Falabella: Growth Options in Uncertain Times
(9 pages of text)
Case (Pub Mat)
In 2020, Falabella, one of the largest Latin American multi-format and multi-country retailers, faced increasing competition from the online world. The growth of online giants posed significant challenges for Falabella’s senior executives, who needed to decide how to allocate investments in this highly competitive environment. There were also growth opportunities in the brick-and-mortar business in many Latin American countries. Falabella needed to assess how to compete in the dual online and off-line world. The COVID-19 pandemic had created additional challenges for Falabella’s management team, as most shopping malls and stores were obliged to close for a long period of time, and the lower off-line sales were not expected to be fully compensated by increasing online sales. Should Falabella’s executives continue to focus on the historical strength of Falabella, fuelled by horizontal, vertical, and international expansion? Should they focus their efforts on the online business and divest some of their current business units.
The case is intended for use in senior undergraduate- and graduate-level courses on corporate strategy, international business, and business models. It is also suitable for use in a capstone strategic management course. The case has also been successfully tested in executive education courses, mainly with students interested in emerging markets. By working through the case and assignment questions, students will have the opportunity to do the following
- Understand the logic behind the selection of businesses and the countries in which businesses choose to participate, including entry and exit decisions.
- Apply and understand the concept of corporate advantage (i.e., the whole is worth more than the sum of the parts).
- Explore and assess the options available to a multi-country retail and shopping mall operator to compete with online giants.
- Analyze the trade-offs of different growth options, including strategies to expand in the online business.
Argentina; Brazil; Chile; Mexico, Large, 2020
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