Strategic Management 75-498

Case Report

MABE: LEARNING TO BE A MULTINATIONAL

Strategic Management 75-498

Instructor: Dr. Hongwei Xu

University of Windsor

Clarke Gallie - 104392919

Sijie Wang - 104503643

Kyle Hope - 104345041

Spencer Farmer - 104446740

Kerianne Ndimubandi - 104268281

November 6th, 2018

KEY ISSUES

Mabe is an international furniture and appliance manufacturer, partnering with many other companies in each country to further push their international distribution. In 2008, Mabe formed a JV partnership in Russia to import goods to sell. The international vice-president Ramiro Perez is evaluating the decision of a joint venture with Fagor, and determining if entering Russia was the right choice. Several major issues have risen due to the joint venture such as high competition within the market. Just after Lehman brothers closed their doors, several other companies entered the appliance and furniture market in Russia. One issue it the major cultural differences Russian businesses operate in. Since locals have a view towards foreigners, Russian business owners have an advantage from companies started overseas. This is also added to corruption, and how Russian politics have heavy involvement with large corporate businesses. Another problem is geolocation of the market itself, although Russia is very large, companies tend to focus on core regions such as Saint Petersburg and Moscow. Additionally, Mabe’s JV doesn’t have a manufacturing company on sight, and imports goods which increase their profit margin from other companies.

Based on these issues, there are various problems that Jamiro has to confront and make decisions on, regarding the joint venture strategy. Some of these key decisions are whether Fagor is the best partner for the venture and if Russia is the right market to pursue (India, China, etc). Jamiro must also take into consideration how the JV currently operates by importing goods compared to others in the area, and potential shifts in market share from the Russian market. Finally, the vice-president needs to reflect on lessons learned from this new market JV, so he can later implement this learning curve when entering new markets.

EXTERNAL ANALYSIS

PESTEL Analysis

The PESTEL analysis is an external analysis framework used to help identify market conditions, macroeconomic trends, and how this could have influence businesses operating in the overall industry and market.

Political

Russia is a country known for having a high level of influence from political nomads interfering with the success or failure of large businesses. A survey conducted over 158 investors and non-corporate investors from 2009 reported concerns over political interference, due to factors such as a weak legal and legislative system, bribery,  and corruption (although, prior to the 2008 financial crisis, business and political leaders had high hopes for Russia's economy).