Assignment task: 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 10 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.
Please answer the following questions:
- What are the potential problems that face the new venture?
- What are the potential advantages of this venture for the company?
- Would you recommend entering the joint venture? Why or why not?
- If Greenwich Industries partners with Industro Viejes, would you recommend hiring local managers or American managers for the top and middle management positions? Why?