p.9

DavidWylie
SrinivasaRangan

EdCale

BabsonCollege

E In the spring of 2004,Andr6nico Luksicwaspreparing While Luksic'svast businessempire, largely con-
to climb Mount Everestt,he highestpeak-inthe-world. centratedin Chile and operatedunder the Quifleno
6 He believedthat an accomplishmentsuch as this one masthead,was not in jeopardn he liked to learn from
required both a clear vision and the support of the everyexperienceH. ad this beena caseof a good strat-
(J very best people, an underlying strategy that had egy plagued by Murphy's Law "everything that can go
servedhim well in his businessventuresand that had wrong will go wrong"?Wasthere somethinghe should
148 earnedhim the reputation of having somethingof a have known or was there a point where he or hi;
Midas touch. So on this adventurehe had hired the trusted team membershad made the wrong decision?
*ffisH*#* Ieaderof a recentChilean Everestexpeditionwho had The lessonto be gleanedfrom this failed Peruvian
alsobeenpart of the teamthat had first conqueredthe ventureremainedunclearand Luksicwantedto apply
those lessonsas he charted the course for future
perilousascentof K2. domestic and international expansion in this and
While this strategyhad proved to be successfuiln
otherventures.
many of his businessdealings,it had not worked in his
recentventure in Peru,and the experiencestill nagged Tne LuxslcGRoUPANDQulNENco
at him. Lucchetti,his pasta company'had grown to
the point where there was no room to expandin the Foundedby Andr6nico LuksicSr.in the early 1950sin
Chileanmarket.The Peruvianmarket,however,looked the city of Antofagastain northern Chile, the Luksic
extremelypromising.Thus,in 1996LucchettiPeruwas Group's initial activities were related to the mining
industry, principally copper' the country's most
born. important natural resource.By the early 1960s,the
Luksic Group had expandedits intereststo several
By late 2003, however,the new state-of-the-art other industries,thereby taking advantageof growth
pastaplant wasbeingliquidated.Luksicwasconsidering opportunities in key sectorsof the Chilean economy
whether he should leavethe Peruvianmarket altogether such as metal processing,electric power distribution,
and absorb a $150 million write-off or, alternatively, generalmanufacturing,shipping, agriculture,fishing'
to continue and build a new plant to take advantage food processinga, nd forestry.
of what was left of the Lucchetti market share, even
though it would require a considerable additional

investment.

DavidWylieD, irectoor f BabsonCollegeCasepublishingp,reparedthiscaseunderdirectionof ProfessoSrrinivasRa anganandwith the supportof Professor
Edcaleandthe Instituteof LatinAmericanBusinesosf Babsoncollegeasa basisfor classdiscussiornatherthanto illustrateithereffectiveor ineffectivhean-
dlingof anadministratiosnituationR. eprintedby permission.

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