There are some key issues that Charles River Laboratories (CRL) Board of Directors has to consider before they can decide whether or not it would be beneficial to enter into a joint venture with ALPES. First of all, the CEO of B&L Jim Foster, viewed a joint venture as a potential distraction for Specific Antigen-Free Avian Services (SPAFAS) as it continued to rapidly expand in the United States. He is vem ry skepticcal about partnering with a small family owned company that was not making a new investment of their own, but rather relying solely on CRL’s capital to fund the project. He is worried about risks of investing in a country like Mexico, and after fifty years in business, CRL had never successfully conducted business in Mexico.
Aside from Foster, Dennis Shaughnessy needs to convince the board that a joint venture with ALPES was in CRL’s best interests. The board was primarily concerned with the large number of intercompany transactions between the Romero companies, and the complex organizational structure of Grupo IDISA, which consisted of five legally independent companies that were all owned by the same family. They are concerned with the lack of transparency of a company that only held board meetings once a year and did not appear to have strategic plans, operating budgets, meeting minutes, or other formal corporate documents that are routine for companies in the US. The board knew little about ALPES, and they were especially concerned with media reports that portrayed Mexico as economically corrupt, and economically instable.
CRL has a few alternatives that should be presented to the board along with the option to get into a joint venture with ALPES. These alternatives may lead to a more successful venture and may allow the board members to rest assured that their investments will produce a quality return in the right amount of time. The first alternative would be for CRL to deny the offer of the joint...