Leadership and Change
Denise Farinos, CFO of GM South America, on Shifting Gears in Emerging MarketsPublished: July 01, 2011
That Denise Farinos, CFO of General Motors South America, has a big job is an understatement. She manages the finances of what some executives have described as the U.S. automaker's most valuable asset in terms of growth and return on investment. The jewel in the crown is Brazil, which with nearly 700,000 General Motors vehicles sold last year, trails only the company's U.S. and China operations in unit sales worldwide.
A 45-year-old Sao Paulo native and a 22-year GM veteran, Farinos said in a recent interview with Universia Knowledge@Wharton from GM headquarters in Sao Paulo that she's lucky to be crunching the numbers during this time of growth. Auto sales are booming across the region thanks to expanding economies, rising incomes, easier credit and appreciating local currencies that make imported vehicles cheaper. With its leading 20% market share in South America, GM is riding the wave. Overall car sales in Brazil, in particular, grew 11% last year and should rise by at least 5% in 2011.
An edited version of the transcript appears below.
Universia Knowledge@Wharton: You've arrived at the top echelon of GM management. Tell us about your career trajectory.
Denise Farinos: After joining GM, I worked in Brazil in several areas of the company, such as marketing, manufacturing and engineering, always in the finance function. To complement my professional experience, I was lucky to participate in several projects with strategic importance that really built my experience and gave me a solid understanding of GM's business.
I got an MBA at Thunderbird School of Global Management in Arizona. My first international assignment was as CFO of GM's Colmotores operation in Colombia. That was a great experience, because I was deeply involved in the day-to-day operations. I was there in June 2009 when GM declared Chapter 11 bankruptcy, which impacted us all, but was a good experience for me. I'd attribute any success I've had to commitment, dedication and an eagerness to learn.
Universia Knowledge@Wharton: What role does finance play in helping an automaker improve its product portfolio?
Farinos: We can help much more than one might think. Finance is involved in the development of a product from the beginning. We contribute by presenting ideas and options to make a project viable and sustainable. Also important is our contribution in making sure that unrealistic information is not included in the business case. We can help the team develop a great car with viable price, cost, volume and investment estimates.
Universia Knowledge@Wharton: GM's Brazil operation, which has been rolled into GM South America, has an illustrious history as part of the career paths of several top managers, including former CEOs Fritz Henderson and Rick Waggoner. Why is that?
Farinos: GM Brazil has the capability to design a new car from scratch, then build it and sell it in a competitive environment. The process of developing a new product from concept to sales brings valuable opportunities and experience to any professional. You learn how to work within a complex product development chain, and externally you find out how to compete in a mature market.
Universia Knowledge@Wharton: What are major differences between the U.S. and Brazilian markets in terms of consumer preferences?
Farinos: U.S. consumers usually prefer to buy a big used car rather than a small new car, mainly because the U.S. offers good infrastructure that allows safe and nice "drivability" and easy parking for big models. What Brazilians classify as compact cars, such as the GM Chevrolet Vectra, U.S. customers think of as [too] small. Moreover, Brazil's infrastructure is more like the south of Europe, with narrow streets and limited parking. Small cars are a better fit in this environment, and more practical. Also, I believe that the differences in consumer preferences are a consequence of the contrast in purchasing power. In the U.S., the average household income in 2010 was US$47,000; in Brazil, it was US$10,500.
Universia Knowledge@Wharton: What is behind the rising incomes in Brazil and other Latin American countries?
Farinos: It's the commodities boom and the impact it has had on economic growth. There is so much more money and jobs because of it. Look at Brazil, which sells sugar, iron, coffee, beef and orange juice to the world. Venezuela has oil and Argentina exports soybeans. Chile sells copper and Colombia ships oil, coal and flowers. All this generates more revenue, giving governments more money to finance internal infrastructure development. Companies have resources to invest and add jobs, and workers have more disposable income. As far as car companies are concerned, rising incomes, low car ownership penetration and a very young population add up to a fantastic market. We see all these positives in Brazil.
Universia Knowledge@Wharton: A frequent criticism of finance executives at many companies is that they are too far removed from operations. How would you address that?
Farinos: I strongly believe that in order to manage a business, we need to understand the whole strategy, and be close to each stakeholder. Understanding their concerns helps each decision. We pay attention to what customers are saying and then bring it inside the company so that engineering, sales and marketing people understand the comments we receive from outside. In Colombia, I met with dealers once a month and had periodic lunches with customers.
That's important in Brazil, because as the market matures, customers become more demanding. They want more quality and features. But here at the South American headquarters, I'm much less involved in day-to-day operations. I deal more with issues having to do with individual countries and their governments -- new rules or taxes, for example. I now have a macro view of the situation, whereas before I was specifically involved in Brazil. Now, we have several countries to run. We need to understand how government actions affect each market and make sure we are aligning corporate requirements in each country
Universia Knowledge@Wharton: Forgive the cliché, but as you are a female CFO at such an important company and at such a relatively young age, is there any advice you would impart to other women working their way up the corporate ladder with dreams of reaching your level?
Farinos: My advice is to be yourself, and not worry about being a woman. Worrying too much about it can be a catastrophe and undermine your career. I never saw being a woman as a problem in my career. Just be committed. And get all the education you can.