Mabe Case Analysis

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Decision Criteria
MABE’s decision criteria for evaluating their current position as part of a joint venture in Russia includes: * The joint ventures’ ability to generate future sales growth and substantial operating margin * The impact of Russia’s changing external environment on the joint venture and MABE as a whole * Other global opportunities for growth in emerging markets, including China and India
OPTION 1. Continue Operations in Russia with the JV
* The JV may have not yielded the results the venture intended on achieving, but the potential for earning increased profit exists. They will have to work hard for it to produce, as it should. * Amount of expenses currently incurred
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This may be costly to MABE but might be a necessity. * Cutting ties to the Mexican companies could be potentially dangerous if the new implementation plan does not work and MABE has to resort back to its old operational procedure.

OPTION 3. Leave the Russian JV, and move on.
* Four years have been devoted to learning the Russian culture, and the industry in which the JV is operating within. * Leaving the market will expend already invested money and time
* Industry problems in Russia may translate into problems for the JV. The decrease of Russia’s human capital can be just as much of a problem for the JV as for Russia. * Corrupt law enforcement and judicial systems along with deficient private property rights protection can further complicate the standing of the JV in Russia.

Recommendation Due to the momentum that MABE has been gaining with their joint venture operations in Russia, the best option for MABE to go for is the continuation of their Joint Venture. The joint ventures’ market share has increased from .9 to 4.9 percent in a short 4 years. Strong growth at this rate could potentially result in the joint venture earning Russia’s fourth largest market share in the appliance industry, surpassing the market share held by LG, which is 6%. The joint venture has worked very hard building a strong organizational culture with deep Russian ties and understanding of the domestic culture and

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