Critical Thinking - Evaluating Global Expansion

Critical Thinking

evaluating global expansion

Greenwich Industries entered the Latin American market in the 1950s by forming a joint venture with Industro Viejes in Santo Ignezeto to manufacture bicycle parts. The joint venture flourished in the 1960s, and Greenwich eventually bought out 100% ownership. The company earned steady profits from the Latin American subsidiary until a military junta overthrew the government in the late 1970s. The ruling generals expropriated all foreign owned companies, including the Santo Ignezeto bicycle parts plant.

Today Santo Ignezeto is ruled by a democratic government that has been in power for ten years. Industro Viejes has approached Greenwich about another joint venture. The government is offering an attractive incentive package to attract foreign investment.

You have been assigned to travel to Santo Ignezeto and begin planning and staffing.

1. What are the potential problems that face the new venture?

 The first thing that comes to mind is that the government could be over thrown by another military junta and expropriate the company again. The new legal and regulatory forces of the new government may be a problem. Since this is a new government that is only about ten years old, I am concerned about the stability of their government. They may not have all of their new regulations or the agencies to oversee these regulations in place yet, and our company may need to adapt all of the time as these new regulations take effect. I am assuming that there are no physical or environmental problems because this company has been able to keep up with operations since the 1950s. Unless they have exhausted all their local resources they may need to locate a new supply of materials. I would also have to make sure that I understood their culture differences in order to understand the way they typically do business and manage their companies. Issues I would have to learn would be their...