Why Wal-Mart Failed in Brazil

Columbia Business School professor Nelson Fraiman, who was born in Uruguay and played a significant role in designing the school's new Entrepreneurship and Competitiveness in Latin America (ECLA) program has some advice for North American companies hoping to succeed in Latin America.

"Firms in North America are getting better, but still aren't very good at learning about local cultures," Fraiman said during our recent conversation. "Large firms like Wal-Mart have gone to countries like Brazil and failed -- the same way they've gone to countries like Korea and failed, the same way they've gone to countries like Germany and failed -- mainly because of not understanding the local culture. The U.S. can become better at learning about the people and working together as equals, rather than imposing a series of systems and procedures that work here, but don't necessarily work there.

"Little details do matter," Fraiman continues. "If a country like Germany doesn't like to smile, then don't smile when you say have a good day. Little details are what usually kills American companies that forget to pay attention."
Columbia b-school students had a chance to observe the little details about their Latin American colleagues firsthand when the group of 37 inaugural ECLA participants attended two weeks of core classes in January. They will cover a lot of ground before the program concludes in January 2011.

"A lot of these entrepreneurs grow locally, and they're not aware of what it means to compete globally. If you want to get better, you have to shape up in your processes before you can think of going global. That's the integral part of the program," explains Fraiman.

For the next seven months, the entrepreneurs will work remotely on improving a process of their choice and measuring its impact. "When we meet in Argentina in August, they're going to tell us how well they've done. And if they pass that piece, we'll teach them how to put together a growth plan," Fraiman says.

While the program is designed to help Latin American entrepreneurs compete globally, there are also inherent benefits for North America when we take an interest in helping Latin American businesses.

"We're part of the same region, and I think it's important for the U.S. to have successful businesses in those countries, so the countries don't go the way of, say, Venezuela with the instability," says Fraiman. "If you include most of the people in the well being of the country, then it will be a stable country. That's what you want for your neighbors in South America, from a U.S. perspective. It brings stability to the region if the region becomes successful."