News Column

2002 HISPANIC BUSINESS 500: Best of the Best

June 2002, HISPANIC BUSINESS magazine

Holly Ocasio Rizzo

View 2002 HISPANIC BUSINESS 500 ListView 2002 HISPANIC BUSINESS 500 ChartsView Interactive map of U.S. HISPANIC BUSINESS 500Buy the HISPANIC BUSINESS 500 Contact DirectoryOn a Saturday in April, Marcelo Claure gathers his Brightstar Corp. management team to begin an important new project: benchmarking for best practices.

“When you have a company that has experienced exponential growth, ‘best practices’ is the last thing you think of,” says the CEO of the Miami-based wireless telephone distributor, which has nearly doubled its revenues each year since its founding in 1997 and currently is number 6 on the Hispanic Business 500®. “You get used to working on a case-by-case basis. But Brightstar has changed from a small group of friends to a major corporation, and we need to operate in a uniform way.”

Mr. Claure says his team members expect to draw on the best management methods at their own company and others. Then they’ll adapt the practices to Brightstar’s situation.

For managers who want to learn from great companies, the Hispanic Business 500 is a treasure chest. The largest Hispanic firms have achieved success, despite the historical and social barriers facing minority entrepreneurs. Hispanic Business spoke with executives at some of the largest companies on the 500 directory about how they hone their managerial skills in response to change and growth, particularly in light of the events of the recent past.

Technology: Setbacks Inspire Adjustments. Technology has emerged as a perpetual concern for management teams, but never more so than last year. The technology industry suffered a series of major setbacks, slowing down the entire U.S. economy. At Miami-based MasTec Inc., which fell to number 2 on this year’s directory after holding the number 1 spot last year, revenues dropped 6.1 percent, and the company had to set aside $13.1 million to cover nonpayment from customers.

After taking over as CEO of MasTec in August, Austin Shanfelter began revising the company’s strategic plan in response to those events.

“We’re focusing now on market-share growth with our current client base,” says Mr. Shanfelter. “We’re back to focusing on key clients, the blue-chip customers who have end users.”

To do that, Mr. Shanfelter says, MasTec emphasizes “the full breadth of its services,” especially maintenance. Instead of simply laying cable or installing networks, the company will service the infrastructure as well.

“We didn’t do a good job of marketing in the past, because we didn’t really have to,” Mr. Shanfelter concedes. “In our business sector, MasTec branded early on. The markets were moving so quickly, we didn’t have to tell our story well.”

The company has completed arrangements for a $125 million revolving credit line – a $25 million increase over previous funding levels – to refinance existing debt and provide working capital.

Finance: Capital Preservation Key. International Bancshares Corp., the largest financial company on the Hispanic Business 500 at number 14, has responded to market changes of a different kind. Since the implementation of NAFTA, the bank has provided funding for U.S.-owned factories in northern Mexico; loans to those and other businesses make up about 60 percent of the company’s portfolio.

Last year’s manufacturing slump led to decreases in trade along the border. International Bancshares, based in Laredo, Texas, adapted by making capital preservation a top priority in its daily operations, especially money handling.

“Strict financial controls are the key to our success,” says CEO Dennis Nixon. “If a business doesn’t control its finances daily, it risks having a lot of waste or theft.”

In its retail marketing, the bank concentrated on serving U.S. customers through 130 banks and 238 ATMs in 40 South Texas communities. “Our basic plan is to be good at home,” Mr. Nixon explains. “We may push the envelope occasionally, moving a little north or west, but we really want to build strength in our market. In small communities we seem to have the typical small-bank footprint of customer service and interest in the community.”

Customer-Directed Objectives. Lopez Foods, an Oklahoma City meat processor, has only two major customers – Wal-Mart and McDonald’s. Good relations with those corporate buyers fueled a 97 percent growth rate for revenues last year, enough to put Lopez Foods at number 13 on the Hispanic Business 500.

“People who don’t know our business feel it’s risky to depend on two main customers,” says CFO Jim English. “But we’re a longtime partner of McDonald’s. We’ve sold to them for 35 years. They treat us like a partner rather than a supplier. Not only is it a single-customer dependency, but we have no contract with them – they trust us, and we trust them.” CEO John Lopez, who bought the company in 1989, was formerly a McDonald’s restaurant operator in Los Angeles.

For Lopez Foods management, the needs of the customer determine the direction of strategic planning. Last year, Lopez Foods bought a plant in Nebraska to increase production. The previous year, storage at the Oklahoma City plant was expanded to meet demand.

Through the transition, the company communicated its progress in daily and weekly work-group meetings, monthly safety meetings, and semiannual goal-sharing meetings. “We wanted to be open to employee feedback,” Mr. English says. “We felt employees might feel most comfortable approaching middle managers with their comments and concerns.”

Employees Develop Company Vision. Employees not only implement plans at fifth-ranked Ancira Enterprises, they write the plans as well. The auto dealership structures its human resources to get workers directly involved in determining company objectives.

“When our organization developed its vision, it was largely done by the employees,” says CEO Ernesto Ancira, who started his company with a downtown Chevrolet dealership in 1972. Employees formed committees, and the committees came up with goals.

The process helps employees buy into the plan, Mr. Ancira believes. And that, he adds, contributes to job satisfaction. “Employees are your company’s personality,” he says. “If you have happy employees, you’ll have happy customers.”

The company seldom hires from outside for growth positions. “Every one of our new acquisitions is run by a person who has been here,” Mr. Ancira says.
In the sales department, Mr. Ancira foresees a modest 2002. “I’m not sure we’ll have enough product to meet demand, since the automakers have scaled back production,” he says. “We don’t have to market as aggressively this year because of it, and we don’t have to cut prices to the bone to keep our inventory manageable.”

Auto Industry Embraces the Internet. Ancira’s Web page announces it’s “proud to be the first auto dealer online in Texas.” In Colorado, Englewood-based Burt Automotive Network (this year’s top-ranked company on the Hispanic Business 500, with revenues of $1.49 billion) also considers itself a pioneering online auto dealer. The shift online began in 1995, when CEO Lloyd G. Chavez brought his son Lloyd Jr. on board as executive vice-president.

“Lloyd Jr. comes from a technical background,” says Gilbert Chavez, general manager and Lloyd Sr.’s nephew. “When he came here, he said we had to be on the Internet because it was the way of the future.”

But bringing together the car dealer culture and the Internet required a feat of technology management. To correct problems with photos and inventory listings, the company hired an in-house Webmaster. Even today, most Web visitors don’t buy online, even though they can. Eighty percent of customers surf first, then come to one of the company’s seven showrooms. Only 12 percent of Web-site visitors submit a sales lead.

For the future, tech-savvy Burt plans to develop a complete broadband network that will link the dealerships through data, voice, and video conferencing communications, according to Lloyd Chavez Jr. Eventually, the dealerships will share programs to generate more business, such as a commercial vehicle preventive maintenance program, a fleet vehicle tracking program, and a service contract program.

“Although our growth as an organization will be most visible through the acquisition of new automotive franchises, our greatest and most profitable growth will occur in fleet sales in the luxury and credit union member markets,” says Lloyd Chavez Jr.

Burt’s sales have increased 48.8 percent in the last two years to reach $1.49 billion. To accomplish that, the company has diversified into support areas for its auto dealerships, with two auto brokerages, a parts-distribution center, and an audio-video studio that produces TV ads for Burt and other companies.

Lloyd Chavez Jr. credits the growth trajectory to his father’s strategic decision to create a central management company (LCG Management), rather than run a loose-knit dealer group. “The foundation of any building is always bigger than the rest of the structure in the beginning,” he says. “We believe that undersizing your business foundation will strangle future opportunities.”

Diversify Strategy to Solidify Market Share. In Miami, Brightstar Corp. also has diversified as part of its strategy to solidify its place in the market. A new manufacturing operation will make phones licensed under the Motorola brand, and a freight forwarding company ships the phones overseas. Divisional interconnectivity gives Brightstar control over most aspects of its products, sales, and delivery.

The company operates in 13 Central and South American countries, with managers keeping in touch through conference calls and e-mail. But global operations are only one reason why CEO Marcelo Claure hankered to get his team talking about best practices.

The other reason is Brightstar itself. “We have to constantly change our company,” Mr. Claure says. “We have to reinvent ourselves, offering more services as our competitors offer more. Now that we’re in a position of leadership, it’s like we’re competing against ourselves to stay on top.”

Source: HISPANIC BUSINESS magazine

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