Alpes

78-631-02

International business

CASE STUDY ANALYSIS:

Alpes s. a.: a joint venture proposal (a)

KEY ISSUE

Charles River Laboratories (CRL), an American global market leader founded in 1947, specialises in commercial production and supply of laboratory animal models for research and development purposes and new pharmaceutical testing. ALPES S.A., a member of the IDISA group (a family owned corporation) was founded in 1974 and is the sole producer of specific pathogen-free (SPF) eggs in Mexico.

CRL has reviewed long-term growth and financial opportunities in producing SPF eggs in an international market and is willing to invest $2 million in a proposed joint venture with ALPES in Mexico. ALPES would not be investing any funds but some of its existing assets and some of IDISA group assets for this project. After reviewing the opportunities, there were also some concerns. For instance, the sole dependence on funds from CRL; the economic instability, corruption and uncertainty of the Mexican market; and most importantly, the fact that CRL has never succeeded in the Mexican market even after 50 years in operation.

The key issue in this case is the need for a decision to be made on a proposed joint venture between these two companies. CRL’s senior vice-president for corporate development, Dennis Shaughnessy, who is in charge of this project, has the responsibility to communicate this idea to the Board of Directors.

INTERNAL ANALYSIS

VRINE ANALYSIS

Value

This proposed joint venture proves to be valuable because of the existing opportunity for long term growth and international expansion. The SPF egg is a product in high demand because its demand surpassed its supply by between 5 – 10% which means the likelihood of an increase in customer base; leading to increase in profit. Also, ALPES is the one and only producer of the SPF eggs in Mexico which will be favourable for the reputation of this joint venture.

Rarity

This long lasting relationship...