REV: AUGUST five, 2008
DANIEL ISENBERG PAUL MARSHALL
To JV or perhaps Not To JOINT VENTURE? That Is the Question (for XTech in China) On October 13, 2005, Reinhold Hesse, CEO of Extrusion Technology Incorporation. (XTech1) boarded the plane in Xiamen, China after a day of conferences with the Xiamen Foreign Expense Board. This individual thought about the upcoming conference in Boston with XTech top administration, including Jim Sharpe, owner of XTech and head of product management, along with Jim's wife, company treasurer Debby Stein-Sharpe, and three other management. The only item on the goal: Should Xtech set up oprations in Chinese suppliers, and if therefore , how? The team would make a decision among several options. Hesse had promised to formulate the pros and cons of each and every and lead XTech into a decision. A single option was to partner with Suitable Jacobs (IDJ) of New Hat, XTech's long-time supplier, which in turn had merely established a joint venture in Xiamen and had a Chinese language general administrator and spare factory space. IDJ expected some equity in a fresh joint venture (JV) between the two companies. An additional JV option was to acquire Nextron, a 1000-person Taiwanese maker of housing parts for digital equipment, having a plant forty five minutes by Shanghai. A third option was to partner with Southco, a 1200-person Philadelphia-based machine of fittings for electronic digital equipment, with four completely equipped plant life in Shenzhen and Shanghai and a really strong commitment to working in Chinese suppliers. A next option was to establish a totally owned subsidiary (" WOFEвЂќ or totally owned foreign enterprise, obvious " wuh-feeвЂќ). Hesse was leaving Xiamen impressed and surprised by apparent convenience of the procedure that was described to him in clear English by the International Investment Table. Finally, Hesse was likewise contemplating whether to wait Xtech's China and tiawan operation to many future period, to be chosen later.
1 For qualifications please consider the case " Jim Sharpe: Extrusion Technology, Inc. (Abridged), вЂќ by H. Kent Bowen and Barbara
Feinberg, HBS Number 603-084 (Boston: Harvard Organization School Submitting, 2003). ____________________________________________________________
Older Lecturer Daniel Isenberg and Professor Paul Marshall ready this case. HBS cases are developed solely as the foundation for class discussion. Cases aren't intended to act as endorsements, sources of primary data, or illustrations of powerful or inadequate management. Copyright В© 3 years ago, 2008 Chief executive and Geniuses of Harvard College. To order copies or demand permission to reproduce components, call 1-800-5457685, write Harvard Business College Publishing, Boston, MA 02163, or head to http://www.hbsp.harvard.edu. Zero part of this publication can be reproduced, trapped in a retrieval system, found in a spreadsheet, or sent in any type or by any meansвЂ”electronic, mechanical, copying, recording, or perhaps otherwiseвЂ”without the permission of Harvard Organization School.
To JOINT VENTURE or To not JV? That Is the Question (for XTech in China)
Extrusion Technology Takes Form
In 1987 37-year-old Rick Sharpe (HBS вЂ76) attained Extrusion Technology (later known as XTech) using a 10-year job in market. When acquired, Extrusion Technology manufactured lots of customized extruded aluminum parts for New England-based industrial buyers in market segments ranging from construction to buyer durables. Sharpe restructured the ailing purchase located outside Boston, Ma, and grew it from less than $4 million in revenues to $30 million. (See Display 1 intended for historical revenues and money flows. ) However , Sharpe was ambivalent about the growth because his and his wife's personal goal was to produce a business that might allow them to spend time for along with community affairs. Sharpe recalled: " There were become owned or operated by the business, not the other way around. Even following 10 years, Debby was pulling all-nighters two times a month. I needed to be able to walk my kids to...