AMERICAN RICE INC. IN VIETNAM

Satisfactory Essays
TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

I. PROBLEM STATEMENT 2

II. ANALYSIS 12 A. Impact of the Joint Venture for Vinafood II 12 B. Impact of the Joint Venture for American Rice Inc. 15 C. Impact of the Joint Venture for Vietnam's economy 16 D. Culture of trust in Joint Ventures 16

III. ALTERNATIVES 23 A. Parboil Facility 23 B. Fully-Owned ARI Business in Vietnam 26

RECOMMENDATIONS & CONCLUSION 28

EXECUTIVE SUMMARY
When American Rice inc. decided to enter the uncertain Vietnamese market, it decided to enter a joint venture with a local company, Vinafood II. Following the creation of the joint venture, significant interrogations were raised on the impact of joint ventures on Vietnam's economy and both of the participating companies. Since ARI (American Rice Inc.) moved quickly into the Vietnamese market and Joint Venture, there are questions raised on whether this was good choice of investment for the company and if it should further invest in this market by purchasing a parboil facility on its own. This investment of 8 million USD is significant and over twice the amount invested in the Joint Venture and Vinafood II does not intend to invest in this venture.

PROBLEM STATEMENT
There is a need to evaluate the impacts for American Rice Inc. of the JV created with Vinafood II, which will be done by illustrating both sides' benefits and disadvantages in the transaction, both sides responsibilities as well as Vietnam's government interests. It is also important to define if it would have been a better choice for ARI to establish a wholly owned subsidiary in Vietnam instead of the joint venture. Finally, ARI is also faced with a decision to make in regards to significant direct investment in a parboil facility. ANALYSIS
When American Rice Inc. and Vinafood II got into a Joint Venture, it seems the importance of establishing a trusting relationship between the two entities was underestimated. The sense of

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