Martinez Construction Company in Germany

2200 Words Nov 15th, 2012 9 Pages
MARTINEZ CONSTRUCTION COMPANY IN GERMANY

1. General presentation of the case study (Summary)

Martinez Construction is a well-established construction company in Eastern Spain. Because of a recent decline in contracts in the Spain society, Martinez Construction Company needed to expand to international market in order to survive (expand and grow). After a survey in the international market, the newly formed Democratic Germany seemed the perfect place. Furthermore, the best solution was to acquire an existing firm with the help of Treuhandanstalt (privatization agency). This was a result of the lack of liquidity of the Martinez Company.
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2.2. Identification of the causes that led to the appearance of this/these problem(s):

The problems arise mainly because the CEO of the Spanish company made his decisions of expansion in Germany on a blue-eyed approach. The idea occur to him when meeting German tourists in Spain that were relax and happy without taking into account that the East Germans were not allowed to travel so far and there are important differences between the mentality of Western and Eastern Germany.
Another cause is represented by the Manager’s idea that he can develop a well-established business in the Eastern German because of cheap labor and raw materials. His choice to expand on German marketplace was not based on rational facts or clear developed objectives.
Despite the fact that the management of Martinez Company conduct a series of research regarding the different market entry strategies into German markets which ended with the solution of acquiring a company from THA, a market selection can not rely only on information based on secondary sources. There are always certain information that can only be found when visiting the potential marketplace (distributors, suppliers, the existing management and employees).

2.3. Identification of the potential negative effects that will appear if the problem(s) is/are not going to be solved:

Negative effects on the short-run: * Lack of experience in managing