At a new session of Matins ESADE sponsored by Bluecap and organised in collaboration with La Vanguardia, Octavio Ibarra, President of the Latin American Council of Management Schools (CLADEA), highlighted the importance of retail and distribution as key factors that determine companies’ ability to survive in the Latin American market.

“The distribution system is a challenge for large companies, since many areas are hard to reach,” commented Mr. Ibarra. “Companies have to become familiar with the environment and adapt to the entire value chain.” Mr. Ibarra mentioned Pepsi as an example of a company that has transformed retailers into the core of its operation in Latin America.

Mr. Ibarra highlighted the differences in payment practices between large companies like Carrefour – which can afford to have a policy of paying later – and small neighbourhood shops that must sacrifice their margin to pay in cash.

“The Latin American economy is based on SMEs,” declared Mr. Ibarra. “Therefore, in terms of productive transformation, we have to prepare SMEs in order to strengthen them in their market.”

Mr. Ibarra also highlighted the role of multilatinas: “These are companies that have emerged, grown and adapted, and they have a very good understanding of the market.”

Latin American social context

“Really, Latin America has major social problems that prevent companies from lasting very long,” commented Mr. Ibarra. He also pointed out the region’s ongoing problems with gender violence, poverty – “the poverty rate is around 30% in most Latin American countries” – and corruption.

“For the average citizen, GDP growth – 2.2% in Latin America in 2018 – has no direct effect on quality of life,” commented Mr. Ibarra. “This is an invitation to think about the role of businesspeople.”

During his talk, Mr. Ibarra also discussed the importance of education, which, in his view, “will play an increasingly important role in the future”. Finally, during his remarks on the need to make development opportunities available to people, Mr. Ibarra mentioned the example of the Cocoa Producers’ Committee as an alternative for Valle del Guamuez (Putumayo, Colombia).