Alpes Case
Group Case
ALPES S.A.: A Joint Proposal
Table of Contents
Topic Page Problem Identification 1 External Analysis 1 Internal Analysis 3 Financial Analysis 5 Alternatives 5 Decision Criteria 6 Evaluation of Alternatives 6 Recommendation 6 Action Plan 7 Contingency Plan 7 Appendix 8
Key Problem Identification: The main issue in this case surrounds Dennis Shaughnessy, senior vice-president for Corporate Development and general counsel for Charles River Laboratories (CRL), and the CRL board of directors and CEO Jim Foster. Shaughnesssy has proposed that CRL undertake a $2,000,000 joint venture project with the Mexican-based company ALPES in the development of a new SPAFAS facility, which quantitatively appears to project high returns. The issue at hand involves Shaughnessy selling the idea to the speculative board of directors and CEO, all carrying many concerns regarding the social and economical safety of a decision to do business in Mexico. Should the CRL board of directors and CEO accept the proposal? Or should they demand an alternative? The following analysis is based under the assumption of a CRL/ALPES joint venture.
External Analysis:
Industry Analysis CRL is in a medical laboratories industry where they supply animal models for use in discovery R&D and the testing of new pharmaceuticals. The key success factor for CRL includes low-cost leadership by maintaining economies of scale. The company can achieve that by acquiring profitable companies and joint ventures. The industry structure has moderate level of rivalry with minimal major companies competing over market share. The industry is at the growing stage after the NAFTA implementation. As the industry dynamic changes because of the NAFTA implementation, CRL can have strategic alliances or joint ventures in Mexico where the cost of production is low, helping them maintain low cost leadership. CRL’s primary competitor, Loham-Tierzucht International, is also trying to expand
ALPES S.A.: A Joint Proposal
Table of Contents
Topic Page Problem Identification 1 External Analysis 1 Internal Analysis 3 Financial Analysis 5 Alternatives 5 Decision Criteria 6 Evaluation of Alternatives 6 Recommendation 6 Action Plan 7 Contingency Plan 7 Appendix 8
Key Problem Identification: The main issue in this case surrounds Dennis Shaughnessy, senior vice-president for Corporate Development and general counsel for Charles River Laboratories (CRL), and the CRL board of directors and CEO Jim Foster. Shaughnesssy has proposed that CRL undertake a $2,000,000 joint venture project with the Mexican-based company ALPES in the development of a new SPAFAS facility, which quantitatively appears to project high returns. The issue at hand involves Shaughnessy selling the idea to the speculative board of directors and CEO, all carrying many concerns regarding the social and economical safety of a decision to do business in Mexico. Should the CRL board of directors and CEO accept the proposal? Or should they demand an alternative? The following analysis is based under the assumption of a CRL/ALPES joint venture.
External Analysis:
Industry Analysis CRL is in a medical laboratories industry where they supply animal models for use in discovery R&D and the testing of new pharmaceuticals. The key success factor for CRL includes low-cost leadership by maintaining economies of scale. The company can achieve that by acquiring profitable companies and joint ventures. The industry structure has moderate level of rivalry with minimal major companies competing over market share. The industry is at the growing stage after the NAFTA implementation. As the industry dynamic changes because of the NAFTA implementation, CRL can have strategic alliances or joint ventures in Mexico where the cost of production is low, helping them maintain low cost leadership. CRL’s primary competitor, Loham-Tierzucht International, is also trying to expand