Study Case

Topics: Peru, Management, Managing director Pages: 8 (1442 words) Published: March 21, 2013



Case Office Equipment Company (OEC)

director (a U.S. national) of the office Equipment Company (oEc) in Lima, Peru (see Map 2l . l), announced suddenly that he would leave within one month. The company had to find a replacement. OEC manufactures a wide variety of small office 1997, the managing


equipment (such as copying machines, recording machines, mail scales, and paper shredders) in eight different countries and distributes and sells products worldwide. lt has no manufacturing facilities in Peru but has been selling and servicing there since the early 1970s. OEC first tried selling in Peru through independent importers but quickly became convinced that in order


make sufficient sales

it needed to have its own staffthere.

Despite Peru's political turmoil, which at times has bordered on being a full-scale civil war, OEC'S operation there (with about 100 employees) has enjoyed good and improving sales and profitability.

OEC is constructing its first factory in Peru that is scheduled to begin operations in early 1999. This factory will import components for personal computer printers and assemble them locally. Peru offers an abundant supply of cheap labor, and the assembly

oPeration will employ approximately 150 people. The government will allow up to I0 percent of the output to be sold locally. By assembling locally and then exporting, oEC expects to be able to ward off trade restrictions on the other office equipment it imports

for sale within Peru. This plant! construction is being supervised by a U.S. rechnical ream, and a U.S. expatriate will be assigned to direct the production. This director will report directly to OEC's U.S. headquarters on all production and quality-control matrers but will rePort to the managing director in Peru on all other matters, such as accounting, finance, and labor relations.

OEC, by policy, will replace the exiting managing director with an internal candidate. The company employs a combination of home-, host-, and third-country nationals in top positions in foreign countries, and managers commonly rotate among foreign and U.S. locations. ln fact, it has been increasingly evident to OEC that international experience is an

important factor in deciding who will be appointed to top corporate positions. The sales and service facility in Peru reports to a Latin American regional office located in Coral Gables, Florida. A committee at this office, charged with selecting the new managing direc-

tor, quickly narrowed its choice to five candidates. Tom
A thirty-year OEC veteran, Zimmerman is well versed in all the technical and sales aspects required in the job. He has never worked abroad for OEC but has visited various of the company's foreign facilities as part of sales teams. He is consid-


ered competent and will retire in about four and a half years. Neither he nor his wife speaks Spanish. Their children are grown and living with their own children in the United States. Zimmerman currently is in charge of an operation that is aboutthe size of that in Peru after the new factory begins operating. However, Zimmerman's present position will

become redundant because the operation he heads is being merged with another.

Brett Harrison Harrison, 40, has spent fifteen

years at OEC. Considered highly compehas

tent and capable of moving into upper-level management within the next few years, he





Population 22.3 million

Monetary unit New sol Major languages
Span ish

Quech ua

Aymara Largest city

Major industrial areas

Cuzco lquitos


Map 2l.l Peru

never been based abroad but has worked for the last three years in the Latin American regional office and frequently travels to Latin America. Both he and his wife speak Spanish adequately, and...
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