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Case study
Publication date: 20 January 2017

Mitchell A. Petersen, Alex Williamson and Rajiv Chopra

At the end of 2011, one of the largest food retailers in Brazil, Grupo Pão de Açúcar, or GPA (a subsidiary of Companhia Brasileira De Distribuição, or CBD), was reviewing its…

Abstract

At the end of 2011, one of the largest food retailers in Brazil, Grupo Pão de Açúcar, or GPA (a subsidiary of Companhia Brasileira De Distribuição, or CBD), was reviewing its accounts payable terms with suppliers in search of additional value. Manager of analytics Maria Cristina Santos was examining the trade credit terms GPA had with Oalem Ltda, a family-owned melon grower located in northeastern Brazil. Oalem, like most small family businesses, was financed with bank loans and equity that was held predominantly by the family. The case examines how accounts payable (trade credit) terms should be set or negotiated between a large retailer and a small supplier, especially when the bargaining power between the two may not be equal. The case demonstrates that trade credit terms can be as important as the terms of more traditional forms of financing.

After analyzing and discussing the case, students should be able to:

  • Determine when it is efficient or value-increasing for one nonfinancial firm to borrow from another nonfinancial firm through trade credit, as opposed to borrowing from financial institutions (e.g., banks) or financial markets

  • Understand how competition or relative bargaining power can influence feasible and optimal trade credit terms

  • Explain why trade credit can be a cheaper form of financing than the alternative forms of financing available to small family businesses like Oalem Ltda

Determine when it is efficient or value-increasing for one nonfinancial firm to borrow from another nonfinancial firm through trade credit, as opposed to borrowing from financial institutions (e.g., banks) or financial markets

Understand how competition or relative bargaining power can influence feasible and optimal trade credit terms

Explain why trade credit can be a cheaper form of financing than the alternative forms of financing available to small family businesses like Oalem Ltda

Details

Kellogg School of Management Cases, vol. no.
Type: Case Study
ISSN: 2474-6568
Published by: Kellogg School of Management

Keywords

Case study
Publication date: 27 January 2023

Boris Urban and Stephanie Althea Townsend

The learning outcomes of this study are as follows:▪ evaluate the difficulties of entry-level women entrepreneurs in the South African farming industry;▪ appreciate the…

Abstract

Learning outcomes

The learning outcomes of this study are as follows:▪ evaluate the difficulties of entry-level women entrepreneurs in the South African farming industry;▪ appreciate the entrepreneurial journey of a women entrepreneur in the farming industry;▪ assess the role of networking and support programmes in prompting women entrepreneurs in South Africa;▪ understand the role of diversification in building a sustainable business in today’s COVID-19-affected economic environment;▪ make an informed decision regarding how COVID-19 had negatively affected the farming industry; and▪ critically evaluate which options are available for women entrepreneurs to overcome the negative effects of COVID-19 and remain sustainable businesses.

Case overview/synopsis

In April 2021, managing director and co-owner Beverley-Anne Joseph, was considering the long-term business strategy options for Zelpy, her hop farm business outside George, a town in the Western Cape, South Africa. As the first black woman hop farmer in Africa, she had run a successful business supplying hops to South African Breweries (SAB), a subsidiary of the global conglomerate Anheuser-Busch InBev (AB InBev). To date, her hop farming business had not been impacted by the South African Government’s COVID-19 lockdowns that impacted the sale of alcoholic beverages. However, it had given her a wake-up call as to the risk of having most of her eggs in one basket. She now had to consider how to diversify her farming business to minimise risk.

Complexity academic level

MBA, Masters in Management, Postgraduate Diploma in Business and Executive Education short courses.

Supplementary materials

Teaching notes are available for educators only.

Subject code

CSS 3: Entrepreneurship.

Details

Emerald Emerging Markets Case Studies, vol. 13 no. 1
Type: Case Study
ISSN:

Keywords

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