PROMISING LATIN-AMERICAN CORPORATIONS
Master of Science in Global Management
Camila Rincón D. 29/10/2010
ECONOMIC SITUATION IN LATIN AMERICA
During the first trimester of 2010, the world economy showed a favorable response the stimuli applied in 2008 and 2009 with an annual growth of more than 5%. There was a significant recovery in industrial production andcommerce despite the problems still present in many countries. (Central Bank of Colombia, 2010) The economic recovery cannot be generalized, it has been irregular instead. The vast growth in Asia is being lead mainly by China (11,9%) and India (8,6%); among other emerging economies, Latin-America’s strong recovery can be mentioned as outstanding, with countries such as Brazil with an annualgrowth of 8,9%, Peru of 6%, and Colombia of 4,4%. On the other hand, amongst the developed countries, United States shows a sustainable but moderated recovery. Finally the European economies continue showing a slow and irregular improvement. (Central Bank of Colombia, 2010) Latin-America has shown incredible resistance to the external shocks provoked by the world economic crisis. There has been asignificant change, moving from exporting raw materials to rich countries to commercializing with emerging economies. Latin-America’s recovery and strength can be attributed mainly to the increase in exports (raw materials) destined to Asian economies. (BBC, 2010) Brazil is exporting raw materials; Argentina, agricultural raw materials; Chile, copper; Colombia, petroleum; Mexico, hydrocarbons; Peru,mining; and Venezuela, hydrocarbons. In the long term, the greatest challenge will be to administrate this prosperity and destine this profit to the investment in human capital, to build a better infrastructure, and encourage innovation, something essential for sustainable growth. Latin-American countries want to follow the Chinese model, which has infrastructure as a fundamental part of theeconomy’s stimulating plans. Brazil has a plan called PAC, Plan to Accelerate Growth for US$ 285.000 million; Argentina has announced infrastructure plans for US$ 21.000 million; and Chile for US$ 4.000 million. Even Mexico planned to invest US$44.000 million in 2009 as part of its National Infrastructure Plan. (Thomson, 2010) It is certain that the recovery is going to continue in 2010 in almost allthe region and the infrastructure plans will continue stimulating the economies.
FORTUNE GLOBAL 500
There are many ways of measuring a company’s performance. Among the factors to take into consideration are sales and earnings growth, earnings outlook, total assets, profitability, debt to total capital and stock market returns. The Fortune magazine publishes annually a listcontaining the top 500 corporations around the world. The Fortune Global 500 ranks the world’s biggest companies in terms of annual revenues. This methodology has been questioned several times, stating that measuring revenues might be suitable to determine a company’s size, but it is not the appropriate measure concerning all the purposes involved the operation of a company. On the other hand, manycompanies prepare their financial statements in their own currency, leading to changes in the value of its business when expressed in US dollars due to the fluctuations of the exchange rate. Even though the methodology used by Fortune magazine has been criticized, there is no doubt that Fortune Global 500 has reached a very high reputation amongst the business market, creating a fierce competitionbetween companies. Being in this list has become a very common goal for today’s growing corporations. Currently, several Latin-American companies are experimenting amazing growth rates that will enable them to be in the list of the 500 biggest corporations in the world. Two of them are the Colombian state oil company Ecopetrol and the Brazilian multinational Constructora Norberto Odebrecht.
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