Latin America Rising
How Latin American Companies
Become Global Leaders
Executive summary
Latin America and its companies are becoming an increasingly important part of the global economy. This report
provides a deep analysis of the international growth path for Latin American businesses — from local companies to
global powerhouses — and offers new and deep insights on how companies can expand their international footprint. In
particular, it examines many of the main challenges Latin American companies face when trying to expand beyond their
national borders, and highlights five key factors and competencies that help them develop into global enterprises.
The focus on local Latin American business is also important as over 70 percent of the revenue produced by the top
500 businesses in Latin America is generated by companies based in the region – not by large Multinationals from other
regions or international companies operating locally – a fact that contradicts the popular myth that global multinationals
are the dominant players in the Latin American market.
Our study examines key management practices, organizational competencies, and growth factors for successful Latin
American companies. This is a major difference from most other business-oriented studies of the region, which have
tended to be more focused on topics such as mergers & acquisitions (M&A), corporate finance, and social responsibility
and development. Moreover, the few reports that have touched on the broader topics of management competencies and
international growth were generally descriptive in nature and did not provide CXO-level executives and national policy
makers with the practical insights necessary to progress and mature their businesses up the global growth curve.
For this report, we conducted a broad business analysis that started with all of the companies in the Latin Trade Top 500
rankings. We also analyzed the business environments in the top six Latin American economies: Brazil, Mexico, Argentina,
Colombia, Chile, and Peru.
A key output of our overall analysis is a framework that describes the ecosystem Latin American companies operate
within, and the maturity paths they follow on their way to global leadership (see Figure 1).
Figure 1: Maturity Evolution Matrix
Assets
Global Latinas
Global presence
and resources
Asset distribution
5
Presence and
resources in
Latin America
Multilatinas
3
Local presence
and resources
Global
4
Regional
Exporter
Local
Local revenues
2
Revenues originating
from Latin America
Multilatinas have
revenues originating
from other countries
and operations and
resources in Latin
America
Local Latinas can
have international
revenues (exporters)
but all operations and
resources are based in
one country in Latin
America
Local Latinas
1
Global Latinas have
significant revenues
originating from
overseas, including
operations and
resources
Exporter
Global international
revenues
Markets
Customer base
Source: Deloitte Analysis
2
500
279
263
Latina
196
Latina Public
Latin America
GDP
14%
# Companies 5%
4%
Revenues
12%
Source: Deloitte's Lati
Assets
Global Latinas
Global presence
and resources
Asset distribution
5
Presence and
resources in
Latin America
Global
Multilatinas
3
Regional
4
Exporter
Global Latinas have
significant revenues
originating from
overseas, including
operations and
resources
Multilatinas have
revenues originating
from other countries
and operations and
resources in Latin
America
Latin America
GDP
14%
9%
7% 5%
21%
4%
# Companies 5%
5% 5%
14%
21%
4%
2%2%
Revenues
12%
10%
22%
Sidebar A: About the study
Local Latinas can
1%
have international
This study provides an in-depth look at what it takes for Latin American companies to thrive
and grow on a global scale. Our broad analysis focused
Chile and Argentina are
Local Latinas
revenues (exporters)
Local presence
disproportionate
corpo
on companies
in
the
Latin
Trade
Top
500,
which
ranks
businesses
based
on
the
revenues
they
generate
in
Latin
America.
It
also
focused
on
the
top
but all operations and
and resources
the size of their econom
resources
are based
in
six economies in the region —1 Brazil,
Mexico,
Argentina,
Colombia,
Chile,
and
Peru
–
which
together
account
for
86
percent
of
Latin
America’s
Gross
Local
2
Exporter
one country in Latin
Domestic Product (GDP).
Source: Deloitte's Latin America research, 2014.
Local revenues
America
Revenues originating Global international
from Latin
Americaprocess
revenues
Markets
structured
screening
to select
a manageable subset
We then conducted a rigorous and
of the Top 500 companies for in-depth analysis
(see Figure 2). The first step was to highlight Latin
America-based
businesses
from
the
region’s
largest
economies for which accurate and broad
Customer base
information was publically available. This cut the list down to 196 companies.
Source: Deloitte Analysis
Figure 2: Screening and Targeting Companies for In-Depth Analysis
Others
500
Companies
Identified
279
Latina
Companies
1
Criteria 1
Differentiate Latina
companies from
Multinational companies
operating in Latin America
263
Latina
Companies
in Priority
Countries
2
Criteria 2
Focus on the priority key
countries in Latin America:
Brazil, Mexico, Argentina,
Colombia, Chile, and Peru
3
196
Latina Public
Companies in
Priority
Countries
Criteria 3
Select public companies
which have more
information available for
the research phase
Utilities
Retail Trade
Primary Metal
Chemical
9%
3%
4%
Transportation
5%
5%
6%
7%
Information
8%
Source: Latin Trade; Companies’ Websites; OneSource; Deloitte Analysis
Mining
From there, we carefully selected 57 companies that provided a representative cross section of businesses across Latin America, such that (1) the
number of companies from each country was proportional to the size of the country’s share of GDP in the region, and 2) the number of companies at
various maturity levels was proportional to the mix of maturity levels across all top 500 companies.
Multinationals
vs. findings
Latinas were
Our quantitative
(% of total revenues;
companies
canranking
use to2013)
improve
from
Latin Trade
Others
Multinationals
vs. Latinas
supplemented
with executive
interviews that helped validate the findings and provided deep, practical insights that
(% number of companies;
the effectiveness
of
their
international
from Latin Trade ranking 2013) expansion efforts.
Asset distribution
We then conducted a rigorous, multi-step screening
According to our analysis, these five factors are key
Multinationals
process Multinationals
to
carefully
select
a
subset
of
companies
from
the
indicators of whether a Latin American company can
32%
29%
top 5001 that provides a representative cross-section of
compete effectively and sustain performance at the global
the broader Latin American Latinas
market in terms of countries,
level. The
last three are competencies that a company
Latinas
industries, and maturity levels71%
(see Sidebar A). Further, our
has direct68%
control over. By contrast, the first two factors
in-depth analysis of the resulting 57 companies revealed
are more structural in nature – meaning they are largely
five key factors and competencies that are important for a
inherent to the country where the company is based.
Latin American company to expand from a local business
Specifically, companies headquartered in Brazil have a
Source: Deloitte's Latin America research, 2014.
to a global leader:
distinct advantage in pursuing their global aspirations
because that nation provides strong and active support
• Availability and retention of top executives qualified to
for international expansion. That is not to say companies
lead international expansion and operations
in other countries cannot succeed at a global level; they
• Access to capital
certainly can. But in order to do so, they will likely need
Assets markets and financing
Global
Global Latinas
Latinas
presence
• Position ofGlobal
market
leadership at home
to aggressively
pursue alternative strategies to their home
and resources
• Ability to execute international acquisitions and
countries’ inherent limitations, or aspire to have their
55 Global
Global
joint ventures
national governments adopt structural reforms that are
• Use of leading corporate governance practices
more conducive to global business expansion and growth.
Presence and
Multilatinas
Multilatinas
in as well as our analysis does not
1 The Latin Traderesources
500 ranking
Latin
America
include companies
from
the Financial Services Industry; further, the
Regional
asset-customer-geography framework used in this study cannot
3 be Regional
appropriately applied to the banking sector
W
19%
Chemical
5%
Nonmetallic Mineral
6%
6%
Wholesale Trade
7%
Mining
9
Food
Others
17%
Construction
4%
Primary Metal
4%
Beverage
5%
Paper
7%
7%
Exporter
4 4 Exporter
Utilities
Tr
Local presence
and resources
Local Latinas
Local
1 1 Local
Source: Deloitte's Latin America research,
Latin America Rising: How Latin American Companies Become Global Leaders 3
Local Latinas
2
Exporter
Exporter
2
Assets
Introduction: Latin
America Rising
Global Latinas
Global presence
and resources
Global
Asset distribution
5
Presence and
resources in
Latin America
Multilatinas
3
Regional
4
Exporter
1
Local
Local revenues
2
Revenues originating
Multilatinas have
revenues originating
from other countries
and operations and
resources in Latin
America
Local Latinas can
have international
revenues (exporters)
but all operations and
resources are based in
one country in Latin
America
Local Latinas
Local presence
and resources
Global Latinas have
significant revenues
originating from
overseas, including
operations and
resources
Exporter
Latin America
GDP
14%
9%
7% 5%
4%
# Companies 5%
5% 5%
14%
4%
2%2%
Revenues
12%
10%
1%
22%
Chile and
disproport
the size of
Source: Deloitte's Latin America research, 20
Global international
from Latin America
revenues
Markets This report examines the international growth path for
Latin America is a large market
with high growth
potential
that is increasingly important toCustomer
the world
economy. The
companies based in Latin America, and offers new insights
base
region’s GDP of $7.4 trillion already accounts for 8.5
into how they can develop into regional and global players.
Source: Deloitte Analysis
percent of global GDP, and by 2017 its real GDP growth
It also provides useful and practical insights for multirate is expected to surpass that of all other regions except
nationals and international companies from other regions
the Middle East and North Africa.2 Economic openness,
that want to learn how to operate more effectively in the
Utilitie
combined with substantial infrastructure investments
Latin American market.
263
196
500
279
Latina
Latina
Public
and an expanding middle class, are creating tremendous
Transportation
Companies
Latina
Companies
Companies in
1
2
3
4
business opportunities
throughout the region.
Identified
Companies
in Priority
Priority
Countries
Although multinational companies from outside of Latin
have a highly visible
presence
Criteria America
1
Criteria
2 and get much of the
Differentiate
Latina Latin American companies
Focus on theactually
priority key
attention,
account for
companies from
countries in Latin America:
the majority of business in the
region. In fact, according
Multinational companies
Brazil, Mexico, Argentina,
toinour
analysis
TopChile,
500,and
Latin
operating
Latin
Americaof the Latin Trade
Colombia,
PeruAmerican
companies comprise 70 percent of the Top 500, and
capture 71 percent of the total revenues (see Figure 3).
Source: Latin Trade; Companies’ Websites; OneSource; Deloitte Analysis
Countries
Criteria 3
Select public companies
which have more
information available for
the research phase
Retail Trade
Primary Metal
Chemical
5%
5%
6%
7%
Information
Min
Figure 3: Multinationals versus Latinas in the Latin
Trade 5003
Multinationals vs. Latinas
(% of total revenues;
from Latin Trade ranking 2013)
Oth
Multinationals vs. Latinas
(% number of companies;
from Latin Trade ranking 2013)
Multinationals
29%
Multinationals
32%
Latinas
71%
Latinas
68%
Chemical
5%
Nonmetallic Mineral
6%
6%
Wholesale Trade
Mining
Source: Deloitte's Latin America research, 2014.
Oth
Construction
Assets
Global
Global Latinas
Latinas
Asset distribution
Global presence
and resources
55 Global
Global
2 Regional GDP estimated based on data from the CIA World Factbook
for Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican
Ecuador, El Salvador, Guatemala, Honduras, Mexico,
Presence Republic,
and
Multilatinas
Multilatinas
Panama, Peru, Paraguay, Uruguay, and Venezuela
resourcesNicaragua,
in
Latin America
3 Fully state-owned companies were3excluded
from the analysis
Exporter
Regional
4 4 Exporter
Regional
4%
Primary Metal
4%
Beverage
5%
Paper
7
Utilit
4
Local presence
Local Latinas
Local Latinas
Source: Deloitte's Latin Ameri
Information
8%
Source: Latin Trade; Companies’ Websites; OneSource; Deloitte Analysis
9
Mining
Wholes
The business ecosystem and
growth stages for Latin
American companies
Multinationals vs. Latinas
(% of total revenues;
from Latin Trade ranking 2013)
Me
Others
Multinationals vs. Latinas
(% number of companies;
from Latin Trade ranking 2013)
Multinationals
29%
19%
Multinationals
32%
Latinas
71%
Chemical
5%
Nonmetallic Mineral
6%
6%
Wholesale Trade
Latinas
68%
7%
Mining
9%
Food
Latin American companies can be divided into five categories based on the geographic distribution of their assets and
customer
base (see Figure 4).
Source: Deloitte's Latin America research, 2014.
Others
Figure 4: Ecosystem and Maturity Model for Latin American Businesses
17%
Construction
Assets
Global
Global Latinas
Latinas
Global presence
and resources
Asset distribution
55
Presence and
resources in
Latin America
4%
Primary Metal
4%
Beverage
5%
Global
Global
Multilatinas
Multilatinas
7%
Paper
7%
3
Exporter
4 4 Exporter
Regional
Regional
Utilities
1
Transp
Local presence
and resources
Local Latinas
Local
1 1 Local
Local revenues
Source: Deloitte's Latin America research, 2014
Local Latinas
2
Revenues originating
from Latin America
Exporter
Exporter
2
Global international
revenues Markets
Customer base
Source: Deloitte's Latin America research, 2014.
Local Latinas are businesses whose operations are
contained within a single Latin American country. Those
that do little or no exporting are designated Local Latinas.
Those that do significant exporting (within or beyond Latin
America) are Latina Exporters.
Multilatinas are businesses that operate in multiple Latin
American countries, but do not have significant operations
outside the region. Those that do not export much beyond
Latin America are designated Regional Multilatinas.
Those that do are Multilatina Exporters.
Global Latinas are companies that operate in multiple
countries — within and beyond Latin America — and
generate significant revenue outside of the region.
1
Global
Latinas
Oil & Gas
32%
Our analysis found that each of these categories has
1 Retail Trade
different requirements that present their own unique
business challenges, especially for companies that want
Multi30%
Latinasis more,
to move up and progress to the next level. What
the road to becoming a Global Latina is not linear or
pre-defined; Latin American companies that want to
1 Retail Trade
mature and grow have multiple routes and destinations
from which to choose or that they can follow.
Local
Latinas
30%
2
3
Food
Infor
19%
14%
2 Information
3 Oil & G
15%
15%
2 Information
W
1
22%
Utilities
Retail Trade
Wholesale Trade
Primary Metal
Transportation
Chemical
Source: Deloitte's Latin America research, 2014.
Latin America Rising: How Latin American Companies Become Global Leaders
3
5
A closer look at the Latin
American market
Latin America should be viewed as a collection of diverse
individual markets, rather than a single homogeneous
regional market, since every country has its own unique
characteristics that can help or hinder a local company on
its quest for regional and global growth.
Mexico is the second largest individual economy,
representing 21 percent of the region’s GDP – and
harboring the same percentage of the region’s companies
(21 percent), which capture a similar portion of the
region’s revenues (22 percent).
Companies in some countries have a much greater
business impact than companies in other countries, and
their collective impact is not always proportional to the size
of the country’s economy (see Figure 5).
Argentina is Latin America’s third largest economy, with 9
percent of the region’s total GDP. However, Argentinian
businesses comprise only 4 percent of the region’s
companies, and only capture 2 percent of the region’s
revenues. These statistics show how a nation’s local
business environment can have a major influence on its
companies’ ability to compete and grow. 3%
Figure 5: Relative Importance of Each Country’s Local
Companies4
(% of total, from Latin Trade ranking 2013)
tinas have
revenues
from
ncluding
and
Others
Latin America
GDP
14%
9%
7% 5%
21%
40%
Argentina
Peru
4%
Colombia
Chile
# Companies 5%
as have
riginating
countries
ions and
n Latin
5% 5%
14%
21%
Mexico
45%
Brazil
State-owned
Case in point: While Chile is only Latin America’s fifth35%
largest
economy in terms of GDP (5 percent), it has1%
the third highest
number of companies (14 percent) and a disproportionate
share of the region’s revenues (10 percent). Later in this
Public
report, we take a closer look at some of the factors that
enable Chile’s businesses to perform so well.
4%
Private
If we narrow the focus from all Latin
American businesses
to only Global Latinas, the differences between countries
are even more striking – with 80 percent of all Global
Source: Deloitte's Latin America research, 2014.
Latinas based in either Brazil (48 percent) or Mexico (32
percent), and those two countries’ Global Latinas taking
Motivations
95 percent of all Global Latina revenues (70 percent
and 25 percent for Brazilian and Mexican Global Latinas
respectively).
2%2%
Revenues
nas can
ational
xporters)
rations and
re based in
y in Latin
12%
10%
1%
22%
51%
Chile and Argentina are the countries with the most
disproportionate corporate revenues compared to
the size of their economies
Source: Deloitte's Latin America research, 2014.
Brazil is Latin America’s largest individual economy,
accounting for 40 percent of the region’s total GDP. Brazil’s
businesses are even more dominant, comprising 45 percent
of the region’s companies, and capturing 51 percent of the
Brazil
revenue generated by the
Latin Trade Top 500.
According to our analysis, different industries tend to thrive
in different countries. Figure 6 illustrates this composition
for the three countries that encompass the largestStrategy
share of
revenue in our analysis, Brazil, Mexico, and Chile.
Others
196
Latina Public
Companies in
Priority
Countries
Utilities
Transportation
Retail Trade
Primary Metal
panies
Chemical
le for
Oil and Gas
9%
3%
4%
24%
5%
Source: Deloitte Analysis
5%
6%
11%
Netwo
Food
7%
6
8%
10%
9%
Construction
Mining
4 Fully state-owned companies
are
excluded
from
this analysis
Wholesale Trade
Mexico
Fin
Information
ce
an
erica
GDP
State-owned
14%
9%
7% 5%
21%
40%
61%
3%
Peru
Colombia
Chile
5% 5%
1%
Argentina
4%
anies 5%
nues
35%
Others
14%
21%
Public
7%
18%
Mexico
45%
5%
Brazil
1%
4%
Private
2%2%
12%
10%
1%
22%
6%
51%
6%
5%
Source: Deloitte's Latin America research, 2014.
Chile and Argentina are the countries with the most
disproportionate corporate revenues compared to
the size of their economies
Capabilities
Motivations
Deloitte's Latin America research, 2014.
Figure 6: Top Industries for Latin American Companies
in Brazil, Mexico, and Chile5
(% of revenues, from Latin Trade ranking 2013)
Brazil
Others
Oil and Gas
Utilities
3%
4%
Source: Deloitte Analysis
5%
6%
11%
Food
7%
Information
10%
8%
9%
Mexico
Others
6%
6%
Wholesale Trade
7%
Mining
Broad
Others
17%
5%
Paper
7%
17%
7%
Utilities
k et D e velo p m e
a
nt
Cost Leadership
Low cost or highly
efficient pro ducers
Differentiation
Product, service or
capability innovators
Scope
Narrow
4%
Beverage
M ar
er
Retail Trade
28%
4%
Op
io n
Private/Public Companies
Retail Trade
Chile
Primary Metal
at
17%
9%
Food
Construction
iz
n
Nonmetallic Mineral
ga
32%
Pe
op
ce
an
Or
19%
In Chile, the top three industries for Latin American
companies are Retail Trade (28 percent), Oil & Gas (17
percent), and Transportation (11 percent). However, if we
look only at Global Latinas, the top three industries are very
different: Transportation (30 percent), Paper (22 percent),
Information and Chemicals (19 percent). Chile’s business environment
is highly conducive to creating Multilatinas, but lacks some
of the structural elements that help build Global Latinas. As
a result, only a small number of Chilean companies have
reached that higher pinnacle of business development in
Latin America and thus statistically the industry distribution
of Chile’s Global Latinas does not align with that of the
country’s overall economy.
le
Wholesale Trade
5%
Networking
Construction
Mining
Chemical
In Mexico, the top three industries for Latin American
companies are Information (32 percent), Retail Trade (17
percent), and Food (9 percent). However, if we focus only
on Global Latinas, the top three industries are Information
(36 percent – all from one company, América Móvil), Food
(16 percent), and Nonmetallic Minerals (10 percent).
ns
Chemical
5%
ti o
Primary Metal
24%
Business
Environment
Fin
Transportation
Retail Trade
9%
In Brazil, the top three industries for Latin American
companies as a percentage of total revenue are Oil & Gas
(24 percent), Food (11 percent), and Construction (10 Strategy
percent). If we narrow the focus from all Latin American
companies to only Global Latinas, the top industries
remain the same but the revenue percentages change:
Oil & Gas (36 percent; see Sidebar B: “State Presence in
Key Industries”), Food (14 percent), and Construction (12
percent).
Oil and Gas
5 Fully state-owned companies are excluded from this analysis;
industries are defined according to NAICS (North American Industry
Classification System)
Focus
Companies concentrating on
particular niche markets and
able to develop uniquely low
cost or well-specified products
/ services for this market
Cost
Differentiation
Source of Competitive Advantage
11%
Transportation
Source: Deloitte's Latin America research, 2014.
State-Founded Companies
Latin America Rising: How Latin American Companies Become Global Leaders
7
9%
Food
Broad
Chile
Others
17%
Scope
Construction
4%
Beverage
5%
Focu
Com
parti
able
cost
/ serv
Narrow
4%
Primary Metal
Cost Leadership
Low cost or highly
efficient pro ducers
Retail Trade
28%
7%
Paper
17%
7%
Cost
Source of Compe
Oil and Gas
Utilities
11%
State-Founded
Transportation
Source: Deloitte's Latin America research, 2014.
Looking across all Latin American countries, our analysis
found that some industries are more conducive to creating
and supporting businesses that grow to an advanced
stage
Inception
of maturity (Figure 7).
Figure 7: Maturity Stages in Selected Industries6
(revenues in USD, from Latin Trade ranking 2013)
1
Global
Latinas
2
Oil & Gas
32%
1
MultiLatinas
2 Information
Retail Trade
30%
Local
Latinas
3
Food
Information
19%
14%
30%
12%
10%
7%
7%
10%
7%
3 Oil & Gas
15%
1 Retail Trade
2 Information
15%
3
22%
13%
10%
Wholesale Trade
16%
13%
6%
6%
6%
Gro
Government – backed
Founded as a state mon
all of Latin America, the top three industries government
for
financing a
privatized
and expanded
Latinas are Oil & Gas (32 percent – dominated
by
Across
Global
one Brazilian oil company, Petrobras, which somewhat
Source: Deloitte's Latin Am
skews the results), Food (19 percent), and Information (14
percent). For Regional Latinas, the top three industries are
Retail Trade (30 percent), Information, (15 percent), and
Oil & Gas (15 percent). The top industries for Local Latinas
are Retail Trade (30 percent), Information (22 percent), and
Wholesale Trade (16 percent).
USA
Later in this report, we examine the factors that make
an
34%
industry more or less conducive to international expansion
Other
7%
and exports.
14%
Asia
20%
Utilities
Retail Trade
Mining
Food
Wholesale Trade
Primary Metal
Construction
Oil and Gas
Transportation
Chemical
Information
Europe
25%
Source: Deloitte's Latin America research, 2014.
21%
Sidebar B: State Presence in Key Industries
For many countries in Latin America, state-owned
companies represent a significant portion of their
economies (see Figure 8). Such companies tend to be
concentrated in the Oil & Gas and Utilities industries,
Others
making40%
these sectors lessArgentina
attractive to companies that are
publically or privately owned.
Peru
Colombia
Chile
1%
45%
Figure 8: Ownership in Selected Industries
(% of total revenues, from Latin Trade ranking 2013)
3%
Others
Mining
State-owned
35%
Transportation
61%
1%
3%
Utilities
Av
Oil and Gas
36%
Public
7%
18%
5%
Brazil
Private
6 Fully state-owned companies are excluded from this analysis
1%
Africa
1%6%
51%
8
Europe
40%
Mexico
gentina are the countries with the most
nate corporate revenues compared to
eir economies
.
Private/Publ
Retail Trade
Asia / Oceania
23%
6%
5%
Source: Deloitte's Latin America research, 2014.
Motivations
Capabilities
Inter
(
A framework for assessing
global maturity
3%
State-owned
Others
Mining
35%
Transportation
61%
Utilities
Others
9%
7% 5%
21%
40%
4%
%
3%
14%
21%
Mining
Colombia
35%
Mexico
1%
10%
22%
Transportation
7%
Utilities
Brazil
3%
18%Private
7%
51%
18%
Average Number of
5%
Stock Exchanges
Oil and Gas
Public
%
Public
61%
Chile
45%
Local Latinas
3%
Others
Peru
State-owned
Oil and Gas
1%
Argentina
1.25
1%
6%
high
1,429
6%
5%
849
1%
average 5%
To understand how companies become Global Latinas,
we
incentives to reduceInterest
costs Rate
and Statistics
improve efficiency.
Source: Deloitte's Latin America research, 2014.(basis points, 2012)
an assessment framework built around four key
• Resources. Looking for inputs to counter a lack
of or
504
Chile and Argentina are the countries with the developed
most
low
Private
6%
6%
disproportionate corporate revenues compared
to
drivers
(see Figure 9).
more expensive natural resources at home.
Motivations
Capabilities
the size of their economies
• Intellectual assets. Seeking foreign sources of
5%
Source: Deloitte's Latin America research, 2014.
Figure
9: Assessing
Maturity Drivers
technological and R&D-related capabilities and talent.
Source: Deloitte's
Latin America
research,Potential
2014.
erica research, 2014.
• Competitive advantage. Pursuing know-how and
Motivations
Capabilities
expertise to boost business results and get an edge on
the competition.
Local Latinas
of Financing
• Capital. Pursuing cheaper capital from Sources
more developed
of capital from different sources of financing, 20
or more
efficient equity(%
and
debt markets.
Strategy
%
Business
Environment
Brazil
Oil and Gas
Utilities
3%
4%
Transportation
5%
Source: Deloitte Analysis
6%
Mexico
9%
Food
Chile
Others
17%
Retail Trade
mary Metal
4%
Beverage
5%
Broad
4%
Cost Leadership
Differentiation
• Market expansion.
andor
Low cost orSeeking
highly new customers
Product, service
efficient pro ducers
capability innovators
revenue sources.
• Efficiency. Pursuing cheaper labor and production
capabilities, as well as tax-free zones and other
Scope
Construction
23,4
15,8
io n
Op
a
er 0.39
4.03
M ar
O
Motivations
Companies have varied reasons for expanding
17%
Marpursuing business
nt in foreign
internationally. Many are
k et D e velo p m e
Retail
Trade
markets in order to directly drive growth. However, that
is only the most obvious motivation. Here is a list of some
of the most common things companies are seeking when
Companies
they pursue businessPrivate/Public
abroad.
28%
at
ns
n
7%
Mining
43,8
12,8
9,3
ti o
ga
esale Trade
on
6%
iz
n
Or
6%
ga
5%
22.4
Or
19%
0.71
0.51
le
Fin
Others
• Motivations. The reasons or drivers that motivate a
company to expand internationally.
Pe
• Capabilities. Inwardce– and outward-facing
capabilities
op
an
that help a company succeed beyond its home market.
Information
• Strategy.
A company’s core business strategy and how
32%
it relates to international expansion.
• Business environment. Country-specific advantages
and challenges that help or hinder a local company’s
iz
ra
international efforts.
at
pe
i
Pe
op
ce
an
le
Wholesale Trade
USD Bn 2012
ns
9%
Mining
These four drivers provide deep insights into a company’s
potential for becoming a Global Latina, and provide clues
Networking
Construction
on how to get there.
BNDES Loans
(% of sources of
financing, 2012)
ti o
10%
8%
Fin
7%
Mineral
Networking Amount of
funding
11%
Source:Food
Deloitte Analysis
Information
Chemical
Source: Deloitte's Latin America research, 2014.
Figure 10: Capabilities that drive global expansion
5%
nt
ket Develop me 0.32
5,8
The inward-facing (back office) capabilities
5,8
0.06related to
international expansion fall into four broad categories:
Private/Public Companies
people, operations, finance, and organization. The
1,2
0.13
Leadership
Differentiation
outward-facingCost
(front
office) capabilities
related to
Low cost or highly
Product, service or
international expansion
into twocapability
broad categories
efficient pro fall
ducers
innovators —
1) All Latina
Brazilian com
Networking and Market DevelopmentNote:
— which
focusAmerican
on
funding; 2) BNDES = National Bank of Dev
improving the company’s position with
outside
Source:
“Theentities
New Banks in Town: Chinese
for Development:
such as markets, customers, and partners
(see FigureLatin
10).American Compar
Broad
Chemical
Business
Environment
24%
Scope
y Metal
Strategy
Dialogue: “China-Latin America Finance D
BNDES Financial Report 2012; Deloitte An
Focus
Companies concentrating on
particular niche markets and
Latin America Rising: How Latin American Companies Become Global Leaders 9
able to develop uniquely low
cost or well-specified products
Telecomm
Narrow
tail Trade
9%
International
Capabilities
36%
Every business has a unique set of capabilities that
determine how effectively it operates and serves
64%
customers. These capabilities are deeply embedded within
Domestic
the organization and are not transferrable.
Others
Networking
0.71
43,8
Pe
op
ce
an
23,4
0.51
15,8
Comp
12,8
0.39
Comp
9,3
4.03
ns
Or
n
at
Op
io n
M ar
k et D e velo
e
ra
nt
p me
0.32
5,8
Comp
0.06
5,8
Comp
1,2
0.13
Figure 11: Four Primary Business Strategies
Differentiation
Product, service or
capability innovators
Scope
Cost Leadership
Low cost or highly
efficient pro ducers
Narrow
Focus
Companies concentrating on
particular niche markets and
able to develop uniquely low
cost or well-specified products
/ services for this market
2%
Others
Local business environment
Every country in Latin America has a unique business
Pulpthat
& Paper
environment with distinct attributes
can help or
7%
hinder a company’s efforts to expand beyond the country’s
borders. Key indicators in our analysis include: economic
ElectricIndex,
Energy
freedom (as measured by the Heritage Foundation
11%
which accounts for factors such as property rights,
corruption, labor regulations, and banking efficiency); and
ease of doing business (as measured by the World Bank’s
Mining
Ranking of countries based on the extent to which their 20%
regulatory environments are conducive to business). Other
key indicators include wealth, productivity, and a country’s
Source: Deloitte's Latin Ameri
recent economic history.
State-Founded Companies
Growth
9%
Food 5%
Cost
Differentiation
Source of Competitive Advantage
Inception
Comp
Strategy
Generally speaking, businesses are driven by one of
1) All Latina American Brazilian companies
four major strategies, each withNote:
a different
impact on a
funding; 2) BNDES = National Bank of Developme
company’s efforts to expand internationally.
ForBanks
private
and Chinese Financ
Source: “The New
in Town:
for Development:
Latin American
public companies in Latin America,
cost leadership
– not Comparative Pe
Dialogue: “China-Latin America Finance Database
differentiation — is currently the
mostFinancial
common
strategy
BNDES
Report
2012; Deloitte Analysis
for global success. On the other hand, state-founded
companies tend to follow a government-backed growth
strategy largely driven by monopoly power and strong
government support (see Figure 11).
Telecomm
Private/Public Companies
Broad
Comp
ti o
ga
iz
Comp
le
Fin
22.4
Comp
Privatization
Government – backed Growth
Founded as a state monopoly. Growth fueled by
government financing and support. Eventually
privatized and expanded overseas.
Our country-specific analyses provided deep insight into
the unique challenges and opportunities companies based
in that country face when trying to conduct business
abroad. We have profiled the top three countries for Global
Latinas, Brazil, Mexico, and Chile (see Sidebars C, D, and E).
Source: Deloitte's Latin America research, 2014.
Latin America
USA
34%
Other
7%
7%
7%
Argentina
21%
Mexico
64%
Brazil
Chile
Global Latinas &
Multilatinas
14%
Asia
20%
Europe
25%
10
Latin America
Local Latinas
mpany G 0,0
5,3
Company E
5,3
Company E
mpany H
24,6
8
Company F 0,0
8
Company F 0,0
nies used/have access to BNDES
Company
G 0,0
8
3) Selected
only;
G companies
8pment;Company
0,0
nance in Latin America”; “Finance
e Perspective”; InterAmerican
Company H websites;
1,2 Companies’
base”;
Company H
,2
is
Source: Deloitte's Latin America research, 2014.
95%
LocalOriented
Industries
21%
LocalOriented
Industries
79%
24,6
24,6
n 24,6
companies used/have access to BNDES
nofcompanies
used/have
accesscompanies
to BNDES only;
Development;
3) Selected
Sidebar
C:companies
Countryonly;
Profile – Brazil7,8
ofhinese
Development;
3) Latin
Selected
Finance in
America”;
“Finance
hinese
Finance
in
Latin
America”;
“Finance
Despite being
the largest economy in Latin America, Brazil
omparative Perspective”;
InterAmerican
DES
mparative
Perspective”;
InterAmerican
nce
Database”;
Companies’
websites;
es
only;
Country
Overview
nce
Database”;
Companies’
websites;
tte Analysis
nance
te Analysis
• Brazil is the largest economy in Latin America, and
the world’s seventh largest in terms of GDP
Oil & •
GasAfter a prolonged period of military dictatorship
48%characterized by significant government intervention
and protectionism, a process of privatization and
liberalization began in the 1990s
• A subsequent period of income growth has led to a
Oil & Gas
Oil & Gas middle class, despite significant inequality
growing
48%
• Brazil is the world’s 10th largest country in market
capitalization, and the largest in Latin America
merica research, 2014.
ng
g
• The country is Latin America’s 2nd largest exporter,
behind Mexico
•
•
•
12,80%
Capital Markets
12,80%
al Latinas
l Latinas
5%
Stages 2
(Local Latina
Exporter) & 4
(Multilatina
Exporter)
5%
5%
Stages 2
Stages 1
62
62
’06
’07
’08
’09
60
60
58Currency Risk
Risk index
of Sovereign
the country’s
include:
40
70
-1%
’05
’10
’11
’12
’13
•
5,97%
12,80%
12,80%
5,97%
5,97%
Labor Force
•
Sovereign Risk
Currency Risk
BBB
BBB
Income
Distribution
by
Socioeconomic
Class
Sovereign
Risk
Currency
Risk
Banking Risk
184 15%
BBBBBB
BBBA/B BBB
46%
BBB
BBB
BBB
192
BBB
22%BBB
BBB
54%
39%
24%
Income
Distribution
by
Socioeconomic
Class
Income Distribution by Socioeconomic Class
2007
2008
2009 by
2010
2011
Income
Distribution
Socioeconomic
Class
Brazil is the largest Latin American country
in
terms
of
population
and
(2007-2011; % total population, MM people)
(2007-2011; % total population, MM people)
(2007-2011;
%
total
population,
MM
people)
184 15%
192
184 15%
192
GDP, with a large consumer base
A/B
184 15%
192
Credit Composition
22%
A/BConsumer
22%
The middle class has grown significantly46%
in recent years, supporting
A/B(2011; % total consumer credit)
22%
C
54%
46%
C
54%
internal growth of local companies
Rural/
46% 27%
C
Other
D/E
39%
Agricultural 54%
24%
D/E
39%
The booming consumer market has attracted
a
large
number
of
11%
24%
D/E
2007 2008 2009 2010 2011
39%
24%
2007 2008 2009 2010 2011
foreign companies in recent years
2007
2008
2009
2010
2011
24%
17% Personal
Consumer Credit Composition
Durable
(2011; % total consumer credit)
Goods
Consumer CreditCredit
Composition
Latin Trade’s 2011 list of Latin America’s Top 100 Banks included 33(incl.
Brazilian
Consumer
Credit
Composition
Vehicles)
21%% total
(2011;
consumer
credit)
27%
Rural/
Other
(2011; % total consumer credit)
Agricultural
banks which controlled two thirds of the total assets of the
top
100;
7
of
those
Housing
27%
Rural/
11%
Other
27%
Rural/
Agricultural
Other
33 were in the top 10
11% Agricultural
24%
11%
17%
Growing consumer credit for durable goods
and
housing
due
to
the
growing
Durable
Personal
Goods
middle class has driven credit and the
banking
a whole,Credit
but is seen in
(incl.
Vehicles) sector as
21%
the market as a probable bubble
Housing
24%
17% Personal
Durable 24%
17% Personal
Durable
Goods
Credit
Goods
Credit
(incl. Vehicles)
21%
(incl. Vehicles)
21%
Housing
Housing
Global Latinas
mber of JVs and M&As per Company (#, until 2012)
M&As
1.1
3.9
JVs
Local Latinas
Global Latinas
Local Latinas
Global Latinas
1.8
M&As
Average Number
of
JVs
and
M&As
per
Company
(#,
until
2012)
JVs Average Number3.9
of JVs and M&As per Company (#, until 2012)
10.9
10.9
7M&As
“2014 Index of Economic Freedom.” Index of Economic
Freedom: Promoting Economic Opportunity and Prosperity by Country. January 2014.
8 “Doing Business – Measuring Business Regulations – World Bank Group.” Doing Business – Measuring Business Regulations – World Bank Group. January 2014.
Source:
SCImago Journal, 3.9
Deloitte Analysis
1.1 Bank, UN, OECD, EIA, INSEAD,
JVs
JVs The World
1.1
3.9
JVs
JVs
M&As
M&As
1.8
1.8
M&As
M&As
65
BBB
BBBBB
Average Number of JVs and M&As per Company (#, until 2012)
JVs
58
58
Political Ri
Political
Ris
Sovere
Sovereign
Risk
RiskRisk
Banking
Banking Risk
Political
Economic
CountryRisk
Risk
(2007-2011;
%Risk
totalCurrency
population,
MM people)
• Brazil has a weak education system, ranked 118th of 195 globally by the UN in average years of schooling,
accounting for a large mass of unskilled workers
• On the other hand, the country is the 15th most influential in terms of scientific publications according to the
SCImago Journal Rank
• Brazil also has a large number of CEOs, reflected by INSEAD’s 2012 list of 50 top performing CEOs in Latin America,
Global Latinas
26 of which were Brazilian
Local Latinas
70
Banking Risk
Political Risk
E
60
•60The key factors in the decline
50
–– Increasing tax burden
50
BBB
BBB
BBB
BBB 50
50–– Growth in government spending
Economic Freedom Index
Economic
Freedom
Index
40
–– Increased
to open, operate,
close businesses
Economic difficulty
Freedom Index
40 ’05and’06
’07
’08
’09
’10
’11
’12
’13
40
40
’05
’06
’07
’08
’09
’10
’11
’12
’13 ’05
–’05
– Increased
labor
legislation
’06
’07
’08
’09
’10
’11
’12
’13
D/E
Market Size
Latinas &
atinas
&
tilatinas
tilatinas
LocalStages 1
LocalOriented
(Local Latina) 79%
Oriented
Industries
95%& 3 (Regional 79%
Industries
Multilatina)
C
s Latin America research, 2014.
s Latin America research, 2014.
95%
95%
Economic Freedom
Stages
2
Stages
1
70
(Local
Latina
5%
(Local
Latina)
-1%
(Local
Latina
(Local
Latina)
Exporter)
&4
& 3 (Regional
• Brazil was ranked 114th of
62
Exporter)
&4
& Multilatina)
3 (Regional
Stages 2
Stages 1
(Multilatina
179, globally,
in
economic
58
(Multilatina
Multilatina)
(Local Latina)
60 (Local Latina
Exporter)
Exporter) & 4
Exporter)
freedom& 3 (Regional
(Multilatina
Multilatina)
Source: Deloitte's Latin America research, 2014.
–– The country was ranked
Exporter)
Source: Deloitte's Latin America research, 2014.
50
similarly in the World
Source: Deloitte's Latin America research, 2014. 70
-1%
70Economic Freedom Index
Bank’s ranking at 116th
-1%
62
48%
21%
21%
Source:
Deloitte's
Americafor
research,
2014.
has hurdles to overcome to make the market
even
moreLatin
attractive
businesses.
n
9%
%
Others
thers
Others
79%
Others
Others
10.9
Latin America Rising: How Latin American Companies Become Global Leaders
10.9
11
Others
21%
Customer base
America research, 2014.
95%
LocalOriented
Industries
79%
Others
21%
5%
95%
Stages 1
Local(Local Latina)
Oriented
79%
D: Country
&Sidebar
3 (Regional
Industries
95%
Multilatina)
Stages 2
(Local Latina
ProfileExporter)
– Mexico
& 4 7,8
(Multilatina
Exporter)
Mexico has a large consumer base, but faces challenges in education, and labor laws.
5%
Source: Deloitte's Latin America research, 2014.
Stages 2
1
CountryStages
Overview
5%
(Local Latina
(Local Latina)
-1%
• Mexico has the
2nd largest GDP, behind Brazil, and
Exporter) & 4
& 3 (Regional
Stages
2
2nd
largest
GDP per capita, behind(Multilatina
Chile58
Multilatina)
70
62
(Local Latina
Exporter)
Exporter) & 4
(Multilatina
•
The
country
spent
70
years
under
de
Source:Exporter)
Deloitte's Latin America research, 2014. facto
) 60
l
rule of a
single political party until 1997; the period was marked
in America research,
2014.
70
expansionary
policies,
authoritative government,
EconomicbyFreedom
Index
-1%
40
62 and import substitution
50
’05-1% ’06
60
’07
’08
’09
’10
’11
’12
’13
58
58
Sovereign Risk
Currency
Banking
Risk
• Mexico
reliesRisk
heavily
on exports
Economic Freedom
• Mexico was ranked 55th
of 179, globally, in
economic freedom
–– The country was
ranked similarly in the
World Bank’s ranking
70
at 53rd
0,3%
65
70
0,3%
67
65
60
50
70
Economic Freedom Index
40
’05
’06 65 ’07 67 ’08
60
’09
0,3%
’10
67
’11
’12
’13
80
Political
Risk
Riskcountry
Country
Risk
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Ec
to the
US, as
well asEconomic
•60 The
has improved
income
remittance
from
migrant
workers
in
the
US
significantly
on
tax
rates,
ease
of
doing
business,
trade
tariffs,
and
reduced
50
50
78
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BB
50 constraints toBBB
flow of capital
Economic Freedom Index
Economic Freedom Index
40
om Index 40 • The income gap in Mexico is evidenced by the large
Economic Freedom Index
76
’05 number
’06
’07
’08
’09
’10 seeking
’11 jobs
’12in the
’13US
’05
’06
’07
’08 since
’09 2005
’10
’11
’12
’13
’05
of migrant
workers
•40 Banking efficiency and corruption, however,
have worsened
’08
’09
’10
’11
’12
’13
’05
’06
’07
’08
’09
’10
’11
’12
’13
– The country
is Ranked 12th
of 17 in Latin America
Income–Distribution
by Socioeconomic
Class
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Economic Risk
Country Risk
Sovereign
Risk
Currency
Risk
Banking Risk
Political Ris
GINI
Inequality
Index
urrency Risk (2007-2011;
Banking Risk
Political Risk MMEconomic
Risk
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Economic Risk
Country Risk
Soverei
total
population,
by%the
World
Bank’s Ginipeople)
Index,Risk
which Country
measures
(2000-2010; 0 = perfect equality)
184 15%
192
A/B
BBBincome equality
BBB
BBB
BBB
BBB
BBB
BBB
BBB GINI Index BBB
BB
BBB
BBB
C
46%
D/E
39%
BBB
22%
BBB
BBB
BBB
BBB
BBB
52
BB
BB
BBB
47
54%
24%
bution by Socioeconomic
Class2008
2007
2009 by
2010
2011
Income
Socioeconomic
Market
SizeDistribution
• With aClass
population of approximately
% total population, MM people)
(2007-2011; % total population, MM people)
192
country
in Latin America
%
184 15%
192
Consumer
Credit Composition
22%
2002 2004 2006 2008 2010
GINI Inequality
Index
120 million,
Mexico
is the second2000
largest
GINI Inequality Index
(2000-2010; 0 = perfect equality)
GINI Index
(2000-2010; 0 = perfect equality)
GINI Index
A/B
• Income
22%inequality has diminished over52the same period, with a reduction in 52
(2011; % total consumer credit)
47
54% 46%
the
GINI
index
from
51.9
to
47.2
C
27%
Rural/
47
Other
54%
Agricultural
24%
• The growing consumer market has fostered growth of foreign and local
11%
D/E
39%
2008 2009 2010 2011
2000 2002 2004 2006 2008 2010
24%
companies
in recent years (17% of growth in middle class)
2007 2008 2009 2010
2011
2000 2002 2004 2006 2008 2010
24%
17% Personal
sumer Credit Composition
Durable
1; % total consumerGoods
credit)
Capital
Markets
• The country places 30th globally in terms of the soundness of its banks, according to the Global Competitiveness
Consumer CreditCredit
Composition
21%% total consumer credit)
27% (incl. Vehicles)
Rural/
er
(2011;
Report and is tied for 2nd in Latin America in terms of efficiency and independence of the banking system
Agricultural
Housing
11%
27%
Rural/
Other
according
to the Economic Freedom Index
Agricultural
24%
11%
• Overall financial market development shows that the country ranks 59th globally according to the Global
21%
Housing
17% Personal
Credit
Durable
Goods
(incl. Vehicles)
24%
Competitiveness Report
17% Personal
• Despite
this, the country still needs to develop the capital markets in order to finance the necessary investments in
Credit
infrastructure and to provide an outlet for the growing pension funds
21%
Housing
Labor Force
12
• A major challenge for Mexico is the quality of education, particularly in math and science (ranked 124th
by executives in the WEF Global Competitiveness Report), hampering innovation and the quality of the
country’s workforce
• Labor laws are a major hindrance to business, due to the difficulty to hire and fire workers
• Mexico follows Brazil in INSEAD’s 2012 list of 50 top performing CEOs in Latin America, with 10 of the 50
listed CEOs
A
Sidebar E: Country Profile – Chile7,8
The Chilean economy is widely considered the most developed and stable in Latin America.
0
0,3%
Country Overview
67
• Despite having the 6th largest GDP in 2012, Chile is
the richest of the Latin American nations with a per
capita GDP of over US$15,000
65
0
0
Economic Freedom
• Chile is ranked 7th of 179,
80
globally, in economic freedom,
and 1st in Latin America
78
–– The country was ranked
34th in the World Bank’s
76
ranking, but was still
’05
first among Latin
American economies
79
Economic Freedom Index
• In 2010 Chile became the first South American
country to become part of the OECD, and boasts
0
’06
’07
’08
’09
’10
’11
’12
’13
’05
’06
’07 trade
’08agreements
’09
’10 with’11
’13 including the
many’12
partners
70
0,3%
67
European Union, China, South Korea, Mercosur,
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Economic Risk
Country Risk
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Econo
80
65
0,3%
and Mexico 67
79
60
• The80major BBB
contributing points to the
BBB
BBB
BBB
BB
BB
A country’s elevated
A79 index include:
A
A
B
78
• Chile underwent a major movement of privatizations,
–– Property rights (2nd globally)
50
being the only country in Latin America with a fully
–– 78
Low corruption (22nd globally)
Economic Freedom Index
privatized
urban
water supply and sanitation
–– Low inflation
and price controls (7th
Economic
Freedom
Index
76 globally)
Economic Freedom Index
40
’05 globally)
’06
’07
’08
’09
’10
’11
’12
’13
Indexhas some of the best coverage and
–– Inequality
The’07country
–– 76
Reduced constraints to capital flow (2nd
dom Index ’05 GINI
’06
’08
’09
’10
’11
’12
’13
Unemployment Rate
(2000-2010; 0 = perfect equality)
’05
’06
’07
’08
’09
’10
’11
’12
’13
quality
–– Efficient and independent banks (19th globally)(2011; % total workforce)
’08
’09
’10
’11
’12 levels
’13 in urban areas, where 85% of the
GINI Index
Sovereign
Risk
Currency
Banking Risk
Political Risk
Economic Risk
Country Risk
Sovereign Risk
Currency Risk 7% Banking Risk
Political Risk
population
livesRisk
5%
52
Economic Freedom Index
urrency Risk
BBB
Banking Risk
Political Risk
Economic
Risk
47
Country Risk
BBB
BBB
BBB
• Despite the long
series of privatizations,
a majorBB
source
2000
BBB
BB
BB
BBB
of revenue
the government
2002
2004 for
2006
2008 2010 remains copper
Sovereign Risk
BB
A
Currency Risk
BBB
A
Banking Risk
A
Political Risk
A
A
Chile
GINI Inequality Index • Despite
nequality Index Market Size
2010; 0 = perfect equality) (2000-2010; 0 = perfect equality)
2
the fact that Chile has the highest GDP per capita in Latin America,
Unemployment Rate
(2011;of
% total
workforce)
income inequality ranks as the worst among members
OECD,
according to the
GINI Index
7%
5%
GINI index
47
• Unemployment
levels are among the lowest of the group of countries in the OECD,
Chile
OECD
making for a relatively large consumer base
Average
GINI Index
52
2004
2006
2008
47
2010
2000
2002
2004
2006
2008
2010
Economic Risk
A
OECD
BBB
Average
Country Risk
A
A
A
Unemployment Rate
(2011; % total workforce)
7%
5%
Chile
OECD
Average
Capital Markets
• Chile actively promotes foreign direct investment (FDI) inflows to the country via a Foreign Investment
Committee (FIC), which led to FDI growth of nearly sevenfold between 2002 and 2010
• Two of the major draws to doing business in Chile, according to the Index of Economic Freedom are its reduced
restraints to capital flow (ranked 2nd globally) and the efficiency and independence from the government of
the banking sector (ranked 19th globally)
• Over half of banks are foreign owned, and have significant access to external capital markets
• The financial market development is considered a key quality of the country by executives surveyed in the WEF
Global Competitiveness Report, ranking in the top 20% of countries in six of eight indicators
Labor Force
• While the educational gap across generations has been reduced over the past years, access to quality education
has remained a problem, due to uneven income distribution
• At the same time, in 2005, 37.4% of Chile’s workers were over-qualified for their jobs (against the OECD
average of 25%), a major point of concern for executives in the Global Competitiveness Report is the poorly educated
workforce
When looking at how the local business environment
affects companies based in Brazil, Mexico, and Chile, two
trends are particularly noteworthy. First, Chile’s high degree
of economic freedom has given rise to a disproportionately
large number of Local Latinas and Multilatinas. Second,
and as presented later in this report, the dominance of
Brazil at the Global Latina level can be largely attributed
to structural advantages such as access to top human and
financial capital, and in some cases direct government
support.
Latin America Rising: How Latin American Companies Become Global Leaders
13
Food
le
17%
Retail Trade
0.39
5%
ns
at
Op
io n
er
a
Narrow
ge
iz
n
4%
ga
etal
Or
4%
ti o
ction
Scope
28%
7%
Paper
17%M
e nt
ark et
DeGas
velo p m
Oil and
7%
Utilities
11%
Private/Public Companies
To understand how Latin American companies move
Cost Leadership
Differentiation
up the global
maturity
curve, we used our assessment
Low cost or highly
Product,
service or
efficient pro ducers
capability
innovators
framework
to study
a set of 57 carefully selected
3 Information
businesses that collectively mirror the Latin Trade Top 500,
in terms of both geographic distribution and company
type (Local Latina, Latina Exporter, Regional Multilatina,
14%
12%
10%
7%
7%
Multilatina Exporter and Global Latina).
Broad
tin America research, 2014.
19%
Information
3 Oil & Gas
15%
22%
Retail Trade
Company D
9,3
Company E
Focus
Companies concentrating on
particular niche markets and
5,8
Company
F
0.32
able to develop uniquely
low
cost or well-specified products
/ services for this market
Company G
5,8
0.06
Cost
Differentiation
Source of Competitive Advantage
Company H
1,2
0.13
0,0
5,3
4.03
0,0
0,0
2
Focus
Companies concentrating on
Our
analysis
revealed
particular
niche
markets five
and key factors that largely determine
to develop
uniquely
low
aable
Latin
American
company’s
ability to move up the
cost or well-specified products
maturity
and
become
a
Global Latina:
/10%
services curve
for
this
market
7%
Note: 1) All Latina American Brazilian companies used/have access to BNDES
funding; 2) BNDES = National Bank of Development; 3) Selected companies o
structuralSource:
limitations
need
to develop
explicitFinance
strategies
“The New
Banks
in Town: Chinese
in Latin America”; “Finan
for Development:
Latin American
Perspective”;
to work around
the challenges.
The Comparative
last three factors
are InterAmerican
Inception
Growth
Privatization
Dialogue: “China-Latin
Database”; Companies’ websites;
competencies
that are moreAmerica
withinFinance
a company’s
control.
BNDES Financial Report 2012; Deloitte Analysis
Government – backed Growth
as a state monopoly. Growth fueled by
1. TopFounded
Executives
government financing and support. Eventually
A country’s
local
business
plays an important
privatized
and
expandedenvironment
overseas.
role in the availability and retention of top executives,
Source: Deloitte's LatinTelecomm
America research, 2014.
directly affecting a company’s2%ability to
9%find leaders who
Food
5%
Othersand operations.
are prepared to guide
overseas
expansion
Pulp & Paper
Harvard Business
Review’s List of 100 Top Performing CEOs
7%
in the world evaluated a sample of 3,143 CEOs globally9.
Oil & Gas
Cost
Differentiation
1. Availability
and retention of top executives qualified to
Among the Top 100 CEOs, nine are Brazilian,
three are
Latin America
48%
Source of Competitive Advantage
Electric Brazilian
Energy CEOs
lead international expansion and operations
Mexican, and one is Chilean.
only
Argentina
7%comprise
3 Wholesale Trade
11%
7% 100. Also,
Chile
2. Access
to capital markets and financing
4.5% of
the total sample,
but 9% of the top
USA
State-Founded
Companies
34%
3. Position of market leadership at home
on average, Mexican CEOs ranked 108 places higher than
21%
Mexico
16%
13%
6%
6% 6%
Other CEOs from the US. These numbers help explain why 80
4. Ability
to execute international acquisitions and joint
7%
ventures
percent of all Global Latinas comeMining
from Brazil or Mexico
20%
14%
5.
Use
of
leading
corporate
governance
practices
(see
Figure
12).
Inception
Growth
Privatization
15%
2 Information
Narrow
Scope
Food
12,8
5,4
State-Founded Companies
Transportation
2
17,3
23,4
Company B
Differentiation
Product, service or
capability
innovators
15,8
Company C
Five keys to becoming a Global Latina
Fin
Others
Pe
op
ce
an
Broad
Chile
22.4
Cost Leadership
Low cost or highly
efficient
0.51pro ducers
13%
10%
Mining
Asia
20%
Food
Government – backed
Growthin any of these areas can make it very difficult
Limitations
Construction
Oil and Gas
Founded as a state monopoly.
Growth fueled by
for a business to expand internationally or become a
government financing and support. Eventually
Information
privatized and expanded
globaloverseas.
company. The first two factors are more structural
Primary Metal
Chemical
Brazil 2014.
64%
Source: Deloitte's Latin
America research,
Europe
25%
in nature, meaning they are largely pre-determined by
where a company is based and may not be within the
company’s direct control. Companies that face such
earch, 2014.
Source: Deloitte's Latin America research, 2014.
Figure 12: Top 100 Performing CEOs Globally 10
(HBR, % by nationality of company in 2013)
Figure 13: Top 500 Universities Globally
(ARWU, % of Universities per location in 2013)
Latin America
Americas
5%
Argentina
10%
13%
GlobalCanada
Latinas & 10%
Mexico
Multilatinas
Latin America
USA
34%
Other
7%
7%
7%
Argentina
21%
Mexico
Chile
Europe
40%
20%
Chile
60%
Brazil
1
36%
14%
82%
Asia
20%
Brazil
64%
Europe
25%
Africa
1%
USA
Local Latinas
5,97%
Asia / Oceania
23%
9 "The Best-Performing CEOs in the World." Harvard Business Review. Web. January 2013.
10 Only one Latin American company studied has a foreign CEO; other companies have local CEOs; Latin Americans only appear in Latin American companies among the top 100 listed;
ARWU considers every university that has any Nobel Laureates, Fields Medalists, Highly Cited Researchers, or papers published in Nature or Science
Latin America
Americas
Local Latinas
5%
14
Argentina
10%
13%
Canada
10%
Mexico
Average Numbe
Of course, top-flight leadership talent does not just materialize without investments; it is a result of top-flight education.
Academic Ranking of World Universities (ARWU) lists the top 500 universities from a pool of more than 2,000 higher
education institutions worldwide. Given the size of their economies, it seems reasonable to expect that all six of the top
GDP countries in Latin America should have at least one school in the ranking (see Figure 13). Yet, the only Latin American
countries with universities in the Top 500 are Brazil (six), Chile (two), Mexico (one), and Argentina (one).
Given Brazil’s exceptional showing in both the top CEOs and top universities lists, it is not surprising that the country by
itself is the home base for nearly half (48 percent) of all Global Latinas and has a high need for top executive talent.
2. Capital Markets and Financing
To fund international expansion, companies need ready access to relatively cheap capital. This is especially important
for companies based in Latin America, where obtaining credit can be a major challenge (see Sidebar F). On average,
Global Latinas are listed on 2.06 stock exchanges, compared to only 1.30 and 1.25 listings for Regional and Local Latinas
respectively. This gives Global Latinas more options and sources for raising capital from investors. Global Latinas also have
access to lower interest rates (see Figure 14).
Figure 14: Stock Listings and Interest Rates
Local Latinas
Multilatinas
Global Latinas
2.06
on
1.30
1.25
Average Number of
Stock Exchanges
Global Latinas
Local Latinas
Multilatinas
Global Latinas
Multilatinas
2.06
high
on
Average Number of
Interest
Rate
Statistics
Stock
Exchanges
(basis points, 2012)
1.25
1,429
1.30
849
average
504
1,429
low
high
849
Interest
RateDeloitte's
StatisticsLatin
Source:
America research, 2014.
average
(basis points, 2012)
504
low
1,241
992
848
722
320
466
1,241
992
848
722
In addition, Global Latinas have the opportunity to get their funding from320
either local or international 466
sources (see
Figure 15), which reduces cost and risk – and helps them overcome capital-related structural limitations that may exist
Local Latinas
Global Latinas
withinSource:
their home
countries.
Deloitte's
Latin America
research, 2014.
Sources of Financing
(% of capital from different sources of financing, 2012)
Figure 15: Sources of Financing
International
Sources of Financing
(% of capital from different sources of financing, 2012)
Domestic
Local Latinas
Global Latinas
Sources of Financing
36%
(% of capital from different sources of financing, 2012)
64%
International
Domestic
Sources
35% of Financing
(% of capital from different sources of financing, 2012)
Local Latinas
Source:
Deloitte's
Global
Latinas Latin America
Multilatinas
and Locals
Global Latinas
Source: Deloitte's Latin Am
Multilatinas
and Locals
Source: Deloitte's Latin Ame
International
35%
Source: Deloitte's Latin America research, 2014.
64%
65%
Domestic
International
Amount of
BNDES Loans
Source: Deloitte's
Latin America
2014.
funding
(%research,
of sources
of
0.71
Amount of
Source: Deloitte's Latin Americ
Multilatinas
65%
Domestic
36%
USD Bn 2012
Global Latinas
Local Latinas
financing, 2012)
43,8
BNDES Loans
BNDES Equity
(% of company’s
equity, 2012)
Company A 0,0
BNDES Equity
Latin America Rising: How Latin American Companies Become Global Leaders
15
De
504
low
320
0.13
466
1,2
Company H
Global Latinas
24,6
Multilatinas
and Locals
Global Latinas Note: 1) All Latina American Brazilian companies used/have access
BNDES
GlobaltoLatinas
Sidebar F: Government-backed financing gives Brazilian companiesfunding;
a big edge
2) BNDES = National Bank of Development; 3) Selected companies only;
Sources of Financing
Sources of Financing
Brazil’s
development
bank,2012)
Banco Nacional
de Desenvolvimento
Econômico
e New
Source:
“The
Banks in Town: Chinese Finance in Latin America”;
Source:“Finance
Deloitte's Latin America research, 2014.
Cost
(% ofLeadership
capital
fromnational
differentDifferentiation
sources of financing,
Multilatinas
(% of capital
from different sources
of
financing,
2012)
for Development:
Low cost or Social
highly (BNDES),
Product,
service
or
and Locals
provides
Brazilian
companies with government-backed financing
that helps Latin American Comparative Perspective”; InterAmerican
International
Domestic Global Latinas Dialogue: “China-Latin America Finance Database”; Companies’ websites;
efficient pro ducers Localcapability
Latinas innovators
them grow internationally and provides a significant advantage over companies
from
otherReport 2012; Deloitte Analysis
BNDES
Financial
Sources of Financing
Sources of Financing
Latin
American
countries.
In
this
respect,
Brazil
is
similar
to
other
fast-growing
economies
Source: Deloitte's Latin America research, 2014.
35% sources of financing, 2012)
% of capital from different sources
of financing, 2012)
36%
(% of capital from different
ource: Deloitte's Latin America research, 2014.
Local
Latinas
Private/Public
Companies
such as Russia and China, which also have national banks that help spur economic
International
Domestic
64%
65%
development
at home and abroad.
Domestic
International Telecomm
35%
36%
Focus
2%
BNDES
offers
Brazilian
companies
a
mix
of
loans
and
equity
tailored
to
their
unique
needs.
9%
Companies concentrating on
64%
Food
5%
Others
65%
particular
markets2014.
and
Source: Deloitte's
Latin America
(see Figure
16).nicheresearch,
able to develop uniquely low
Domestic
International
cost or well-specified products
Pulp & Paper
for this market
Figure/ services
16: Examples
of BNDES Global Latinas financing for selected companies
7%
Source: Deloitte's
Latin America
research,
2014.
Amount
of
BNDES
Loans
BNDES Equity
Oil & Gas
Cost funding
Differentiation
of sources of
(% of company’s
48%
Source of Competitive (%
Advantage
Market Leadership
financing, 2012)
equity, 2012)
Electric 3.
Energy
USD Bn 2012
11% Global Latinas and Multilatinas are healthy companies Local
with Latinas
Amount of Companies
BNDES
State-Founded
43,8 Loans
Company BNDES
A 0,0 Equity
0.71
strong growth prospects that were typically top performers
funding
(% of sources of
(% of company’s
1 Local
and market leaders in their home countries before
financing, 2012)
equity, 2012)
USD Bn 2012
17,3
22.4
23,4
Mining abroad. For example, in the Brazilian food Local Latinas
expanding
Company B
20%
43,8
Company A 0,0
0.71
industry,
one Global Latina, BRF, controls 71 percent of the
eption
Growth
Privatization
1 Local
country’s market for frozen processed meats, compared
toDeloitte's Latin A
5,4
0.51
15,8
Company C
Source:
17,3
22.4 Growth
23,4
successful
Local
Latina
that 2014.
controls just 14 percent of
Company B
Source:a Deloitte's
Latin
America
research,
Government – backed
ounded as a state monopoly. Growth fueled by
the country’s market for cookies and pasta.
12,8
0.39and support. Eventually
Company D 0,0
government financing
5,4
0.51 overseas.
15,8
Company C
privatized and expanded
Source: Deloitte's Latin A
4.03
urce: Deloitte's Latin
America research, 2014. 9,3
12,8
0.39
SA
4%
0.32
4.03
5,8
9,3
0.06
0.32
5,8
5,8
Latin America
Company F
Company E
0,0
5,3
Others
24,6
21%
Mexico
Note: 1) All Latina American Brazilian companies used/have access to BNDES
Company H
24,6
0.13 2) BNDES = National Bank1,2
funding;
of Development; 3) Selected companies only;
Source: “The New Banks in Town: Chinese Finance in Latin America”; “Finance
14%
for
Development: Latin American Comparative Perspective”; InterAmerican
Dialogue:
America
Finance
Database”;
Companies’
Note:
1) All “China-Latin
Latina American
Brazilian
companies
used/have
accesswebsites;
to BNDES
BNDES Financial
2012;Bank
Deloitte Analysis
funding;
2) BNDESReport
= National
3) Selected companies only;
Brazil
64% of Development;
Source: “The New Banks in Town: Chinese Finance in Latin America”; “Finance
Europe
for Development: Latin American Comparative Perspective”; InterAmerican
25%
BNDES
provides
equity
financing
toDatabase”;
a wide range
of industries,
Dialogue:
“China-Latin
America
Finance
Companies’
websites; with a
BNDES Financial
Deloitte
presence
in Oil Report
& Gas2012;
(Figure
17). Analysis
Global Latinas &
Multilatinas
particularly strong
Others
9%
Others
Latin America
Americas
Pulp & Paper
5% Electric Energy 10%
7%
13% 11%
Canada
10%
36%
Electric Energy 20%
11%
Mining
20%
82%
USA
Oil & Gas
48%
Argentina
Mexico
Chile
Oil & Gas
48%
Mining
Source: Deloitte's
America research, 2014.
60% Latin Brazil
20%
Source: Deloitte's Latin America research, 2014.
16
21%
79%
In other Latin American
countries, different types
of institutional funding
such as the Inter-American
Development Bank and the
China Development Bank
are present and have grown
significantly over the past five
years. China’s funding, of
course, is made with Chinese
national interests in mind first.
79%
Stages 1
(Local Latina
& 3 (Region
Multilatina
Stages 1
According to our research, cost efficiency is the most
(Local Latina)
Source:&Deloitte's
La
common source of market leadership for Global Latinas.
3 (Regional
Multilatina)
Many of the most successful companies in the region have
70
Local Latinas
Telecomm
2%
Telecomm
Pulp & Paper
2%
7%
Food 5%
12,80%
Others
LocalOriented
Industries
LocalOriented
Industries
9% (% of equity value per sector, 2012)
Figure 17: BNDES Equity Portfolio
Food 5%
21%
Figure 18: Sales Growth Advantage Over Industry
(%; 5 year CAGR 2008-12) 11
Company G 0,0
Company F 0,0
7%
Company H
1,2 Argentina
7% 5,8 Chile
Company G 0,0
0.13
0.06
The dominant leadership position of Global Latinas and
Multilatinas in their home market is reflected in the
tremendous sales growth advantage they enjoy over Local
Latinas in their respective industries (see Figure 18).
5,3
Company E
Company D 0,0
5,97%
been able to effectively leverage a position of local cost
62
Source:
leadership into a competitive and sustainable advantage
in Deloitte's Lati
60
the global marketplace.
70
62
50
4. Acquisitions and Joint Ventures
60
Local Latinas
Many companies mistakenly
assume that effective
Economic Freed
40 M&As
Average
Number
of strategy
JVs and
international expansion requires
a green
field
of per Company
’05
’06
’07
50
building their own local operations in a foreign country
from the ground up. However, our research shows that
the
Sovereign
Risk Freedo
C
Economic
international expansion strategy for
Global Latinas40is more
1.1
JVs
’05 JVs’06
’07
likely to rely on inorganic growth through acquisitions BBB
and joint ventures (see
Figure 19). In1.8fact, considering
Sovereign
Cu
M&As Risk
M&As
acquisitions overseas, compared to Local Latinas, Global
BBBIncome Distr
Latinas on average execute almost four times as many joint
ventures (JVs) — and more than six times as many mergers (2007-2011; %
184 15
& acquisition deals (M&A).
A/B
Income
Distrib
46%
C
(2007-2011; %
11 Average difference between company sales growth and industry D/E 184
39%
15%
sales growth
A/B
2007
C
46%
Consumer Credit Composition
(2011; % total consumer credit)
Other
bal Latinas &
Multilatinas
27%
11%
12,80%
Durable
Goods
(incl. Vehicles)
Local Latinas
24%
21%
Housing
Rural/
Agricultural
17% Personal
Credit
5,97%
Figure 19: Global Latinas Rely on JVs and M&A
Local Latinas
Global Latinas
Average Number of JVs and M&As per Company (#, until 2012)
JVs
1.1
1.8
M&As
JVs
3.9
10.9
M&As
A Mexican Global Latina, CEMEX, has developed a
rigorous M&A model that it used to execute 15 or more
Multilatinas
Global Latinas
M&A deals in 2012 alone. The model is built on a global
capability platform2.06
that covers every aspect of the business,
1.30
and is implemented by an experienced team of M&A
professionals.
ilatinas
Global Latinas
2.06
Figure 20: Independence of Board of Directors
(% independent directors; average per expansion
phase)
56%
Global Latinas
Multilatinas
35%
5. Governance practices
1,241
992 for international corporate
56%
Global
Latinas
Adoption of leading practices
Local
Latinas
28%
operate more effectively
848governance helps Global Latinas
722
Source: Deloitte's Latin America research, 2014.
35%
on a global scale. Also, it helps
them
gain access to capital Multilatinas
466
320
from state pension funds and sovereign wealth funds,
Also, Global Latinas are more likely to issue only common
1,241
992
Local
Latinas
28%
which typically have strict guidelines about the types of
stock,
giving voting rights to all investors
(see Figure 21).
848 companies they invest 722
in. This insight is important for all
Source:Global
Deloitte's
Latin America research, 2014.
Latinas
79%
to become Global Latinas; however,
Figure 21: Voting Rights of Shareholders
320 companies that aspire 466
Multilatinas with only voting rights stocks)
it is especially critical for companies that are currently
(% companies
and Locals
61%
controlled
by a single owner or family, since operating
Global Latinas
Global Latinas
effectively
on a global level may require surrendering
Sources
of Financing
79%
Source: Deloitte's Latin America research, 2014.
capital from different
of financing,
a certainsources
amount
of control2012)
to other investors and
Multilatinas
Domestic stakeholders.
and Locals
61%
30
Global Latinas
35%
Sources
of Financing
More
than two-thirds of Global
tal from different sources of financing, 2012)
Latinas have publicly
traded shares in foreign stock exchanges, while less than
65%
Domestic
half of Local Latinas are traded outside their home country.
International
Being listed on foreign stock exchanges makes Global
35%
Latinas more likely to adopt international standards and
leading practices
for corporate governance. For example,
65%
compared to Local
Latinas, Global Latinas on average have
International
twice as many independent directors on their boards (see
NDES Equity
Figure 20).
% of company’s
quity, 2012)
0,0
S Equity
company’s
, 2012)
17,3
5,4
Source: Deloitte's Latin America research, 2014.
Global Latinas
Our analysis suggests that the five factors listed above
Global
5
are key indicators for a Latin American company’s ability
to grow into a Global Latina. Companies with global
Global Latinas
aspirations should ensure all five of these factorsMultilatinas
are
addressed – even if it means reaching beyond their home
Global
5
country’s borders for key resources such as executive
talent
4
Exporter
3 Regional
and investment capital. Also, understanding the five factors
Multilatinas
can help companies from outside Latin America
gain a
Local
Latinas
foothold and operate more effectively within the region.
3
1
Local
Regional
2
4
Exporter
Exporter
Local Latinas
Customer base
Latin America Rising: How Latin American Companies Become Global Leaders
Local
1 Deloitte's
Source:
Latin America research,
2014.
2
Exporter
17
722
Source: Deloitte's Latin America research, 2014.
466
Moving horizontally into exports
Global Latinas
Multilatinas
and Locals
nas
ancing
rces of financing, 2012)
61%
Source: Deloitte's Latin America research, 2014.
56%
as
as
79%
Global Latinas
65%
35%
International
as
Global
5
28%
Becoming
a Global
itte's Latin America
research,
2014.
Latina is not the only way to capitalize
on international business opportunities. Local Latinas
and Regional Multilatinas also have the option to expand
internationally by moving horizontally on the maturity
tinas
path and becoming Exporters. This
79%involves a company
continuing to base all operations in its home country, but
nas
seeking new sources of61%
revenue by selling products and
cals
services in foreign markets – both within and beyond Latin
America (see Figure 22).
Deloitte's Latin America research, 2014.
Figure 22: Expanding Horizontally into Exporting
Global Latinas
5
Multilatinas
To become a successful exporter,
it helps to operate in an
industry where the products and services are in demand
4
Exporter
globally and are relatively easy
to export – industries
such
3 Regional
as Food, Construction, and Air Transportation – rather than
in local-oriented industries such as Retail, Utilities, Ground
Local Latinas
Transportation, and Telecom, where the goods and services
are difficult or impossible to export. Among the companies
1 Local
2
Exporter
we analyzed, only 5% of the Latina and Multilatina
Exporters are in local-oriented industries. By contrast,
79% of the Local Latinas Customer
and Regional
baseMultilatinas are
in Source:
local-oriented
could
be making it
Deloitte's industries,
Latin Americawhich
research,
2014.
fundamentally difficult for them to move into exports (see
Figure 23).
Figure 23: Companies in Local-Oriented Industries
(% of total within group; Latin Trade ranking 2013)12
Global
Multilatinas
Others
3
4
Regional
21%
Exporter
95%
LocalOriented
Industries
Local Latinas
1
Local
2
79%
Exporter
5%
Customer base
This horizontal move can be a useful intermediate step on
the path to becoming a Global Latina; however, instead
of the five key factors described above, there are three
different factors associated with successful exporting:
• Doing business in an export-friendly industry
Others
21%
• Developing a differentiated strategy that is compelling
internationally
95% sales
• Establishing strategic partnerships for foreign
Localand distribution
Oriented
Industries
Source: Deloitte's Latin America research, 2014.
70
-1%
62
58
60
50
Economic Freedom Index
40
79%
Stages 2
(Local Latina
Exporter) & 4
(Multilatina
Exporter)
Stages 1
(Local Latina)
& 3 (Regional
Multilatina)
Source: Deloitte's Latin America research, 2014.
’05
’06
’07
’08
’09
’10
’11
’12
’13
Sovereign Risk
Currency Risk
Banking Risk
Political Risk
Economic Risk
Country Risk
BBB
BBB
BBB
BBB
BBB
BBB
5%
Stages 1
(Local Latina)
& 3 (Regional
Multilatina)
Stages 2
(Local Latina
Exporter) & 4
(Multilatina
Exporter)
18
Source: Deloitte's Latin America research, 2014.
12 Our sample is based on 19 companies in Stages 1 (Local Latina) and
3 (Regional Multilatina) and another 21 companies in Stages 2 (Local
Latina Exporter) and 4 (Multilatina Exporter)
Income Distribution by Socioeconomic Class
(2007-2011; % total population, MM people)
184 15%
192
A/B
22%
Conclusion
Latin America is a rising star in the global economy.
The insights presented here can help Latin American
companies capitalize on growth opportunities within and
beyond the region. They can also help companies from
outside the region establish solid footholds and operate
more effectively in the Latin American market.
For Local Latinas and Multilatinas, there are five key
factors for expanding internationally and moving up the
maturity curve toward becoming Global Latinas. Three of
these factors are competencies that companies have the
power to affect through their own actions: (1) establishing
a position of market leadership at home, (2) developing
strategies and capabilities that focus on acquisitions and
joint ventures as the primary means for international
growth, and (3) adopting leading corporate governance
practices. Global Latinas tend to be very strong in all three
of these areas, and any Latin company that aspires to
reach a similar level of global success will likely want to
follow their lead.
at the global level. It could also result in market changing
opportunities at the global level originated – and
controlled– within and by Latin American businesses.
Having all five factors in place gives a company a distinct
advantage in the global arena. However, it does not
guarantee success. Our analysis shows there is not a single
magic formula for expanding internationally and becoming
a Global Latina. Different companies will be presented
with different opportunities and obstacles, and will follow
different paths. Some will become Global Latinas; others
will not. However, all companies that do business in Latin
America can potentially improve their performance by
understanding and addressing the five factors that have
helped Global Latinas establish a strong presence in the
global marketplace. These same factors can also serve as
guidance for international companies that either operate
or want to operate in Latin America.
The two remaining factors are more structural in nature,
meaning they are largely determined by a company’s home
business environment. These factors are: (1) availability and
retention of top executives qualified to lead international
expansion and operations, and (2) access to capital
markets and financing. Although companies do not have
total direct control over these factors, that does not mean
they cannot succeed internationally. They simply have a
tougher path to follow and need to make a deliberate
effort to find alternative strategies. Of course, over the
mid to long-term, government policy development
and changes in talent and capital, if deemed a national
interest, may offer more parity in the market. Alternative
strategies for executive talent acquisition may include
targeted executive development programs sponsored
by interested companies, or international recruitment of
capable executives in the region. Relative to investment,
private equity and venture capital, in particular those
originating from the region, can foster direct investment
and ownership of Latin companies to accelerate growth in
earlier stages of development, either from a Local Latina
to Multilatina, or from Multilatina to Global Latina. This
model of direct investment given local and regional market
knowledge and comfort of operating in this environment,
may lead to more aggressive consolidation and expansion
Latin America Rising: How Latin American Companies Become Global Leaders
19
Report authors
Omar Aguilar
Principal
Americas Regional Strategy &
Operations Consulting Leader
Deloitte Consulting LLP
[email protected]
+1 215 870 0464
Rafael Delatorre
Senior Manager
Deloitte Consulting LLP
[email protected]
+1 212 313 2830
Omar Aguilar is the Americas Regional Strategy and Operations Leader for Deloitte Consulting LLP, and US Senior
Partner for Deloitte Consulting Brazil, focused on supporting and serving multinational, multilatina, and local clients in the
Americas. His areas of specialty include enterprise cost management, margin improvement, restructuring, turnarounds,
and business model transformations. Omar has published widely on the topic of sustainable and scalable change, and has
been quoted by or has written for Business Finance, The Journal of Cost Management, and The Wall Street Journal. He is
a frequent speaker and has been a guest lecturer at the University of Pennsylvania Wharton School, the Stanford Graduate
School of Business, and the Carnegie Mellon Tepper School of Business. He holds bachelor and master of science degrees
in nuclear engineering from the University of Missouri-Rolla, and a Master of Business Administration from the University
of Notre Dame.
Rafael Martín Delatorre is a senior manager with Monitor Deloitte, serving clients in the Americas. His experience
includes corporate and competitive strategy, scenario planning, and organizational strategy in a variety of industries.
Rafael earned his MBA from the IESE Business School in Barcelona, with an exchange term at Columbia Business School in
New York. He also holds a bachelor of business administration from the University of São Paulo.
20
For more information,
please contact:
Latin America Leaders
Omar Aguilar
Principal
Americas Regional Strategy & Operations Consulting Leader
Deloitte Consulting LLP
[email protected]
+1 215 870 0464
Jorge Hernandez
Partner
Colombia Strategy & Operations Consulting Leader
Deloitte & Touche Ltda.
[email protected]
+57 315 347 7221
Anselmo Bonservizzi
Partner
Brazil Strategy & Operations Consulting Leader
Deloitte Consultores
[email protected]
+55 11 96398 1540
Francisco Revelo
Partner
Peru Strategy & Operations Consulting Leader
Deloitte & Touche SRL
[email protected]
+51 1 211 8585
Salvador Hernandez
Partner
Mexico Strategy & Operations Consulting Leader
Deloitte Consulting Group S.C.
[email protected]
+52 55 5080 7126
Fernando Oliva
Partner
Uruguay Strategy & Operations Consulting Leader
Deloitte SC
[email protected]
+598 29160756
Claudio Fiorillo
Partner
Argentina and LATCO Strategy & Operations Consulting
Leader
Deloitte & Co S.A.
[email protected]
+54 11 4320 2700 Ext. 2133
Federico Chavarria
Partner
Costa Rica Cluster (Costa Rica, Nicaragua, Honduras,
Dominican Republic) Consulting Leader
Deloitte & Touche S.A.
[email protected]
+506 2521 6790 / 6890 ext. 300
Pablo Tipic
Partner
Chile Strategy & Operations Consulting Leader
Deloitte Auditores y Consultores Ltda
[email protected]
+562 2729 7153
Latin America Rising: How Latin American Companies Become Global Leaders
21
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Latin America Rising: How Latin American Companies Become Global Leaders
23
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