Is There Strategy in Brazil? Reed E. Nelson I once worked for the Brazilian operations of a large electrical equipment manufacturer. They offered a complete line of products, from generators, transformers, and high-voltage lines to the watt-hour meters found in alleys and backyards around the world. The Brazilian opera- tions were prosperous, but they did not approach the sales volume of even small divisions in the U.S. and Europe. This was during the heyday of strategic planning, and yearly we entertained visitors from headquarters who seemed pos- sessed by the need to classify business activities as "stars," "question marks," "cash cows," or "dogs." These classifications were determined by juxtaposing projected growth and market share. On one of their early visits headquarters per- sonnel noted that the heavy transformer market, in which we held a near monopoly, had been flat for years. Hence, our transformer business (not really a "business" at all, but a product made to order on a job shop basis) became a cash cow, which was milked and abandoned. Requests for repair or modification of installed units were channeled to a small service and repair unit. A subsequent visit from headquarters re- vealed that our generator business, a low-growth market in which we had lost market share, was a dog, to be disposed of at once. Requests for re- pair or replacement of installed units were again channeled to a small service and repair unit. Our visitors, however, noticed that locomotives were in great demand, and we had a virtual monopoly in the locally assembled product, so we moved our other activities into a corner to make room for the locomotives. Other visits decreed similar actions; capaci- tors were dogs, control panels cows, meters question marks. Locomotives were upgraded to super novas. Always, repairs or modification of installed units were referred to a growing service and repair business. Then the government de- cided to dam up two major rivers and make the largest hydroelectric generating station on earth. (The project had the added advantage of being able to bury one-third of Argentina under ten feet of water in the event of war.) At about the same time, the government no- ticed that it had enough locomotives for the next ten years or so. We were totally unprepared to make any major bids on the hydroelectric project, because our once flexible and innova- tive heavy manufac- The Brazilian case shows U.S. firms that popular strategic management con- cepts may have no application in the Third World. turing facility had been reduced to an assembly plant for locomotives. This left us with a few ailing dogs, a black hole, and one big star: the large service and repair unit. This experience first shook my faith in the applicability of popular American and European tools and techniques of strategic analysis and planning to the Third World. My faith was further tested later when I had occasion to teach seminar modules on strategic management to Brazilian students and executives. Some of my most cher- ished typologies--Miles-Snow, BCG, Cost-Differ- entiation, and Focus--brought blank stares rather than the usual nods I had come to expect from American audiences. My students understood the concepts, and even dutifully suggested some local cases to validate what I had said, but they did not register the same enthusiasm I had come to expect. Intrigued, and somewhat frustrated, I began to question colleagues and managers about the applicability of popular American and Western European strategic models in Brazil. A number of criticisms arose, some of them vague, some of them quite pointed. A representative sampling follows: • "How are you supposed to do strategic planning when inflation is 30 percent a month, Is There Strategy in Brazil? 15