LeBow College of Business
More audio. There are four clips in each post - each one representing someone else’s synopsis
Standard Podcast: Play Now | Play in Popup | Download Standard Podcast: Play Now | Play in Popup | Download Standard Podcast: Play Now | Play in Popup | Download Standard Podcast: Play Now | Play in Popup | DownloadThe students were asked to provide summaries of their trip. The next few posts will consist of audio synopses from the students and a few of the faculty members. Enjoy!
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Today we took a 20 minute bus ride from our hotel to a local Industrial Park to visit the Latin American headquarters of ARAMARK. We heard two presentations this morning. The first, given by Mr. Jose Luis Ibaibarriaga, the CFO of Central Restaurantes, ARAMARK focused on the economic and political outlook for all the countries in Latin America. ARAMARK has operations in Peru, Argentina, and Brazil (among others) and services industries as diverse Mining, Education, and Health Care.
Mr. Ibaibarriaga explained that countries in Latin America represent very different markets and the importance of knowing the culture of each country before entering the market. As an example of this, ARAMARK often uses very short term(one month) agreements/contracts with their clients, due to the uncertainty in the political and economic landscapes across many of the Latin American countries. He also explained that, unlike Chile, there is a trend in many of these countries today away from free markets, and back to populist policies, which means a greater threat of instituting price controls and nationalizing industries. Of course, the biggest political threat rests in Venezuela, with President Chavez. No one can accurately predict how many countries will follow Venezuela’s lead.
These types of discussions drive home the advantage of having long term stable political systems. Assessing business risk is difficult enough to assess, but in many of these markets one must add the political uncertainty to the decision making process. As an example, although Chile’s inflation rate has been relatively low and very stable since 2000, Chile’s inflation rate in 1973 was 1000%-which presented a real a challenge for any business’ pricing decisions.
Mr. Pablo Achurra, the General Manager of Central Restaurantes, ARAMARK gave the second presentation. Mr. Achurra focused on the specific challenges ARAMARK faces in each of its service and geographical markets. Mr. Achurra believes one of ARAMARK’s greatest strengths is that it first learns the market in which its clients operate and then brings its expertise in food service to that client.
The mining industry, for example, is first and foremost concerned about safety. Some of the cantinas operated by ARAMARK in this business must be located underground in the mine itself, as it takes workers an hour to reach the surface. These locations present real challenges for ARAMARK to insure the safety not only of their employees, but to maintain the appropriate sanitary conditions in the food service operation that is underground. Workers in the mines work 7 days straight and then have 7 days off. Obviously, these challenges are different than those ARAMARK faces in operating the concessions for the Eagles and Phillies (although, one might argue that when the Cowboys are in Philadelphia, the risk factor is equivalent).
Most workers are unionized, but unions are structured very differently in Latin America than in the US. Unions are typically associated with a company, rather than a trade, making negotiations complex, given the large number of companies served by ARAMARK.
Tomorrow we head home, and will be leaving the hotel at 6:30 for ride to and a tour of a copper mine. After a late lunch, we will be heading to the airport and are scheduled to arrive in Philadelphia at 10:30 Sunday morning.
Chile is an amazing place-the people have been very hospitable and warm, the food has been excellent and we’ve learned a great deal. We must thank those alumni whose contributions made this trip possible.
Carolina presenting gifts from LeBow expressing our thanks to Mr. Achurra and Mr. Ibaibarriaga:
Today began with a two hour drive over the mountains to the port city of Valparaiso. There, we heard a presentation by Mr. Boris Leyton, Reefer (or refrigerated) Operations Manager for CSAV, one of the largest shipping companies in the world. CSAV also owns and operated the vessel we visited in Philadelphia. Reefer vessels do not carry containers.
CSAV’s world headquarters in here in Valparaiso. Like many buildings in Chile, the building has been damaged by earthquakes over time. To maintain the vista, builders will refurbish the facade of the building and create a more modern, safer structure inside the facade.
CSAV’s strategy is to increase the number of vessels it owns over the next five years and continue to improve productivity through information technology. This last step is extremely important to offset the increasing costs of oil.
As there are so many steps in getting Chilean fruit to customers in Philadelphia, the margins for each operation are thin and it takes (if all goes well) approximately 30 days from harvest for the growers to get paid for their product.
Chile is unique as fruit grower, in that there are no diseases native to the country that attack the fruit. In fact, in many countries, growers will plant rose bushes in their orchards, as they are more sensitive to diseases than fruit trees. The bushes act as ‘canaries in a coal mine’, warning the growers that something is attacking the bush and will soon affect the fruit. In Chile, the growers do plant rose bushes in their orchards, but do so only for decorative purposes.
This also means that Chilean growers do not use pesticides on their fruit. Fruit exported to the US is treated only after it is unloaded off the vessel.
SVAC’s world headquarters.
After the presentation, we walked to the port of Valparaiso. Mr. Leyton mentioned that port is particularly busy this time of year. One of their vessels has been delayed getting into the port due to the heavy traffic and is waiting to arrive. The daily operating cost for a vessel like this is $50,000.
After lunch, we visited one of Pablo Naruda’s homes. Pablo Naruda is one of, if not the most famous Chilean poets (although we learned he was much more than just a poet). This home in Valparaiso is perhaps the most interesting. It certainly has the best view of the ocean, as it is built on the cliffs overlooking the Pacific with a unobstructed view of the water from every room.
Today ended with a quick trip up the coast to Vina Del Mar, one of the most beautiful beach resorts in Chile. The water was cold, so no one dared to swim. In addition to its high rise hotels, Vina Del Mar has a casino and many upscale restaurants.
Even the faculty found some time to get their feet wet in the Pacific.
Here is video of the Virgen de la Immaculada Concepion in Santiago.
This is a video of the changing of the guards at the Moneda Palace in Santiago. Every 48 hours at 10:00 am this takes place.
| A number of students on the trip are from countries other than the United States. Izabella is originally from Poland. Here she provides us with a review of day 4 in her native language. |  |
Today began with a return to the Presidential Palace where we saw the ceremonial changing of the guard. Our guide told us that there was to be a strike by high school students today, as they were protesting the fact they have to pay for public transportation.
Many of Chile’s public services are privatized. The company that owns the bus lines has apparently refused to allow students free public transportation and the government has also refused to pay for this. The public transit system is extremely crowded, as we continue to see long lines waiting for buses. The subways are very clean, run often (a train a minute) and are easy to understand.
We also continue to see many stray dogs on the streets (there was one sitting in the middle of the changing of the guard ceremony). These dogs are usually very well behaved, but have been abandoned by their owners. Most have learned to cross at green lights and to use the crosswalks (those that didn’t learn this, we don’t see). The government rounds the dogs up twice a year to give them a bath. No one really knows how best to solve this problem.
