family members as the "glue and honey" bringing them together. Despite running multiple initiatives, Luciana Domit chair of the family board and a fifth-generation member, acknowledged, it was becoming increasingly hard to get its over 170 family members to spend time together and to engage in the activities they promoted. As the family enlarged and interests diverged, fostering its long-term unity could become more challenging. Were the family board's current strategies and overall governance structure at Votorantim conducive towards keeping the family united in its values and preserving its legacy? Or would a transformation be needed if the ErmÃrio de Moraeses were committed to remaining at the forefront of the Votorantim's governance structure?
The case uses the example of a large investment made by French retail group Carrefour in Brazil to discuss the opportunities and challenges of doing business in the country. It gives readers an overview of Brazil's economic transformation since its colonial years until 2023, when leftist President Luiz Inácio Lula da Silva was sworn in for his third term, after the most polarized elections in the country's recent history and having to deal with an attack against government buildings in BrasÃlia. The case's ultimate goal is to foster a discussion about how political and economic uncertainty impacts companies operating in Brazil. For that, it summarizes the key obstacles faced by these businesses, such as the country's logistical bottlenecks, complex bureaucracy and arcane tax system. At the same time, however, the case also sheds light on the sectors that are thriving despite these difficulties and on some valuable opportunities offered by Brazil's huge consumer market and diversified economy. The descriptions about Carrefour's business in the country aim to spur a debate about these opportunities and whether they offset the risks of the local market.
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?
Marfrig, one of the world's leading meatpackers, strived to comply with its commitment to have a deforestation-free value chain in Brazil by 2030. The company also pledged to reduce its emissions of greenhouse gases in accordance with the guidelines set by the Science-Based Targets Imitative (SBTi). Controlling shareholder and chairman Marcos Molina, and Director of Sustainability and Communications for South America Paulo Painez, must figure how to achieve these goals while dealing with increased pressures from NGOs, customers, and foreign governments. The pair believed that a solution to the company's-and the sector's-challenges would only be achieved by working together with other stakeholders of the Brazilian beef industry: cattle ranchers, NGOs, the government, and civil society at large. Aligning the interests of the different players, while keeping Brazil's lead as the world's top beef exporter, was especially challenging given the country's fraught political environment and its tarnished image abroad.
After conducting an impressive turnaround in Walmart's subsidiary in Brazil, Private Equity firm Advent International has to decide how to exit this investment: through an IPO or selling the business to Carrefour.
In 2021, public accelerator program Start-Up Chile, which ten years earlier had created a global buzz, might be losing its competitive edge to similar programs or one-year visas for digital nomads offered by other countries. The case follows SUP's CEO, Angeles Romo, as she considers how Chile could remain appealing to world-class entrepreneurs in a post-pandemic world and how to ensure SUP's impact on Chile's economy.
Bunge, one of the world's leading agribusiness traders and processors, strives to comply with its commitment to having a deforestation-free value chain by 2025 while it considers potential new business growth areas. After a complex turnaround, which involved one of the biggest corporate reorganizations in Bunge's 203-year history, the company finally has surplus cash to invest. CEO Greg Heckman and Chief Sustainability Officer Robert Coviello must figure out if they can turn sustainability into a profit maker for the company or if it will remain as another cost of doing business.
Advent International, one of the world's leading private equity firms, must decide whether to acquire Walmart's subsidiary in Brazil or not. Although Walmart Brazil is losing cash at a rapid pace, Advent thinks it has a solid plan to recover the company's finances. However, there are several execution risks associated with the deal and local analysts are skeptical about the possibility of a quick turnaround.
MAYA Capital co-founders Lara Lemann and Monica Saggioro raised $41.5 million through a series of closings for their early-stage Latin American venture capital fund. The two women had met for the first time in mid-2016 when Lemann was contemplating scaling her angel investing experience by structuring a fund, and Saggioro was about to start her MBA program at Harvard Business School. After founding MAYA in 2018, the pair built an investment portfolio in sector-agnostic investments across the region, providing startup founders with an on-demand, hands-on management support approach. MAYA also initiated a series of creative efforts to help develop its venture ecosystem and to source opportunities. By 2021, Lemann and Saggioro had invested approximately $21 million in 28 companies, with several completing subsequent follow-on rounds of financing to support their growth. By then, Latin America´s VC market size had more than doubled since MAYA´s inception, with escalating competition among local players. Lemann and Saggioro faced several important decisions: When should they raise another fund? How large should the next fund be? Should they alter their investment strategy? And as MAYA expanded its portfolio, would they be able to sustain their hands-on management support strategy?
The case describes how Odebrecht's board of directors handled the issues raised in the (A) case and continues the story of the Group's efforts to restore its reputation and return to growth after admitting its role in Latin America's largest-ever corruption scandal. The case covers the Group's filing for, and emergence from, a court-supervised reorganization while coping with an ongoing feud within its founding family, as well as changes in the Group's leadership and governance as it attempts to regain financial stability and complete another round of changes to its compliance and internal control systems. The case concludes with the outgoing CEO's announcement of the Group's new name-Novonor-and its newly defined purpose and vision for its future.
In June 2020, XP and Itaú faced intensified competition and tension in their partnership, with the latter owning a minority stake at XP. Two years earlier, in May 2017, Itaú had announced it would acquire 49.9% of XP for $1.8 billion, followed by three additional stages leading to company control. Yet in August 2018, Brazil's Central Bank, partially barred the deal, stating Itaú could become a minority shareholder. Tensions surfaced as soon as the deal was formalized, with both companies engaging in public attacks across several marketing campaigns, with Itaú estimated to lose around $27 million a day to XP from client migration. Moreover, XP faced increased competition from emerging investment platforms that were gaining ground in Brazil´s market. By mid-2020, XP´s financial results had skyrocketed, taking in $190 million in net income and $743 million in total revenues. As Guilherme Benchimol, XP´s CEO, looks ahead, he must define what strategies they should pursue to achieve further growth, considering competitive forces and market opportunities at hand.
XP, an investment platform, was on the verge of defining whether to do an IPO or selling off a majority stake to Itaú Unibanco, Brazil´s largest financial conglomerate. Under the leadership of Guilherme Benchimol, XP´s co-founder and CEO, XP had risen to become the largest independent investment platform in Brazil in 2017, reshaping the country's financial investment landscape by marketing itself as a "financial supermarket." The company offered digital seamless investment alternatives at low fees, pioneering a model leveraged across a wide network of independent financial advisors and disrupting a market dominated by large incumbent banks. By late 2016, XP raked in $71 million in net income, boasting over 340,000 clients and $20 billion in assets under custody. In turn, Itaú recorded $415 billion in total assets and net profits above $6.7 billion in 2016, serving over 55 million clients. Benchimol believed the game was just starting: Brazil presented an enormous market opportunity to offer more financial services to millions of new investment clients, but future growth would require additional funding. By the end of 2016, Brazil´s stock market began to show signs of recovery after a two-year performance slump, enticing XP to go public. Yet, Martin Escobari-an XP board member and partner at General Atlantic, the firm that owned 49% of the company by then-felt XP should explore the possibility of finding a potential buyer for XP, shortlisting Itaú among candidates. Although Benchimol openly criticized Brazil´s top banks and their treatment of clients, he realized Itaú´s privileged market position could provide XP with more credibility and, ultimately, more clients. Did it make sense to sell XP to Brazil´s biggest bank? Or should XP go public?