1. Your company, Quiet-Maid, manufactures home washers and dryers in the United States that use a patented technology to make them run virtually silent. Having been successful in the United States, Quite-Maid's CEO wants your opinion on exporting to the European market.
a. What are the advantages of Quite-Maid exporting appliances to Europe from the United States?
b. What problems do you foresee with exporting large appliances there? What barriers and or problems do you think the company might face?
c. What factors might influence success in Europe?
2. The CEO now decides that the best course of action is to enter the European market by forming a joint venture with a Spanish manufacturer of home appliances. Quiet-Maid would contribute its quiet technology and financial and technical assistance in return for a 40 percent share. The Spanish company would oversee manufacturing, sales, and service and receive a 60 percent share.
a. Why did Quiet-Maid choose a joint venture as its vehicle to enter Europe? In addition to manufacturing, sales, and service, what else might the local Spanish firm do for the joint venture?
b. What reasons do you think Quiet-Maid had for not starting a new subsidiary in Europe on its own?
3. During negotiations, Quiet-Maid's management went to Spain to review its prospective partner's finances. During their visit, they were asked "which set of books and numbers" they wanted to review-the real financial records of the Spanish company or those used to report to Spanish tax authorities. Quiet-Maid became uneasy about their potential exposure as a minority partner in a foreign investment with this company, and decided to withdraw.
a. What did Quiet-Maid discover on its trip to Spain?
b. What are the risks of making an investment in this foreign joint venture?
c. If Quiet-Maid decides that there is no other possible joint venture partner available in Europe, and if it does not have the resources to start a new subsidiary, what is its alternative? What other significant assets does Quiet-Maid have that it could leverage to still do business with the Spanish firm? Explain.