Case Study

In 1995, a shop owner in Rio de Janeiro started a business in Rocinha, one of the city’s slums or favelas, that consisted of selling cooking utensils and hardware goods on credit to the people living there.  He found that offering short term financing to people with no official credit history, and often with inconsistent employment, on basic items they needed to improve their situation in some way turned out to be a profitable and relatively safe business.  Repayment percentages were over 95% and the ability to charge a relatively high interest rate to people with little alternative financing opportunities led to a quickly expanding business.

The business took a turn in the year 2000 when he saw that a significant number of the people buying items from him were women who were using the items they financed to start small businesses in the favela.  Some of them were able to form groups of women that made tapestries and wood items for tourists visiting Rio de Janeiro.  Others focused on preparing food, often for consumption by low level workers who had access to the government’s and private industry’s subsidized lunch program.

This was an unexpected outcome and he discussed this with several of his friends, one of whom was a banker working with a large Brazilian bank that had a lending division focused on short term financing provided through supermarkets and post offices in several cities.

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This friend and the shop owner decided to create a lending organization focused on women entrepreneurs from the lower economic classes, particularly those residing in the city’s favelas.  As a new, different, socially conscious and women focused organization, the new company received funding from several local charitable organizations and Women Mean Business, a mixed government and private organization based in London.

Bela Banco grew rapidly, opening numerous small branches in the favelas of Rio and Sao Paulo home to several million citizens.

The bank remained focused on women entrepreneurs, with typical loans ranging from $25.00 to $250.00 for periods of up to 3 months, with loans made for the purposes of creating small businesses and provide a way to improve the financial situation of the borrower and her family.

Bela Banco was able to remain untouched by corruption and scandal in Brazil with several prominent bankers and internationally known professionals accepting positions on the Bank’s board of directors.

In early 2018, former U.S. Presidents Jimmy Carter and George W. Bush met the ownership team of Bela Banco in Lima, Peru at a conference for expanding the role of female entrepreneurs globally.  Bela Banco had already installed a few branches in the poorer areas of four countries in Latin America.

At this meeting, a radical idea arose: why not put Bela Banco branches in the United States?

Some facts came to light during this discussion:

  • In the United States, nearly 1 in 7 people, (46 million) live in poverty. (The federal government defines poverty as a family of four living on $23,500 or less). Many of these families work hard to make ends meet, often employed at unreliable  minimum wage jobs. Even working full-time at minimum wage, individuals earn less than $15,000 a year.
  • 34% of households headed by single women live in poverty
  • 1 out of 5 children live in poverty in the U.S.
  • Commercial banks are generally unwilling to lend to unproven business owners, particularly those with low credit scores

Bela Banco’s management team decided to accept the offer of former Presidents Bush and Carter to serve on the Bela Banco U.S. advisory board and were assured they could count on their continued public support.

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Question 1

1)    What is Bela Banco’s strategy?

  1. a)To expand into foreign markets
  2. b)To offer small loans for business start up purposes to lower income people
  3. c)To sell the bank to a large investor once profitable
  4. d)To provide a high return on equity to investors

Question 2

2)    To offer lending products in the United States, Bela Banco would:

  1. a)Modify the loan products to fit with the US market
  2. b)Offer the same products offered in Brazil, due to the success of the business in that country

Question 3

3)    A SWOT analysis of Bela Banco would see the surprisingly high level of people living in poverty in the US as a Threat or Opportunity:

  1. a)Threat
  2. b)Opportunity


Question 4


4)    Bela Banco’s strategy is more:

  1. a)Blue Ocean
  2. b)Red Ocean

Question 5

5)    Thinking of the next year’s operation in the United States, Bela Banco’s management would be wise to:

  1. a)Define numerical goals for the coming year
  2. b)Start up the business and see what happens

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Question 61 pts


6)  Basic strategy is the “application of strength, advantage, differentiating factors against weakness, disadvantage or sameness”. Applying this to Bela Banco, the company in the U.S. would:

  1. a)Analyze competitor’s product offering, client base and marketing approach and focus on differentiating factors to win over the competition
  2. b)Realize their inability to compete with major US banks

Question 7


7)    To come up with ideas to reach Bela Banco’s goals for their U.S. operation, the bank’s head of strategy would be wise to:

  1. a)Assess the business for fundamental viability
  2. b)Go over a SWOT analysis thoroughly
  3. c)Gather all information possible related to the target market
  4. d)Put a,b,c together to arrive at creative solutions to attain the company’s goals

Question 8

8)  Writing logically is essential to proposing ideas and solutions effectively.  Once a proposed idea or solution is made, the key to logical writing is answering the questions of:

  • Why?
  • How?
  • How do you know?
  • Who?
  • When?
  • What will happen?


In one scenario, Bela Banco’s management decided the best way to enter the U.S. market was to accept an offer from Wells Fargo to join forces in the U.S. while keeping Bela Banco’s business model and ownership structure intact.

Using the questions above, please briefly bullet point the rationale Bela Banco’s management team would use to logically show why an alliance with Wells Fargo is a good idea.  Without time for research, it is understood your answers for “How do you know?” and “What will happen?” will be reasonable sounding guesses.

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