Chile, often considered among Latin America´s greatest economic success stories, suffered a shocking wave of protests in October 2019, as its citizens demanded reforms across healthcare and education systems, and protested inequality and rising costs of living. As Chileans and outside observers reviewed the situation, many reflected on the country's long history of inequality as the underlying source for public frustration. Chile´s inequality had declined since the late 1990s, largely due to previous governments' commitment to free market policies and economic growth. The country benefitted from a robust business sector that was open to international trade, and from a large and thriving middle class. Yet, Chileans were clearly angry, and their outrage now threatened to ruin the country's robust economy and political stability. Meanwhile, a growing number of observers became concerned and inspected the role that Chile's business sector had played in the country's successes and failures. Although business drove growth, it was also the sector that had escaped the troubles that beset so many other parts of the country. Moreover, Chile´s economic performance in 2022 was lackluster. What had gone amiss with one of Latin America's most successful economies? And who had the power, and responsibility, to make changes?
The case uses the example of the opening of the first IKEA furniture store in Chile - which is operated by Chilean group Falabella - to discuss the opportunities and challenges of doing business in the country. It gives readers an overview of Chile's economic transformation since its colonial years until late-2022, when a new government, led by former student leader Gabriel Boric, faced the challenge to recover economic growth after the pandemic and as Chile advanced in a tortuous process to rewrite its Constitution. After three decades living under democracy, many Chileans seem to disagree with some aspects of the country's liberal economic model (which started to be implemented during the regime of general Augusto Pinochet). However, it is still not clear whether the Chilean society will support a radical transformation or merely a mild reform in this model. The case invites readers to discuss, first, the strengths and disadvantages of the Chilean market. Second, how the constitutional process could change the country's environment for businesses, and what are the risks involved in this process for companies such as IKEA and Falabella.
Set in 2004, as Massachusetts Medical Device Industry Council (MassMEDIC) President Tom Sommer contemplates the future direction of a successful medical device cluster association. Focuses on the formation of cluster organizations and their roles and effectiveness, highlighting the importance of these organizations in enabling cross-cluster collaboration between firms, universities, regulators and other government officials, and other institutions. Details the events that led to the formation of MassMEDIC and the initial challenges the organization faced. Discusses the evolution of MassMEDIC's activities, from its formation in 1996 through 2004, and the views of different MassMEDIC stakeholders on the future direction of the organization. Provides detailed data about MassMEDIC and the Massachusetts medical device cluster to enable an evaluation of results and inform future direction.
Le Centre Suisse d'Electronique et de Microtechnique S.A. (CSEM)--the Swiss Center for Electronics and Microtechnology--was a major nonprofit research institution located in Neuchatel, Switzerland, with roots in the Swiss watch industry. CSEM maintained close links to several Swiss universities, and over time, the center's activities expanded to include basic and applied research, contract production, and technology consulting. By the late 1990s, CSEM began spinning off promising commercial ventures and incorporating them as for-profit companies. In 2001, CEO Thomas Hinderling wondered whether any adjustments in CSEM's strategy were necessary or desirable going forward.
Acoplasticos was established in 1961 as a lobbying group for Colombia's major plastics manufacturing companies. In the early 1980s, the organization shifted its focus toward improving the productivity of the Colombian plastics and rubber cluster, which also included certain petrochemical, manmade fiber, paint, and ink industries. Over time, the organization's activities expanded to include cluster technology upgrading, training, trade fair production, joint procurement, and information collection and dissemination. Despite significant improvement in the performance of the Colombian plastics and rubber cluster during the 1990s, however, Executive Director Carlos Garay was concerned about the challenging economic and political environment in 2002.
Provides an overview of the wide variety of organizations other than firms, government ministries and regulatory agencies, and universities that may have significant effects on competitiveness. These intermediary entities, referred to as institutions for collaboration (IFCs), include, for example, chambers of commerce, industry associations, professional associations, trade unions, technology transfer organizations, quality centers, think tanks, university alumni associations, and others.
After decades of poor economic performance, the Irish government adopted major changes in economic policy in 1987. By the end of the 1990s, Ireland's real GDP growth rate of almost 10% per year exceeds that of all member nations of the European Union (EU). A key component of Ireland's growth strategy has been the encouragement of foreign direct investment through low tax rates and financial and logistical support provided by the Irish Industrial Development Agency (IDA). In 1999, Ireland confronts the issue of sustainability of the "Irish miracle" in the face of diminishing access to EU subsidies, increasingly strained physical infrastructure, and questions of equity in the distribution of economic gains across the population. The case includes substantial material relating to the Irish political, social, and historical context in addition to traditional economic statistics.
Features the challenges facing an entrant in the New Zealand telecommunications market during the period 1989-1994. Clear Communications Ltd. (CCL), a joint venture owned by Bell Canada, MCI, New Zealand Television Corp., and Todd Companies, begins offering long distance service in May 1991. The firm is dependent on access to the network of the incumbent, Telecom Corp. of New Zealand, to offer most of its services. This dependence proves to be a significant obstacle to CCL's expansion into the local business call market, particularly given New Zealand's unique "light-handed" regulatory system. Clear ultimately spends millions of dollars in a failed four-year lawsuit to obtain better terms of interconnection. In October 1994, CEO Andrew Makin must decide the future strategic direction of the firm.
Growing fiscal deficits, persistent economic recession, and underinvestment in the nation's telecommunications infrastructure lead the Argentine government to privatize its state-owned monopoly provider of telecommunications services, ENTel, in late 1990. The privatization process and the resulting ownership structure is complex, and the new regulatory framework appears to offer both significant opportunities and risks for investors.
In early 1994, Dow Corning Corp. debates whether to participate in a proposed $4.2 billion product liability settlement. Specifically, the firm must decide whether to contribute $2 billion to end a class action suit filed by women suffering from connective tissue diseases, autoimmune disorders, and other medical conditions, allegedly as a result of defective silicone breast implants. Although denying any impropriety, Dow Corning stands accused of intentionally withholding information on health risks associated with its implants over several decades.
Surveys a number of essential issues related to pricing and public policy in market economies. Begins with a brief review of the price-determination process in competitive markets, then examines a range of topics involving pricing and public policy in monopoly and oligopoly markets. Includes a number of graphs that illustrate the relationship between costs, demand, price, efficiency, and profitability under various market conditions.
Government intervention in markets may have significant effects--both positive and negative--on a firm's strategic options and its performance outcomes. Thus the ability to analyze the origins, implications, and dynamics of public policy is a critical managerial skill in today's market economies. This note provides managers with a framework for analyzing relationships between public policy, business strategy, and performance. Designed in particular for use in the Harvard MBA course Capitalism Constrained. The conceptual framework is applied to managerial settings in the environmental, energy, transportation, media and communications, financial services, and health and safety sectors.
Describes Burroughs Wellcome's response to protests over the pricing of its AIDS drug AZT in September 1989. Also presents short-term reactions by government officials, AIDS activists, and investors to Burroughs Wellcome's strategy.
Describes key developments relating to Burroughs Wellcome, AZT and other AIDS drugs, and the AIDS issue in general from late 1989 through 1992. Includes excerpts from Wellcome PLC's financial statements and updated statistics on AIDS in the United States.
Describes the position of Utility #4 in negotiating Group A with respect to 1) its SO emissions reduction requirements; 2) the costs of its alternative compliance strategies; and 3) the nature of its state regulatory environment.
Describes the position of Utility #4 in negotiating Group C with respect to 1) its SO emissions reduction requirements; 2) the costs of its alternative compliance strategies; and 3) the nature of its state regulatory environment.