Beating the Odds. (Book Review).

Winning Strategies for the New Latin Markets By Fernando Rabies, Francois Simon and Jerry Haar Financial Times Prentice Hall US$34.00

Fernando Robles, Francoise Simon and Jerry Haar, three academics from American universities who are specialists in Latin American business, create no false illusions in Winning Strategies for the New Latin Markets. The first few pages explain that succeeding in Latin America's business world is not an easy task due to the radical changes that affect all aspects of life in the region.

The authors note, however, that these same changes have generated attractive business opportunities. Among the major transformations that have taken place in Latin America in the last decade are the privatization of large, state-owned companies, free trade, economic reform, monetary and fiscal reform, and the quick diffusion of the Internet and e-commerce. These innovations have allowed multinationals to weave a vast commercial web from New York to Sao Paulo and from Madrid to Buenos Aires.

The authors argue that success in Latin America requires harmonization of consumer characteristics in different countries. They also note that the future of any multinational in the region depends on consolidating power in three big markets: Mexico, Brazil and the Hispanic market in the United States. The 34 millon Hispanics in the United States, in effect, constitute the fourth-largest Latin American nation, and the third in purchasing power. Estimated annual spending by U.S. Hispanics by 2010 will reach US$1 trillion.

The authors analyze a radical transformation in Latin American business strategies. The traditional model yields to a model where the role of information technology and the Internet is increasingly important for planning, production, distribution and customer service.

Together with the technological transformation, social change has opened the way to a more urban society, consisting of smaller family units. Companies should not take that change, nor the great diversity in the habits of Latin American consumers, for granted. In this sense, the authors explain methods to attract Latin American consumers in a period of economic difficulty. One of these methods is brand promotion, and the value of foreign brands compared to local, traditional brands. This last point is a significant factor for business strategy since economic competition in the region alternates between two main contenders: American and European multinationals versus traditional Latin American companies that are often family-owned and deeply rooted in the consumer's mind.

Winning Strategies outlines the importance of education and medical care to strengthen a top-notch work force and to build economic and political stability. The authors argue that great advances have been achieved in this field but that enormous deficiencies persist, creating business opportunities themselves. Latin America's medical care market, for instance, is the fourth-largest in the world. Insufficient availability of health care creates a market for multinationals.

Riptide. The book concludes with a revision of strategies of companies that created great changes in the last decade, such as Telefonica, Wal-Mart and Cemex, and those that adapted to those changes. It also examines economic and political situations in various countries, and offers a summary of the strategies to achieve managerial success described in its eight chapters.

This optimistic book comes to light in an opportune moment: The economic downturn in the United States has had a strong negative impact on Latin America. At the same time, the failure of the neoliberal model to achieve its short-term goals has given rise to a political riptide in the region, which often moves against reform, making investors tremble. Hugo Chavez in Venezuela, Lula in Brazil, and the tie in the Bolivian ballot between the cocalero leader Evo Morales and the current president Gonzalo Sanchez de Lozada are examples of this undertow Investing in Latin America has lost the luster it had ten years ago, but Robles, Simon and Hoar argue that there are still those who can reap benefits during periods of institutional instability.

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Excerpt from: Winning Strategies for the New Latin Markets:

"In this context of rapid technological change and high economic uncertainty, what are the most potentially profitable options for companies operating in the Latin markets? After their retreat from the region in the" lost decade" of the 1980s, foreign multinationals are now forming pan American or transatlantic networks. Local companies must decide whether to bet on the region or to globalize, since their national markets are no longer protected and are invaded by foreign competitors."