Trouble in Paradise with Comments
HBR CASE STUDY
Trouble Paradise by Katherine Xin and Vladimir Pucik
F
The Zhong-Llan Knitting Company joint venture in China is one of the region's shining success stories. So why is generai manager Mike Gravesthinking about pulling the plug on it?
ROM Mike Graves's tall windows, which were draped in red veivet, the view of Shanghai was spectacular: the stately old Western-style buildings, the riot of modem skyscrapers, the familiar needle of the TV tower. But today Mike barely noticed it. Clenching a copy of his Chinese partner's proposal for another acquisition - it would be the company's fourth - he paced the floor and replayed in his mind that morning's unsettling phone call.
He had called his boss. Bill Windier, at headquarters in Ohio, hoping to get a nice quote to inject into the brief remarks he was to make at that day's banquet celebrating the joint venture's tenth anniversary. But as he gave Windier a quick rundown of what he intended to say - mostly about the joint venture's progress toward "world-class quality"Mike could sense his boss's growing frustration. Aboutfiveminutes into the call. Windier cut Mike off in midsentence.
saying,"Don't throw your shoulder out patting yourself on the back." Windier reminded Mike about the margins he was looking for across all of Heartland Spindle's businesses. "A 4% ROI is pathetic," Windier said. "We've been in there ten years, Mike. The numbers shouid look better by now." He said he was looking for a 20% ROI, adding that such a number could surely be achieved through greater efficiency and more automation. And in Windler's view, the company had at least 1,200 employees too many. "That needs to be fixed, fast," he said. Mike knew his boss wouldn't take no for an answer, but he had also learned that his Chinese partners would never agree to drastic moves such as the layoffs suggested by Windier. It was beginning to look as though the five good years he had spent here as general manager might be
Trouble Paradise by Katherine Xin and Vladimir Pucik
F
The Zhong-Llan Knitting Company joint venture in China is one of the region's shining success stories. So why is generai manager Mike Gravesthinking about pulling the plug on it?
ROM Mike Graves's tall windows, which were draped in red veivet, the view of Shanghai was spectacular: the stately old Western-style buildings, the riot of modem skyscrapers, the familiar needle of the TV tower. But today Mike barely noticed it. Clenching a copy of his Chinese partner's proposal for another acquisition - it would be the company's fourth - he paced the floor and replayed in his mind that morning's unsettling phone call.
He had called his boss. Bill Windier, at headquarters in Ohio, hoping to get a nice quote to inject into the brief remarks he was to make at that day's banquet celebrating the joint venture's tenth anniversary. But as he gave Windier a quick rundown of what he intended to say - mostly about the joint venture's progress toward "world-class quality"Mike could sense his boss's growing frustration. Aboutfiveminutes into the call. Windier cut Mike off in midsentence.
saying,"Don't throw your shoulder out patting yourself on the back." Windier reminded Mike about the margins he was looking for across all of Heartland Spindle's businesses. "A 4% ROI is pathetic," Windier said. "We've been in there ten years, Mike. The numbers shouid look better by now." He said he was looking for a 20% ROI, adding that such a number could surely be achieved through greater efficiency and more automation. And in Windler's view, the company had at least 1,200 employees too many. "That needs to be fixed, fast," he said. Mike knew his boss wouldn't take no for an answer, but he had also learned that his Chinese partners would never agree to drastic moves such as the layoffs suggested by Windier. It was beginning to look as though the five good years he had spent here as general manager might be