Caesar Sanchez and Adezan: A Different Kind of Leadership

Sakiusa Tuisolia: MBA Cohort 7 (B)/ LT8

Economics Session 7.

Case: Caesar Sanchez and Adezan: A Different Kind of Leadership

My take is that this is a case that demonstrates the importance of high cost to an economy and a business and how it impacts aggregate (collective) and individual firm behaviour and performance. It essentially conflicts with the Prof Bernado School that costs are not important in business. This case argues to the contrary that costs are very important and it indicates among other things how a high cost structure could be damaging to an economy or business.

Without going into the details of the case (assuming you all have read the case), the main external cost issues which impacted on aggregate firm behaviour are:

1. In Brazil, the "Custo Brazil" policy of the government in imposing a very high tax structure during the 1980's and early 1990's was extremely damaging to the country's economic competitiveness and business in Brazil which became uncompetitive in exports - this caused distortions in investment decisions and resource allocation.

2. Brazil also suffered from high interest rates which imposed a high cost of borrowing or money.

3. Brazil also faced high logistics and transportation costs because of their underdeveloped and inadequate infrastructure - roads, railways, river transport, etc. which in this example showed how innovative and visionary leadership enabled the firm Adezan to survive.

At the firm level like Adezan, the above cost constraints were far more than those encountered by entrepreneurs in other countries. The high cost of money, tax and operations made business survival in Brazil in at the time very difficult.

The only way for an entrepreneur or business to survive by getting around these obstacles is by being "resourceful." The case shows how Adezan managed to tackle the market challenges, re-invent itself and survive through the resourcefulness of its owner and senior managers. Its decisive actions were:

* Acknowledging the difficulties facing its business.

* Understanding its strengths and competencies.

* Studying the market and understanding customers.

* Innovation and offering new value propositions and products to counter the high cost issue.

* Working in true partnership with its customers (Cebrace).

* Involving staff in problem solution process.

* Continued search for competitiveness based on Adezan's core competencies, skills and resources.

* Obstacles then in the early 1990 have led