Teaching Cases

Día día practimercados: meeting the daily needs at the base of the pyramid (B)
Date Published: 2014
Published By: Harvard Business School Prublishing
Authors:Michael Chu, Regina García-Cuéllar, Rosa Amelia González
Product #: N9-312-043


Early one Monday morning in August 2011, as José Vicente Aguerrevere (JVA) (HBS MBA 2002) waited for his team to arrive for their weekly management meeting, he reflected on the merger of Día Día (DD) and La Diadema (LD). When they had decided in July 2009 to combine DD, their five-year old rapidly-growing FMCG1 retail chain focused on Venezuela’s base of the pyramid, with LD, a well-known personal care and household cleaning supplies retailer, they were convinced it would be a real game-changer.2 ―What an understatement,‖ thought JVA. In the following 18 months, DD had proceeded to plunge from entrepreneurial success to insolvency. While there were valid marketing considerations behind the merger, what had made the transaction difficult to refuse was the opportunity to acquire 29 additional stores in a noncash exchange for a 20% stake in DD. A winning retail format like DD should have, in JVA’s estimation, ―800 to 1,000 stores across Venezuela.‖ However, with no means to finance store expansion other than operating cash flow, the Company was growing at a rate of 1 to 1½ stores a month. Accordingly, the LD merger was equivalent to almost 2 years of expansion.

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Keywords: Retail trade; Food industry and trade; Private companies; Government business enterprises; Venezuela
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