Fortaleza, Northeast Brasil – Marcelo Azevedo, Urban microfinance manager, and the planning committee of Crediamigo, Brazil’s largest microfinance institution need to figure out an entry strategy to Rio de Janeiro’s microfinance market. A part of the Banco do Nordeste, a regional development bank, Crediamigo has a 10 year long and 400,000 clients in the Northeast of Brazil. Its objective is to double its clients base for 2011; Rio de Janeiro’s market, 3000 km South of Crediamigo’s base, was the next priority.
Crediamigo has two options. The first one consists of partnering with VivaCred, a small experienced microcredit NGO which operates in Rio de Janeiro slums. VivaCred was a microfinance NGO with relatively low organizational capabilities and a low performance in terms of loan repayment. Its lending methodologies were different from Crediamigo’s experience. The second option was to set a new branch of Crediamigo in Rio and to shape it at Crediamigo’s image.
The purpose of the case is twofold. First, it is to discuss these options and to highlight the pros and cons of these two modes of entry considering the local competitive market, the organization to be partnered with and the “business” per se related to lending methodologies. Second, it is to introduce students/participants to the challenges of entering in partnership with another organization.
|Authors:||Emmanuel Raufflet, Frédéric Lavoie|
|Institution:||HEC Montréal, Canada; CECI, Canada|
|Key Words||Microfinance, Acquisition, Entry strategy, Brazil, North East, Rio de Janeiro|
|Courses||Strategic Management, Microfinance, Social Entrepreneurship|
|Permission Rights||This case is available for purchase from Emerald Insight|