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In the fall of 1991, in the midst of the NAFTA negotiations concerning a 20% reduction of U.S tariffs on flat glass, Vitro, S.A., the $3 billion Mexican glass maker, signed a tentative $800 million joint venture with Corning Inc. in which two mirror companies were established ? Corning-Vitro and Vitro-Corning ? with each company taking an equity stake in each of these JV firms. Furthermore, the two parent companies agreed to a series of marketing, sales, and distribution relationships to support the activities of each of the new companies. Just two years later, the joint venture was under distress, with some of the interested parties suggesting that it be dissolved.
Both companies had long histories of successful joint ventures. In addition, both companies were globally oriented, and both had founding families still at their centers. But cultural differences between the two firms created many problems. Corning managers said they were sometimes left waiting for important decisions about marketing and sales because in the Mexican culture only top managers could make them, and at Vitro those people were busy with other matters. Vitro’s sales approach was less aggressive, the remnant of years in a closed economy, and this sometimes clashed with the pragmatic approach Corning had developed over decades of competition. This and many other cultural conflicts put a heavy strain on relations between the two firms.
Should the JV be terminated ?
1. if so, what would be the terms of dissolution.
2. if not, how could the JV be made to work better, give the strategies
Ultimately, issue 1or 2 must be resolved. Any solution, whether to maintain the JV, dissolve it, or somehybrid approach, should be comprehensive and specifically address these elements:
? Financial structure: describe the terms for financing existing or new ventures under the arrangement or payments for dissolution of the relationship.
? Governance: what would be the board, management, or other top-level changes in ownership and leadership under the present or revised relationship.
? Marketing: what changes should be made to agreements about marketing, distribution, and sales relationships, either under the currentarrangement or in any new structure.
? Competition/cooperation: describe the necessary changes in the way in which each company should operate in the other?s territories or markets
Attention:
1. please write the argument for the decision whether they should break up,and to support by some other real cases in Mexico and US.
2.please write about 100 words for bibliography.
3.The additional files I uploaded are helpful
4.introduction and conclusion are not expected, because it will be a part of a research.
5.If your dicision is keep them, please support it by giving the strategies to deal with their cultural problems.
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