Case #1481.1

Privatizing the Argentine Mail (Sequel)

Publication Date: December 01, 1998
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In this case, Argentina's Minister of Economy, Domingo Cavallo, must decide how to deal with a problem of corruption that will be exacerbated if privatization of the Argentine Mail goes forward. Cavallo and his team approach this issue as if it were a "typical" case of privatizing a state-owned enterprise. Indeed, the Argentine Mail is a typical state-owned enterprise. It is inefficient, outmoded, riddled with corruption, and weighted down with unions that control employment practices and influence policy. Proceeding on the assumption that this is a typical case, the reformers move in a low-key way to prepare the company for privatization. They negotiate with key stakeholders (the unions and the internal bureaucracy). They get a new legal framework in place. They bring in new management to improve operations. The Mail is downsized, new technology is introduced, its financial systems are improved, its organizational culture is reformed, its public image becomes more positive, and service improves. Only when efforts are made to move from a reformed public enterprise to full privatization do the reformers begin to realize that this is not a "politics as usual" kind of problem.

Other Details

Teaching Plan:
Available with Educator Access
Case Author:
Sebastian Popik
Faculty Lead:
Merilee Grindle
Pages (incl. exhibits):
South America, Argentina