The open forum The Venezuela to come: from survival to competitiveness (La Venezuela que viene: de la supervivencia a la competitividad), held on May 14th at IESA Business School in Caracas, shared different perspectives for local companies who wish to better navigate through economic announcements from the Trump and Delcy Rodríguez's administrations post the January 3rd removal of former President Nicolás Maduro.
IESA (Instituto de Estudios Superiores de Administración) is the premier private business school in the South American country, founded in 1965. For many years, it held world-renowned faculty of Venezuelan origin such as Carnegie Endowment for International Peace's Moisés Naím and Harvard Growth Lab´s Ricardo Hausmann. Besides Caracas, It also has campuses in Panama, the Dominican Republic and an office in Miami, Florida.
The event, exclusively covered by VzEconomics, is part of the local agenda led by Venezuelan academia, business associations, and think tanks on the country's evolving economy.
Oil is not enough
For IESA´s Research Director, economist Richard Obuchi, Venezuelan businesses must start looking past a state of resilience and start working towards what Michael K. Porter called competitiveness in today's world.
Professor Obuchi warned that “oil and gas is not enough“ —the sector is the first poised for economic recovery in his estimation — to drive a more competitive economy. Said goal needs work from each sector, amongst changing policies, he asserted.
Commerce is another sector with fast growth possibilities, with the rest following in a 24-36 month period, Obuchi shared. Consumer power could grow in the next twelve months.
“Opportunities will be won by those who move before others,“ the academic said. These are protecting the core business, amplifying organizational capabilities (e.g. workforce upskilling), building a portfolio for possible new investors and thinking about business areas that might go under transformation.
A look within
Professor Ernesto Blanco, PhD, IESA's Chair on Strategic Planning, stressed that Improvised work is not well regarded by international capitals.
He urged participants to ask themselves key questions before engaging with investors, all based in a deep-look within each business:
Is my value proposition aligned with their needs?
Are our products compatible with international standards (e.g., Six Sigma)?
Do we have an Id
What is the state of my value chain?
“Let's start to make our companies stronger by looking at what´s going on within them,“ Blanco said.
The importance of human talent
The event also brought together discussions based on current practices from SMEs, conglomerates and even multinationals currently working in Venezuela, such as Amaru Liendo, Country Manager for S & C Johnson & Johnson.
“Human talent is fundamental to becoming more competitive. We should map out our talent pool and also get ready for some changes, such as establishing an agility-friendly and trust-based work environment,“ said Liendo, who is also the current President of the Venezuelan-American Chamber of Industry and Commerce (VenAmCham).
“We might lose or have to let go of some of our talent if they are not ready to undertake upcoming challenges (or find better opportunities). We can mitigate this by mapping out our pool and strengthening their capabilities, right now.“, recommended the VenAmCham leader.
ESG and capital access
The event also discussed key topics that Venezuelan companies must meet to acess international markets such as ESG standards (Environmental-Social-Governance), transparency and compliance, followed by capital access.
Mauro Velázquez, Auditing Partner for KPMG Venezuela, stressed that corporate governance is a sine qua non condition for international eligibility in companies. KPMG is the current firm in charge of Venezuelan audits by the U.S government.
“Transparency is the only language that successful partners understand,“ said Velázquez.
Economist Luis Xavier Grisanti, director of IESA's International Center of Energy and Environment, pointed that Venezuelan bank credit portfolio currently stands at a limited threshold of merely $2.5 to $3 billion (amounting barely 3% of real Venezuelan GDP), a result of longstanding government policies.
Companies should be ready for credit expansion. Grisanti, joined by Adriana Goncalves (Merinvest President) and Professor Carlos Navarro (coordinator of IESA´s graduate studies on Finance), suggested the following critical route, under a 18-month horizon:
Comprehensive technical revaluation of fixed assets: a rigorous and mandatory accounting process designed to reflect the company's true replacement value and immediately expand its profile of real collateral assets vis-à-vis international banking institutions.
Balance sheets external auditing: a systematic engagement of accredited international auditors to dispel any vestige of institutional information asymmetry.
Absolute separation of assets: between the founding partners' personal finances and the corporate budgets and net operating cash flows.
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