Posted on behalf of Josh Leiling
A message that was repeated over and again during George Mason’s MBA Global Residency, was that Brazil is keenly focused on social responsibility and sustainability. More and more good MBA programs are teaching the importance of this message. Most of the companies we met with had some form of active program to help benefit the communities in which they operate and included some form of socially responsibility in their mission statements. For example, BNDES recently added the “S” to stand for its social mission. To meet its mission goals, the development bank recently began providing free loans to worthy projects such as special needs schools, hospitals, and cultural centers. In addition, in our meeting with BNDES I learned that they rolled out a new program for small businesses, which provides them ready access to relatively cheap (10% annually versus 45% charged by consumer credit cards) credit for small purchases needed to start-up and grow, a critical time when cash flow is needed. These development programs are encouraging not only from the standpoint of improving well-being for those who need it most, but also providing opportunities for those in lower economic classes to become more socially mobile.
One of the biggest challenges Brazil faces over the next several decades is how to manage its inevitable growth while ensuring sustainability of the country’s resources. Brazil is rich in oil, minerals, fertile soil for many forms of vegetation, you name it. Brazil will need strong government policies as well as good stewardship among its businesses here to ensure that the country’s growth doesn’t come at the expense of its future. If it approaches infrastructure, healthcare, food and energy production in a smarter way than the rest of the world, then not only will Brazil be in a position to be self-sustainable, but it will be the envy of the BRICs as well as America and Europe. To this end, the mindset of self-sustainability is already built into the business model of certain successful companies and should be a key criterion for any new or growing business here going forward. For example, during the residency I discovered how proud Brazilians are of their ability to source much of their own products, and how much they want to maintain this feature going forward. Consider Petrobras, which in the 60’s decided to begin oil production and exploration and knew nothing of the technology. Today, they exceed every major oil producer in this capability, purely by investing in itself the required research and technology. And even with this capability, the company maintains a policy to have a replenish rate of 100% or greater for all oil taken from Brazilian reserves. In meeting with Arrezzo we learned how companies can strategically position themselves geographically (collocating manufacturing and design facilities) and skillsets (leather making) to make a product (high-quality designer shoes) that competitors outside of Brazil can’t replicate. These companies are just two examples that American businesses can look to in determining how best to grow Brazilian companies in a long-term, sustainable fashion.