VUCA Context as an inherent component of the Latin America business landscape
| Factor | Examples affecting Latin American businesses |
|---|---|
| Volatility | Some of the highest hyperinflation periods in history have been recorded in countries in the region (Brazil and Peru in the 80s and 90s; Bolivia in 1985, to cite a few), and to date, Venezuela and Argentina are facing some of the highest price growth rates in the world in the recent years. Firms in many Latin American countries have learned to become resilient to sudden price changes, an aspect that affects operating, financing and investing activities. The impact is higher for firms that trade internationally, as they face insecurity in aspects such as the cost of imports or the payment of foreign-denominated debts |
| Uncertainty | Many Latin American countries are confronted with particularly high levels of uncertainty in the political area. Changes in government policies, elections and social unrest can create an unpredictable business environment. This has a direct effect on the firm’s ability to make long-term strategic decisions or investments, losing the ability to develop long-term strategies and profit from them (Barton et al., 2017). Adapting to sudden shifts in regulations or government priorities becomes a constant challenge for businesses operating in the region (Aguinis et al., 2020) |
| Complexity | Unequal distribution of land and capital, often dating back to colonial times, has resulted in social inequality, rural poverty and armed conflicts. Attempts to address these issues involve navigating complex legal frameworks, historical grievances and differing perspectives on land reform. The complexity of the situation has contributed to problems in the development of rural areas. Further compounding these woes, the pandemic has exacerbated existing economic inequalities, as it led to many closures in micro, small and medium-sized enterprises (ECLAC, 2021) |
| Ambiguity | Weak institutions create ambiguity for businesses (Khanna and Palepu, 2010). Latin American history is full of shifts in political leadership, changes in economic policies and fluctuations in regulatory environments that in turn impact the business landscape (Brinks et al., 2019). The ambiguity surrounding government actions and its respect for the established rules of the game can affect investment decisions, market entry strategies and overall business planning |
| Factor | Examples affecting Latin American businesses |
|---|---|
| Volatility | Some of the highest hyperinflation periods in history have been recorded in countries in the region (Brazil and Peru in the 80s and 90s; Bolivia in 1985, to cite a few), and to date, Venezuela and Argentina are facing some of the highest price growth rates in the world in the recent years. Firms in many Latin American countries have learned to become resilient to sudden price changes, an aspect that affects operating, financing and investing activities. The impact is higher for firms that trade internationally, as they face insecurity in aspects such as the cost of imports or the payment of foreign-denominated debts |
| Uncertainty | Many Latin American countries are confronted with particularly high levels of uncertainty in the political area. Changes in government policies, elections and social unrest can create an unpredictable business environment. This has a direct effect on the firm’s ability to make long-term strategic decisions or investments, losing the ability to develop long-term strategies and profit from them ( |
| Complexity | Unequal distribution of land and capital, often dating back to colonial times, has resulted in social inequality, rural poverty and armed conflicts. Attempts to address these issues involve navigating complex legal frameworks, historical grievances and differing perspectives on land reform. The complexity of the situation has contributed to problems in the development of rural areas. Further compounding these woes, the pandemic has exacerbated existing economic inequalities, as it led to many closures in micro, small and medium-sized enterprises ( |
| Ambiguity | Weak institutions create ambiguity for businesses ( |
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