AQ Feature

Multinacionais brasileiras: competências para a internacionalização by Afonso Fleury and Maria Tereza Leme Fleury

Photo: Lars Klove

Brazil, the country of the future” was a sarcastic cliché popular among Brazilians to describe a country striving to reach an economic potential that always seemed just out of reach. The past decade, however, offered hope that Brazil was finally fulfilling the cliché’s promise. As hyperinflation became a distant memory, the hemisphere’s largest country joined Russia, India and China in the ranks of emerging economies.

The story of the passage from cliché to reality is explored in Multinacionais brasileiras: competências para a internacionalização (Brazilian Multinationals: Competences for Internationalization), co-authored by Afonso Fleury, a professor in the department of production engineering at Universidade de São Paulo, and Maria Tereza Leme Fleury, director and professor at Escola de Administração de São Paulo da Fundação Getúlio Vargas.

As the authors point out, Brazil’s success was accompanied by real income gains among a large percentage of Brazilians, which in turn fueled a consumption boom as Brazilian companies exploited a profitable new consumer market. But can the success story be sustained? The authors examine in particular the experience of Brazilian multinationals such as Vale (mining), Petrobras (oil) and Embraer (regional aircraft), who have all become top global performers.

The book is especially useful as a primer for those who wish to understand the fundamental differences between the traditional business model of the multinationals of the past (think IBM or General Motors) and this new breed of global powerhouse.

Part I of Multinacionais is devoted to creating an analytical framework for the authors’ research. Most academic readers will be familiar with the impact of globalization on emerging economies, but they will be well rewarded by the analysis offered in Part II, which provides case studies of successful Brazilian multinationals and compares them with the experiences of other BRICS countries (they append an “S” for South Africa).

As Part II of Multinacionais details, Brazil relied on a strategy of self-sufficiency from the 1950s through the 1980s. Development was understood as import substitution, with domestic industries protected by trade barriers and government incentives. This policy changed drastically in the 1990s, when a period of privatization of large state assets brought a massive influx of foreign capital and the denationalization of many sectors. As the authors state, “one of the consequences [of adopting a neoliberal agenda] was the conscious decision to abandon industrial policies.”

While some companies were acquired by their foreign rivals, others seized the opportunity of being free of state control to play catch-up to the world economy. According to the authors, these corporate leaders drew their inspiration from Japanese management theory and studied the multinational subsidiaries from the U.S. and Europe.

JBS Friboi, the world’s largest protein producer, is a prime example. The company began as a butcher shop in the state of Goiás in 1953 with humble beginnings. After 10 years, entrepreneur José Batista Sobrinho entered the production side of the business with slaughterhouses. By the 1990s, the company had acquired its main Brazilian rivals. A decade later it acquired Swift Foods & Company and Inalca from the U.S. and Europe, respectively.

There are other examples in the case studies of companies that propelled themselves to succeed abroad. Some are well-known, such as Petrobras and Embraer. Others, such as Marcopolo, which manufactures buses, and Griaule Biometrics, will be new to many readers.

Yet the book could benefit from even deeper analysis. Most of the best-performing companies are arguably the ones in the primary sector, such as agriculture, mining and oil. Their global preeminence is due to their business acumen, but it is also due to the demand for grains, iron ore and protein from other developing countries, especially China. Some of the more hi-tech companies mentioned in the book do not come close to the international profile of a Vale or a JBS Friboi.

And this is the quandary that the Brazilian government—and Brazilian companies—face today. When will Brazil have its own Lenovo, the Chinese company that acquired IBM’s PC division? What about its own Tata Group, India’s most internationalized conglomerate?

Nevertheless, learning from the lessons of the past is vital, and they are laid out very clearly in this book. Multinacionais offers a better understanding of a new world in which the Ciscos will rub shoulders with the Huaweis, and where Embraer might become a name as well-known as Boeing.

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Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Brazil, emerging markets, BRICs




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