14 The Epoch Times
Special Edition - August 2007 BUSINESS www.theepochtimes.com
Making Inroads Airline switch ‘hard to understand’
Into Latin America
Heide B. Malhotra government.
Epoch Times Washington D.C. Staff “Overall, the funding available
to Latin America’s private sector
WASHINGTON—Latin American is very low,” suggests McKinsey.
investors and companies—burned Latin American banks have fallen
during the mid-to-late 1990s far behind Asian banks which lend
financial crisis—retain a deep at least three times more to local
mistrust of lending institutions. firms, encouraging businesses to
Latin American corporations grow.
often transfer their cash to foreign Small and mid-size companies TAKING FLIGHT: An Aer Lingus jet. The company has announced it is no longer flying to Shannon airport in the west
shores, buying land, buildings face the most difficulties in finding of Ireland. The flights will be replaced with a service to Belfast in Northern Ireland. Adrian Dennis/AFP/Getty Images
and other tangible property and reasonably priced loans and often
commodities. remain unable to expand. Most Rita O’Connor
“While these assets [tangible firms have to rely on funds from Epoch Times Ireland Staff “The common sentiment being the west of Ireland.
properties] are a rational choice, their own operations for new expressed today by public repre- Brassil’s comments were echoed
such investments divert savings business ventures, modernization, erlingus chief executive sentatives and business leaders by Christina Carey of Impact, who
from local banks and equity and expansion or when replacing old Dermot Mannion was in the region is that Aerlingus is represent cabin crew. Speaking on
bond markets, thus stunting their equipment. This limits innova- heckled by workers as he not committed to maintaining let RTE radio Ms Carey said that any
(South America’s) development,” tion, employment opportunities, announced the end of the airlines alone developing existing opera- expansion of Aerlingus should not
according to McKinsey Quarterly, as well as consumer wealth. service between Shannon and tions at Shannon airport”, he be at the expense of workers at
a white paper report from Smaller and mid-sized firms Heathrow. said. Shannon.
McKinsey & Co., in a recent article have scant borrowing opportuni- The chief executive announced An immediate review of the Impact are currently seeking
titled “Fulfilling the Potential ties due to reluctance by lenders the change during a press con- decision has been called for by an emergency meeting with
of Latin America’s Financial and often exorbitant interest ference on Tuesday, a decision Shannon Development chairman Aerlingus to discuss the switch.
Systems.” rates. The largest Latin American that could effect business in the John Brassil. Brassil has said The Shannon free zone employs
On the other hand, many local firms stay away from local banks region. that the decision constitutes a over seven thousand people and
Latin American banks have an and have aggressively taken The decision, according to fundamental breach of trust by generates exports of over 2.5
aversion to lending to private advantage of foreign borrowing Minister of state and Clare TD Aerlingus in respect of Shannon million euro annually, connec-
firms or individuals. opportunities. Tony Killeen was difficult to and that the air service was crucial tivity with the Heathrow hub is
According to McKinsey, between understand. for the continued development of essential.
23 and 26 percent of the assets Foreign Banks Take
in Venezuelan and Colombian Advantage the leading local banks,” claims auto loans and corporate bonds. country.
banks are invested in government McKinsey in a July article “A New Global players have acquired “Institutions such as Citigroup,
bonds. In Mexico, Argentina and Leading global banks have Era for Latin American Banks.” marketing tactics that let them which has been fine-tuning
Brazil, banks lend more than 50 jumped into the fore and are Competition is heating up. move easily from one country to its organizational model for
percent of their funds to govern- buying into Latin America’s Foreign banks moving into the the other, wherever opportunities decades, have turned this
ments. The most recent lending banks. “The multinationals, market bring with them a different present themselves. Local players capability into a significant com-
trends were not available to the having taken notice of the new lending mentality than local are facing a distinct disadvantage petitive advantage,” according to
McKinsey team. An exception is opportunities, are increasing their lenders. These banks are willing to and might be gobbled up by the the article.
Chile, where banks lend less than investments across the region in lend on longer terms and aggres- global banks who might use
2 percent of their funds to their hopes of taking market share from sively market real estate loans, them as a stepping stone into the
Apple’s success is a lesson in corporate strategy
Heide B. Malhotra returns. At the end of 2002, its well with Harvard students and suggested that Apple restructure electronics manufacturer, Apple
Epoch Times Washington, D.C. Staff stock hovered around $14 a share. generated deep discussions. from a computer manufacturer ditched the word “Computer”
It jumped to around $65 a share When Apple was in the dumps, to a consumer electronics firm. from its official name.
pple Inc. is riding high. by the end of 2004. At the end of everyone said that they saw it He proposed to use Macintosh
In the last quarter, it 2006, Apple was trading at $85 coming, but when it was doing computer sales as a cash cow and Customer Voices
shipped almost 1.8 million a share, eventually moving up to well, students were confounded build up the other products.
Macintosh computers, sold 9.8 more than $120 by May of this when Yoffie pointed to problems Another suggestion was to Apple’s products are some of
million iPod music players and year. in the making. once again start licensing the the most sought-after, and its
its iPhone—a revolutionary new “Student opinion of Apple tends Macintosh operating system (OS), retail stores are often crowded
product that went on sale in June Taking the Hint to be excessively positive or exces- which was stopped after Jobs took with customers. When the latest
after an almost hysterical media sively negative, depending on over the CEO position. A window product, the iPhone, hit the market
blitz—is expected to reach sales Harvard Business School has the company’s current fortunes,” had opened into the software on June 29, media reported long
of more than 1 million within the followed Apple’s fortunes and suggested Yoffie. market, with Microsoft products lines in front of Apple stores of
next three months, according to a misfortunes since 1992 and The case study’s latest version, becoming pricy for consumers. consumers waiting to buy the
recent Apple press release. included the company as a case “Apple Computer, 2006,” Lastly, Yoffie suggested out phone. The lines had formed a few
Apple also claims that it has study in its MBA curriculum. discusses in details the strategies of self-interest (he held board days before the event and people
sold more than three billion The case has been revamped five used by former Apple CEOs, the membership in chipmaker Intel) had brought mattresses and food,
songs—downloaded from its times, including a video lecture reasons behind the strategies and to throw in the towel on its own just so they would be one of the
iTunes music software—and has from John Sculley, former Apple why a given strategy was ineffec- OS, license Microsoft Windows first to get the iPhone.
five million songs, 550 television CEO (1985 – 1993), going over tive. and become a big-time computer “Apple brings several things
shows and 500 movie titles for blunders he should have avoided. “The company always looks a manufacturer. [to the market]: really sleek
purchase, more than those offered “This is a case where you can little different, yet many of the Jobs, who assumed the CEO cool hardware, great software
by Amazon.com and Target. focus on strategic success as well core issues that pose challenges position in 1997, must have and a cool hip image,” said Eric
“We are thrilled to report the as strategic failure,” said Harvard for it remain constant,” indicated followed the Harvard discussions Clemens, professor at the Univer-
highest June quarter revenue and Professor David B. Yoffie, in the Yoffie. closely. Apple went innovative sity of Pennsylvania’s Wharton
profit in Apple’s history, along article “HBS Cases: The Evolution Yoffie suggested three different under his leadership, as it intro- Business School in a recent
with the highest quarterly Mac of Apple,” published last month. strategies in the 2004 “Where duced the iMac, iPod, and iTunes. Wharton publication.
sales ever,” said CEO Steve Jobs He continued, “There aren’t many Does Apple Go from Here?” The OS X operating system and Additionally, Apple is the
in a recent press release. instances where you have both article. The most drastic change iPhone appeared and sourcing current front-runner as a “tech-
Alongside the company’s resur- sides so nicely paired [the ups and was to “build their business off of chips from Intel panned out. nology leader of the digital living
gence, Apple’s stock (NASDAQ: downs of a company].” the digital home, the iPod, iTunes, At the same time, to emphasize room,” Clemens added.
AAPL) has also enjoyed high The Apple case study resonated iPhoto, etc.,” said Yoffie. He also the new direction as a consumer