After years of focus on the Asian market, one of the major dairy firms of the Netherlands is considering a joint venture to enter the Brazilian market, especially in baby foods. Its potential local partner is a large family owned industrial conglomerate specializing in industrial complex building. This partner aims to diversity in industries closer the consumer market, especially in industries that are close to the upcoming middle class. As the young unit deputy manager for baby foods you are asked to make a proposal to the board for the structure of the merger. Two issues are especially important. A first issue is the way in which revenues are shared. This is closely linked to equity shares in the joint venture. Second, it is an open question which of the partners should organize and run the operations. Clearly, the Dutch dairy firm would like to leave the operations mostly to the Brazilian counterpart; however, the board aims to make agreements in areas in which it expects the largest deviation when compared to the situation in the Netherlands.

Write your advice to the board.