Question

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.

1. Would you recommend entering the joint venture? Why or why not?

Answer 1

Ans: The Greenwich Industries when enter in Latin America market in 1950 then -

1. by jJoint venture with Industro viejes in santo Ignezeto with vertical joint venture to take over the risk of oversease market,

2 by joint venture flourished in 1960 Greenwich bought out 100% owenership,

3. after ther military junta santo Ignezeto is ruled by democratic goverment in power 10 years.

As per senerio we see that greenwich industries is make a stable indivisual firm but it's ex-joint company is now under the ruling goverment at this position company giving only limited advantages of incentive package but company liable to share its profit with joint company that create extra liability with company. Greenwich has its indivisual Company that Stable in earning profit with limited liablity in firm, But after company getting more liablities and sharing profilte also for cost of incentive packaging that gives shortly effected the company profit, that's why Greenwich industries not enter in joint venture now.