Harvard Business School
The world order has changed significantly in the last two
decades. The influence of western-style varieties of capitalism has
been challenged by new forms of capitalism that rely less on
private enterprise and on the enforcement of rigid institutional
structures (e.g., laws). This change is to a large extent explained
because of the rise of emerging markets to the center stage of
global capitalism. Large economies such as those of BRIC countries
(Brazil, Russia, India, and China) or the so-called N-11
(Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria,
Pakistan, Philippines, Turkey, and Vietnam) dominate some of the
most important commodity markets and are growing and
industrializing at a faster pace than any developed country.
Additionally, investors that considered securities issued in
emerging markets as a risky asset class in the 1990s are now buying
emerging market bonds and stocks as the new blue chips. These
trends are important because they provide a new set of
opportunities for entrepreneurs and investors in the developed
world and within emerging markets.
these changes, however, have taken place so fast that it is hard
for investors, entrepreneurs, and managers in general to develop a
framework that can help them differentiate secular trends from
temporary transitions and provide them with lessons to deal with
the weak institutions, political risk, and strong state presence
that prevails in emerging markets. Therefore, this course provides
a simple framework to
understand the development strategies followed by emerging markets,
identify and learn to deal with political risk and state
capitalism, and, finally, to distinguish new trends that can
provide sustainable business opportunities. The course uses a
variety of country and company cases to accomplish these objectives
-- from country cases on BRIC economies, to cases on energy,
mining, and utility companies to banks operating in emerging
in emerging markets and interacting with the governments of those
countries poses significant challenges. The business environment in
these new dominant emerging markets is very different from that of
the developed world. For instance, in the largest emerging markets
governments play a greater role to promote economic development,
the rule of law tends to be weaker and the enforcement of contracts
can end up depending on the political whims of whoever is in power.
Therefore, this course will have a strong focus on the strategic
challenges managers face when dealing with state-owned enterprises
or with governments that threaten firm performance either through
expropriation, corruption, or other forms of state intervention.
course will focus on three interrelated modules that affect growth
and business opportunities in emerging markets. First, the course
provides a basic framework to understand the development strategies
and sources of competitiveness in emerging markets. Second, the
course will look at the kind of strategies that succeed when
investing and doing business in or with emerging markets. Finally,
the third module looks at business-government relations in three
different ways. The module will begin by looking at the rising
challenge of developing successful strategies in systems in which
corruption is pervasive. Second, we will look at the importance of
state-owned enterprises in emerging markets and the possible risks
and business opportunities that they may bring. Finally, the module
includes a series of cases that examine strategies for companies
and investors to help them overcome expropriation risk.
Below, you will find an overview
of the course in module form. Each class period is guided by a
module including the cases, assignments and links to the
information used for that specific class.
1 The Competitive Advantage in Emerging Markets
Session One - China:
“Unbalanced” – 711.010
and the Yuan-Dollar Exchange Rate – 711.110
§ Abstract: In 2010, Wen Jiabao looked back at the financial crisis with
some satisfaction. Using aggressive fiscal and monetary policy,
China had weathered the crisis successfully, growing 8.7 percent
annually in 2010. Most of the unemployed workers had returned to
work, often demonstrating for higher wages or better working
conditions. Wen, however, was really focused on his new development
strategy - shifting away from export-led growth to ease domestic
and international pressures. But many institutional challenges
seemed to hamper domestic demand, and Wen was particularly
concerned with pressures from America on China's policies for
trade, exchange rates, energy, and investment.
Articles & Other Important
Advantage of Nations – 90-211
Why is China growing so fast? Using the exhibits, explain
Who wins and who loses among emerging markets from China's
accession to the WTO?
Using the note on China's exchange rate, how much does it
cost to the People’s Bank of China (PBOC) to manipulate the
Yuan-dollar exchange rate every year? Is there a limit or could the
PBOC keep on doing it forever?
Session Two- “Brazil:
Leading the BRICs”
Leading the BRIC’s? – 711.024
in Brazil – 711.086
§ Abstract: Brazil's new president, Dilma Rousseff, had
announced plans to sustain GDP growth above 5 percent annually and
continue the country's leadership role among emerging economies.
Between 2003 and 2010, Brazil benefited from strong economic growth
and stable policies under the Lula administration. Brazil also
increasingly led the BRICs (the fast-growing countries Brazil,
Russia, India, and China) in multilateral negotiations, notably in
the World Trade Organization's Doha Round. Yet Brazil's actions to
enforce a compulsory license of a patented therapy for HIV/AIDS and
its victory in a longstanding WTO dispute with the United States
over cotton subsidies had created tensions with major trading
partners. Entering office in January 2011, Rousseff
had the opportunity to outline a new agenda for international
trade. Specifically, she had to decide whether to seek completion
of the Doha Round, which was in a stalemate due to disputes over
global intellectual property rules and agricultural subsidies and
tariffs, or to instead pursue regional trade agreements in South
and Central America. Rousseff also
pledged active government involvement in the economy, described in
the case as "Brazilian capitalism," but it was unclear
whether fiscal expansion coupled with conservative monetary
policies would reduce bottlenecks to growth and further temper
Brazil's high inequality.
Articles & Other Important
Africa can become the next BRIC” By Jim O’Neill
BRICS AND BEYOND” (Skim
carefully pages: 5-7, and 75-84 and 131-149)
What is Brazil's development strategy? (Use the CAN
Does Brazil belong in
Does BRIC make sense as a bundle of countries? What makes it
successful as an investment category? What makes it weak? Will the
N-11 have the same success?
Session Three- Angola
and the Resource Curse
and the Resource Curse – 711.016
§ Abstract: Since emerging from decades of
conflict in 2002, Angola has been growing at a scorching
double-digit rate, led by its oil industry. But the nation remains
beset with seemingly intractable problems: immense inequality, low life
expectancy, a non-diversified economy, and constant grumblings of
corruption. The global financial crisis and subsequent fall in
state oil revenue drove a loan-seeking Angola towards either the
IMF, who demand extensive reforms, or the Chinese, who seek to take
a direct stake in the nation's recovery. The case explores the
dynamics of post-conflict recovery as well as the challenges
associated with a reliance on oil wealth, including the resource
curse and Dutch disease.
What is Angola's development strategy? (Use the CAN
framework to understand Angola's "value proposition")
Is oil a blessing or a curse for Angola?
Is China helping Angola?
Session Four- South
Africa (A): Stuck in the Middle? – 711.084
§ Abstract: 15 years after ending apartheid,
formal unemployment in South Africa was still at 24%. While the
country had grown at 4 to 5% annually during the 2000s, the
financial crisis set it back by 1 million more unemployed.
Moreover, it seemed as if the nation were stuck between low wage
and fully developed competitors. The government of Jacob Zuma has just adopted a "New Growth
Path," hoping to create several million jobs over the next few
years. Both the Finance Minister and the head of the Central Bank
support the initiative, but worry how they can sustain fiscal
discipline and control inflation, in light of these stimulative policies. Organized labor,
meanwhile, has little sympathy for any sort of sacrifice.
Articles & Other Important
the Next Growth Market: Africa
Using the CAN
framework, how would you characterize South Africa's development
strategy? Is it working?
What can South Africa
get out of its current “stuck in the middle status”?
According to the HBR
Article “Cracking the Next Growth Market: Africa,” what are the
current advantages and obstacles for the entrance of multinationals
into Africa? (To answer this question please make sure to read the
HBR piece on Africa's consumer market and to take a look at the
Bloomberg graphs on Africa's middle class.
Session Five- Dubai:
Debt, Development, and Crisis
Debt, Development and Crisis (A) – 710.069
Debt, Development and Crisis (B) – 710.070
Debt, Development and Crisis (C) – 710.071
§ Abstract: On November 25, 2009, the city
state of Dubai stunned markets by announcing that Dubai World, its
flagship state holding company, would seek a six-month
"standstill" on at least $4 billion U.S. dollars of its
$26 billion in debt obligations. This case describes Dubai's
development strategy in detail and narrates how, as part of that
strategy, a series of state-owned holding companies accumulated
billions of dollars in debt. The (A) case ends as Sheikh Ahmed bin Saeed, chairman of Dubai's Fiscal Committee,
has to decide what to do about the financial troubles of Dubai
World and other state-owned holding companies. The case presents
Sheikh Ahmed bin Saeed having to decide
among three options: the Dubai government can guarantee the debt,
they can renegotiate the debt, or they can walk away (i.e.,
default). The B case describes the decision and the reactions to
this decision around the world and presents a new decision on the
part of bond holders of Dubai's state-owned holding companies. The
C case briefly analyzes the advantages and disadvantages of Dubai's
bankruptcy procedures, both for investors and for the holding
companies of Dubai.
Articles and Other Important
Country Report on the United Arab Emirates
What should Sheikh Ahmed bin Saeed
Al Maktoum and Dubai's Supreme Fiscal
Committee do about the debt of Dubai World? Should they guarantee
the debt, restructure it, or walk away?
Could we see Dubai's
crisis coming? What is Dubai's development strategy?
As an investor: would
you have sold your bonds before December of 2009?
Pakistan: Is Foreign Aid Helping or Hindering Development?
Is Foreign Aid Helping or Hindering Development?
Abstract: Not available
What is Pakistan's development strategy? Is it working?
Skim the section on N-11 in the book “BRICS
AND BEYOND”, here (pages 131-149).
Does Pakistan belong to N-11?
Is foreign aid helping Pakistan? Should the USA continue
providing funding to Pakistan?
Abstract: From 1989-2003 civil wars raged
in Liberia, causing GDP per capita to drop an unprecedented 90 percent
from peak to trough. The roots of Liberia’s conflict and economic
decline are complex and intertwined, resting on over a century of
discriminatory elite rule and twisted by ethnic politics during a
military dictatorship. By late 2011, eight years of post-conflict
government have restored basic order, re-opened the country to
foreign investors, and jump-started the small economy. But the
country’s business model may unsettle its political stability. As
Africa’s first democratically elected female head of state and
Nobel peace prize winner Ellen Johnson Sirleaf
goes into her reelection campaign, she must decide how to keep the
country on its fragile but quick recovery, sowing the seeds for
peace and prosperity rather than renewed conflict.
What caused the war in Liberia? What will prevent another
Is this a good place to invest?
What should Johnson Sirleaf do
going forward? What should she say?
MODULE 2 Institutional Voids and Opportunities in Emerging
Session Eight- Metro
Cash & Carry
Cash & Carry – 707-505
§ Abstract: Analyzes the globalization of
Metro Cash & Carry, a German wholesaler, which has flourished
in many foreign markets but struggled to gain traction in India.
Considers Metro's experience in Russia and China to put the
company's challenges in India in comparative perspective. Pays
particular attention to the institutional obstacles for a
multinational to tap into the opportunities offered by emerging
Articles & Other Important
in Emerging Markets: A Road Map for Strategy and Execution
(Chapters 1 & 2)
What have been Metro Cash and Carry's key competitive
advantages as it has moved into emerging markets?
How did Metro Cash and Carry adapt itself to each of Russia,
China and India? What adaptations were necessary across the board,
and what adaptations were idiosyncratic to particular country
How would you rethink Metro's approach to India going
forward? What will it take to get Metro Cash and Carry accepted as
a corporate citizen in India?
Session Nine- Silver
Lake in Brazil
Lake and Private Equity in Brazil: Carnaval
or Calamity? – 712-004
§ Abstract: This case describes the recent
boom in Brazil and recent developments in the private equity
industry in that country. At the center of the case is Dave Roux,
partner of the technology-focused, private equity firm Silver Lake,
who is examining whether to open an office in Brazil. His decision
will depend on the state of the Brazilian economy, of the private
equity industry, and, ultimately, on the value proposition of
Silver Lake. Is the current boom in Brazil a sign of a structural
change or is it a bubble? Is it too late for a private equity firm
to go to Brazil? Is the Brazilian market too saturated? How do
private equity firms add value in Brazil? What's the right entry
strategy for a private equity firm in Brazil? Should Silver Lake
open an office in Brazil?
Is the boom in Brazil this time for real? Can the country go
Should Silver Lake open an office in Brazil? What are the
risks and opportunities of opening shop in Sao Paulo?
What strategy should they follow? Should they copy the model
of General Atlantic, Warburg Pincus,
Carlyle or Blackstone?
Session Ten- Sherritt Goes to Cuba
Sherritt Goes to Cuba (A): Political Risk in
Unchartered Territory – 711-001
Sherritt Goes to Cuba (B): Dealing with
Political Risk Under Raul Castro – 711-002
§ Abstract: Ian Delaney, CEO of Sherritt, a primarily a mining company, visited
Cuba in the early 1990s to negotiate a deal to export nickel for
their Canadian refineries. The case describes the difficulties of doing
business in Cuba and the challenges Delaney overcame to turn Sherritt into a large diversified holding
company that operates in mining, oil, utilities, telecomm, hotels,
and others. Delaney did this while managing a relationship with an
authoritarian regime with an anti-capitalist discourse.
Articles & Other Important
group’s Cuba oil deal” By Marc Frank
In the A case. Examine the economic situation of Cuba in the
1990s? How are they doing? Is this a good place to do business?
Given this macro framework, does it make sense for Sherritt to go to Cuba in the early 1990s?
[i.e., think about institutional voids, etc...]
Please skim the article on Chinese investments in the energy
sector in Cuba. Is China's entry into Cuba a threat for Sherritt?
Bunge: Food, Fuel, and World Markets
Food, Fuel, and World Markets – 708-443
§ Abstract: In 2007, Bunge, an agribusiness
company, had over $26 billion in worldwide sales and was
considered, along with Cargill and Archer Daniels Midland (ADM),
one of three very integrated worldwide agribusiness companies.
Headquartered in White Plains, NY, the company has traditionally
possessed a strong presence in Brazil. Describes Bunge's tradeoff
between efficiency of global operations and local responsiveness in
an uncertain business environment. New world developments were
effecting Bunge directly: high oil prices, a growing demand in
emerging economies like China and India, and the possibility of
agribusiness companies competing successfully in the production of
biofuels. Bunge had traditionally followed an organizational model
that was integrated but decentralized, trying to strike a balance
between the efficiency of a global entity and the speed of local
businesses. What would be the best strategy for Bunge to respond to
the external changes imposed by high energy prices and increasing
demand from emerging economies? How aggressively should Bunge
invest in the rising biofuels markets?
Should Bunge invest in biofuels? Where? Design an action
plan for Bunge's biofuels division considering the financials of
the firm and the global context.
Examine Bunge's global supply chain. Why does Bunge value
integration so much? What is the value proposition of the company?
Are you more willing to invest in Bunge stock after having
read the case? What are the major pros and cons you see in the
company's value proposition?
Worldwide in Syria: Assessing Political Risk in a Volatile
Environment – 712-009
Worldwide: Evaluating FCPA-Related Risks in West Africa – 712-010
§ Abstract: This case explores the dynamic
set of political risks raised by a local-partner contract renewal
within the context of Syria's unfolding political upheaval. Cambell Technologies, a US-based software firm,
was evaluating whether to renew its licensing agreement with
Elevate, its Damascus-based distributor. Elevate's
strong sales performance and sound management seemed to justify a
renewal of its agreement, but the possibility of political change
in Syria added potential new variables to Campbell's calculus. The
case protagonist, Steven Fox, CEO of risk assessment and advisory
firm Veracity Worldwide, had to evaluate the risks at play and
advise Campbell's CEO on whether to renew its relationship with
Elevate Software Solutions.
Should Steven Fox and his team and Veracity advise Jim
Barnes to go ahead with the Megametals
joint venture in West Africa? What action plan should they propose?
What are the reasons for concern? What FCPA cases could potentially
be used as precedent against Barnes in the United States?
What should Robert Larson do with its Syrian partner,
Elevate Software Solutions? Should he renew the contract they have?
Are there any potential FCPA-related risks in this deal? What
should the action plan be for Robert Larson and Campbell
Module 3 State Capitalism in Emerging Markets: Challenges
Sovereign Wealth Funds and State Capitalism
Wealth Funds: Barbarians at the Gate or White Knights of
Globalization? – 712-022
§ Abstract: State Capitalism is everywhere
in emerging markets (and developed countries) and managers have to
learn to live with it, understand its problems, and find
opportunities to do business with them. Managers working in large
multinational corporations and financial institutions will most
likely either do business with or compete with state-owned
enterprises (SOEs) in emerging markets, they will have to deal with
the government, and they will have to dodge expropriation risk.
Management consultants in emerging markets more and more have to
advise state enterprises on how to improve practices and adopt
better corporate governance mechanisms. Investment bankers help
SOEs in their efforts to reform and to privatize all or part of
their capital. In this module we will examine the role of State
Capitalism in emerging markets and we will look at some of the
challenges and opportunities for managers of state-owned
enterprises. The first case talks about Sovereign Wealth Funds,
which are arms of governments that invest foreign exchange reserves
in risky assets (or at least riskier than Treasury Bonds). Should
we be afraid of them?
Other Important Link(s):
Capitalism Comes of Age: The End of the Free Market?” by Ian Bremmer
Ian Bremmer: State Capitalism
Should we be afraid of Sovereign Wealth Funds?
Should SWF’s be regulated? How? By whom?
From the Article by Ian Bremmer:
What is State Capitalism? What are the three main problems with
state capitalism according to Bremmer?
Should we be afraid of the rise of State Capitalism in emerging
Hermitage’s Russian Quandary
Russian Quandary (A) – 711-054
§ Abstract: In June 2007, the offices of
Russian hedge fund Hermitage Capital were raided by Moscow police;
in the months that followed, Hermitage founder Bill Browder found
himself banned from Russia and fending off efforts to expropriate
the fund's Russian assets. This case describes the challenges faced
by Hermitage in responding to these threats, and more broadly
discusses the perils of doing business in a business environment
with weak legal and political institutions.
Articles & Other Important
Reveals Russian Police Fraud
How would you rate the strategy that Hermitage followed
prior to the 2007 raid (Smart/interesting but with problems/too risky)?
What was Hermitage’s value proposition? (What institutional voids
were they trying to fill in?)
In early 2008, at the end of the (A) case. Browder finds out
about a second lawsuit against the holding companies of Hermitage.
What should Browder do now (i.e., fight back, back down, change
Since Bill Browder will be in class, we will have a chance
to discuss with him his experiences and the current strategy of his
fund. So think about his investors. Are they happy with Browder in
2008? What would they want him to do after that? What can you learn
that you can apply to other emerging markets?
railways: Building a Permanent Legacy? – 711-008
In May 2009, Lalu
Prasad Yadav, the railway minister for
the government of India, was about to leave Indian Railways (IR),
the government entity that, under his supervision, was in charge of
operating India's railway network. Together with Sudhir Kumar, his officer on special duty, and
the railway board, Prasad had led Indian Railways through one of
the most impressive business turnarounds in recent history.IR had
been on the brink of bankruptcy in 2001. Yet by 2008 the company
was operating profitably, with a cash surplus (before dividend) of
$5.8 billion and an operating ratio (i.e., total working expenses
over total earnings) that had gone from 92% in 2004 to 76% in 2008.
As a result of the parliamentary elections of 2009, Prasad had to
hand over the reins to a new minister. Still, one question
remained: Would the turnaround efforts and the improvements in
efficiency at IR be permanent?
Other Important Link(s):
Today “Indian railways bankrupt under Mamata”
· Euromonitor International Country Report: Retailing
If Indian Railways were a private company and you were hired
as a consultant to revamp the company in 2004, what would you
How would your recommendations differ from the reform plan
adopted by Minister Lalu Prasad and the
Officer in Special Duty, Sudhir Kumar?
What are the main political constraints for change in Indian
Will the reforms of Minister Prasad and Sudhir
Kumar be long lasting?
Session Sixteen- Vale
Global Expansion in the Challenging World of Mining – 710-054
In 2009 the management of Vale, a
Brazilian diversified mining company and the largest iron ore
producer in the world, was under pressure from at least two fronts.
First, the emergence of China as the most important consumer of
iron ore in the last few years had changed the pricing system for
iron ore from long-term contracts based on negotiated
"benchmark prices" to contracts based on spot prices,
usually forcing mining companies to pay for shipping. Second, for
Brazil's charismatic president, Lula, a former union leader, Vale's
layoffs during the global financial crisis and its perceived move
away from Brazil (as Vale increased its exports to China and
purchased Chinese vessels to ship iron ore to Asia) were reasons to
start an open campaign to pressure Vale and Agnelli
to invest in integrated steel mills in Brazil. In October of 2009,
the CEO of Vale, Roger Agnelli was going
to meet with Lula and had to decide what to do to attenuate these
political pressures. What could Agnelli
do to deal with political pressures at home? Was the purchase of
large vessels to ship iron ore to Asia a good decision at a time
when the shipping industry had spare capacity?
Other Important Links(s):
Times Video Interview of Roger Agnelli,
CEO of Vale
What could Agnelli do to deal with
political pressures at home?
What is Vale's value proposition?
Was the purchase of large vessels to ship iron ore to Asia a
good decision at a time when the shipping industry had spare
(A) Energy and Strategy in Russian History – 709-008
(B) Energy and Strategy in a New Era – 709-009
(C) The Ukrainian Crisis and Its Aftermath – 709-009
§ Abstract: Critics have accused Gazprom,
the world's largest natural gas producer, of eschewing market
principles in favor of the foreign policy priorities of the Russian
government, ever since the energy giant cut off the supply to
Ukraine in January of 2006. The purported motive for the decision,
however, seems to indicate the opposite: the company claimed that
it had no other choice because the sides failed to conclude a
contract on the terms of future trade. The case takes a look back
in history for clues that may resolve this paradox. It highlights
how politics shaped the economics of natural gas trade in the
former Soviet Union and Europe since the late 1960s until the end
of the 1990s; sketches the story of the creation of Gazprom by the
first post-Soviet government of Russia; and describes how the
erection of new sovereign borders in the wake of the dissolution of
the Soviet Union, coupled with political and economic transition,
created major problems in the gas trade between the former Soviet
republics, emerging with the greatest intensity in the
In the dispute between Gazprom and Naftogaz
Ukrainy, who was right?
Should Europe and the former Soviet Republics be afraid of
Gazprom? Or, is it a normal energy company just going about its
What are the advantages and disadvantages Gazprom has by
having the government owning 50+1 of the voting shares? Why not
20%? Why not 100%?
Session Eighteen- IPO
of Agricultural Bank of China
IPO of Agricultural Bank of China (ABC) (A) – 712-006
§ Abstract: This case describes the process
that led to the IPO of Agricultural Bank of China (ABC), the
biggest in the history of humanity! The A case describes the
challenges that the management team at ABC (together with Goldman
Sachs, Morgan Stanley, and others) had to care of in order to
launch the public offering. The objective of this case is to put
you in the shoes of the management team and the team of advisors
and think how ABC should sell its business model to investors
worldwide at a time when markets were going through some turbulence
(there was high volatility) and there was high uncertainty about
the future of the World and China.
What is the business model of ABC? Can the management team
of ABC and its advisors sell this model in the turbulent times of
China has a strong tradition of State Capitalism. Is that an
advantage or a disadvantage for investors interested in the shares
For investors: Think about a story that can lead the purchase
of shares into a disaster (not so hard given recent events)
Session Nineteen- The
Barber of Buenos Aires: Argentina’s Debt Renegotiation
Foreign Investors – 706-044
of Buenos Aires: Argentina's Debt Renegotiation – 706-034
Tells the story of Argentina's
aggressive strategy for renegotiating its sovereign debt from 2003
to 2005. Most creditors accepted the offer to swap their debt for
new securities worth 35 cents on the dollar, with no recognition of
all past-due interest. Many holdouts, however, remain outside the
deal. Some experts believe that Argentina's stance will have
negative consequences for the country's private sector and gives a
worrisome signal about public policies; others maintain that
circumstances beyond the government's control had placed the
country in an unsustainable situation, and the successful
renegotiation opens up new opportunities. The case presents the
story of Argentina's debt saga from the point of view of the
country's creditors (foreign and domestic), its government, and
private Argentine companies that had to do business in the
post-renegotiation environment. Also, discusses the larger issue of
how the international financial community should handle sovereign
Other Important Link(s):
Economist: “Emerging-market debt: Stylish haircut”
Economist: “Argentina under the Kirchners:
Socialism for foes, capitalism for friends”
Economist: “Argentina after Kirchner: The end of an era”
Times: “Irish crisis demands new EU response”
Was President Kirchner's decision to repudiate a large
portion of the nation's foreign-currency public debt the right
decision for Argentina?
Did Argentina emerge stronger or weaker as a result of the
What are the best options for addressing the challenge of
sovereign debt restructurings at the international level? Can they
be implemented in the current global context?
Final Session: Banco Ciudad
Banco Ciudad (A): Who is the Owner –
The state-run Banco
de la Ciudad de Buenos Aires (Banco
Ciudad) was losing money in 2007. Early in 2008, Federico Sturzenegger, a renowned academic in Argentina,
was appointed executive chairman by the city government and charged
with turning the bank around. But just four months later, Sturzenegger was already facing the 45th day of
a labor conflict sparked by union representatives on account of
having fired six employees. The showdown raised several questions.
First and foremost: Who owned Banco
Ciudad? The city government? The citizens? Its employees? How could
this bank use its strengths and overcome its weaknesses to best
serve its constituents and the public? This case follows Sturzenegger's eventful first few years in
office to examine how a state-owned enterprise maneuvered in a
challenging environment to hit its targets of greater efficiency
What was wrong at Banco Ciudad
when Federico Sturzenegger took the job
of CEO and Chairman?
How would you fix these problems? Are your proposed
solutions going to be accepted by the employee union?
What is the comparative advantage of the bank? How could Banco Ciudad use this advantage(s) to improve
its bottom line?
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