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Sodimac Homecenter Case

News Talk Presentation

We have been talking a lot about politics over the last couple of weeks due to the election. A lot of people complaint about the fact that politics tend to lie on their campaigns. Something similar happens sometimes in the business world.

I want to talk about a case involving one of the biggest retailers in South America. Sodimac Homecenter is a Chilean home improvement warehouse store chain. Besides Chile, there are stores in Argentina, Colombia and Peru, Uruguay and Brazil. It Is like a Home Depot or Ikea but in South America

In 2010 Sodimac reduce the salaries of their employees from $520 to $460 per month. Consequently, hundreds of employees threat the managers of Sodimac with several collective bargaining. The CEO Sandro Solari gave a public speech saying that this this decrease in salaries was just provisional, and that they would go up again within the next 3 months.

Not only they didn’t raise them, but they decrease their salaries even more to reach the minimum wage in the country, 260,000 Chilean pesos ($400) per month. In one year, they were reduced from $520 to $400 which might not be seen like a lot, but for humble people it is quite a significate change. Only a week after, some reliable newspaper in Chile published that while the employees’ salaries were going down, the ones from the powerful Solari family (owners), increased by a 7% bringing in about 153 million pesos (US$302,000) each.

About 8700 workers for Sodimac remain on a strike for over a month. In fact, some of the workers have vowed to go on a hunger strike. The workers argued that their rights were being violated. They lost 3% of market share within the next year due to the bad publicity, and a 7 within the next 5 years. From 14% to 7%. I am not saying that the strike was the only reason, but definitely one of the main ones. This is an example of how not respecting the rights of the employees has led a company to lose customers and market power


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