Search results for: 'Subsidiaries'
The internationalization conundrum of S&H DE1-222-I
Joe and Alex, father and son and president and CEO of a family-owned business called Steel & Heavy (S&H) had to make a key strategic decision. They needed to set up a new manufacturing subsidiary near an efficient port and narrowed their choices down to a port in Spain or one in China. Joe was in favor of China (Shanghai) because of its size, growth and access to the Asian markets. The Shanghai port was also very large and efficient and labor costs were cheaper than in Europe. But, it was quite far from the headquarters. Alex preferred Spain because of the smaller geographical and cultural distances from the headquarters in Italy, the large metal production cluster already present there and the low cost of coordinating with Italy. Plus, the port in Gijón is the sixth largest in Spain and one of the most modern in terms of infrastructure. However, it was still small compared to the port in Shanghai and the final markets were still far from Gijón. Although Joe owned the majority of S&H’s shares, he did not want to impose a decision on his son and family. When pondering the decision, Joe decided to call T+P, S&H’s partner. T+P’s CEO knew that they would also need to create their own new subsidiary because the international venture was a joint decision. The case wraps up with Alex and Joe calling the CEO to tell him their arguments but does not reveal what the final decision was.Academic Area:Strategy