Internal Analysis: Charles River Laboratories
ALPES S.A.: A JOINT VENTURE PROPOSAL (A)
Situation Analysis
Internal Analysis (Charles River Laboratories) Strength: The Company has potential customers in more than 15 countries worldwide such as biotechnology firms, animal health, medical device, hospitals, academic institutions and government agencies. Then, CRL is market leader of industry about commercial production and supply of laboratory animal models. Weakness: Cost per unit for produce SPF egg was more expensive than normal egg. So, selling price per unit was high and some of customer unaware about SPF egg.
Internal Analysis (ALPES S.A.) Strengths: ALPES as a member of IDISA group which owned the large poultry operation that is physical resource of company. Next, ALPES has human resource who is Miguel; he had completed Ph.D. in chemistry at Harvard University and starts his job for U.S. Company in Mexico. So, he has more experience and generates new idea to reduce cost and increase reliability by vertically integrating. In addition, the company was readily to supply SPF egg and embryos because they own well-established production facilities. Moreover, a company has potential customers which are InterVet and Anchor. (InterVet is Netherland based company that it was one of the world’s largest poultry vaccine manufacturers and Anchor is Mexican subsidiary of German company) …show more content…
Weakness: From financial ratio analysis, it shown that ALPES has problem about lack of financial resources which Debt to Asset is 19.95% and Debt to Equity is 24.91%.
Both of ratios mean that company has problem to borrow fund form external and fund form shareholders (internal). In addition, there is negative real rate of return in last three
years.
External Analysis (Mexico) Opportunities: Because of North American Free Trade Agreement (NAFTA), it has effected to increase Vaccine production in Mexico and the company might easily to expand their product to Unites State and Canada. Next, change in European and Asian Vaccine Regulation was affected to increase demand for SPF eggs.
Threats: CRL will take higher risk when they invest in Mexico because unstable currency and uncertain market. For ALPES, if they would like to expand business in Mexico, they will have high borrowing cost.
Problem/Key Issue According to the case, Dennis Shaughnessy who is senior vice-president of Corporate Development and General Counsel for Charles River Laboratories (CRL) would like to request for $2 million from board of direct to create SPF egg farm by joint venture with ALPES in Mexico. Both companies can gain opportunities in this business but there are many problems such as CRL has bad experience to enter in Mexico and APLES has problem in lack of their financial resources. Therefore, the question is that “How does CRL expand their business in Mexico to achieve their growth objective?” and “What strategies that CRL and ALPES should implement in order to gain opportunities in Mexico?”
Situation Analysis
Internal Analysis (Charles River Laboratories) Strength: The Company has potential customers in more than 15 countries worldwide such as biotechnology firms, animal health, medical device, hospitals, academic institutions and government agencies. Then, CRL is market leader of industry about commercial production and supply of laboratory animal models. Weakness: Cost per unit for produce SPF egg was more expensive than normal egg. So, selling price per unit was high and some of customer unaware about SPF egg.
Internal Analysis (ALPES S.A.) Strengths: ALPES as a member of IDISA group which owned the large poultry operation that is physical resource of company. Next, ALPES has human resource who is Miguel; he had completed Ph.D. in chemistry at Harvard University and starts his job for U.S. Company in Mexico. So, he has more experience and generates new idea to reduce cost and increase reliability by vertically integrating. In addition, the company was readily to supply SPF egg and embryos because they own well-established production facilities. Moreover, a company has potential customers which are InterVet and Anchor. (InterVet is Netherland based company that it was one of the world’s largest poultry vaccine manufacturers and Anchor is Mexican subsidiary of German company) …show more content…
Weakness: From financial ratio analysis, it shown that ALPES has problem about lack of financial resources which Debt to Asset is 19.95% and Debt to Equity is 24.91%.
Both of ratios mean that company has problem to borrow fund form external and fund form shareholders (internal). In addition, there is negative real rate of return in last three
years.
External Analysis (Mexico) Opportunities: Because of North American Free Trade Agreement (NAFTA), it has effected to increase Vaccine production in Mexico and the company might easily to expand their product to Unites State and Canada. Next, change in European and Asian Vaccine Regulation was affected to increase demand for SPF eggs.
Threats: CRL will take higher risk when they invest in Mexico because unstable currency and uncertain market. For ALPES, if they would like to expand business in Mexico, they will have high borrowing cost.
Problem/Key Issue According to the case, Dennis Shaughnessy who is senior vice-president of Corporate Development and General Counsel for Charles River Laboratories (CRL) would like to request for $2 million from board of direct to create SPF egg farm by joint venture with ALPES in Mexico. Both companies can gain opportunities in this business but there are many problems such as CRL has bad experience to enter in Mexico and APLES has problem in lack of their financial resources. Therefore, the question is that “How does CRL expand their business in Mexico to achieve their growth objective?” and “What strategies that CRL and ALPES should implement in order to gain opportunities in Mexico?”