Codensa: Easy Credit for All, Spanish Version Harvard Case Solution & Analysis

This case describes how Codensa, an electricity firm in Cundinamarca and Bogota (Colombia), developed an easy-access consumer credit business model for low income populations leveraged by the cost structure of its core business. Codensa offered consumer credit to low income inhabitants through the CodensaHogar business unit, by linking together a value chain of makers and large retailers of household appliances.

Codensa entered into this business as part of its commercial branding strategy, contributing its bill structure as credit collection device. Sixty-six percent of Codensa users were individuals who did not participate in the formal banking system. After getting a credit history with Codensa, 45% of this population obtained access to other financial services. Almost 50% of customers asked for new credit upon finishing their payments. In 2006, concern aroused among shareholders. The excess from the electric energy business would be inadequate if it were to keep up this speed.

Growth funds ought to be sought from an external source or from within the business. Nevertheless, members of the monetary division disagreed. They argued that the funding cost that Codensa needed to pay the electricity business should include an evaluation of the risks assumed by the business. The difference between the commercial and financial visions posed a number of challenges for general management. This case may be used in intermediate classes on financial management and strategy, financial strategy as well as corporate strategy or lessons on business models oriented towards a "double bottom line."


This is just an excerpt. This case is about GLOBAL BUSINESS

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