In the 1950s, Taylor Industries entered the Latin American market by forming a joint venture with Clemente Industries in San Marco to manufacture kitchen appliances. The joint venture flourished in the 1960s, and Taylor Industries eventually purchased 100% ownership. The company earned steady profits from the Latin American subsidiary until the local government was overthrown by a military faction in the late 1970s. The ruling generals expropriated all foreign owned companies, including the San Marco kitchen appliances plant.

San Marco is now ruled by a democratic government that has been in power for over a decade. Clemente has approached Taylor to propose another joint venture. The local government is offering a generous incentive package to attract foreign investment.

You have been asked to travel to San Marco to begin planning and staffing.

1. What are the potential problems that face the new venture?

2. What are the potential advantages of this venture for the company?

3. Would you recommend hiring local managers or Canadian managers for the top and middle management positions? Why or why not?

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