As a global market leader, Charles River Laboratories (CRL) is considering a joint venture with ALPES, a family-owned franchise and sole producer of specific pathogen-free (SPF) eggs in Mexico. Charles River Lab is serving over 15 countries worldwide with production and supply of laboratory animal models for research, development and testing of new pharmaceuticals. With the increasing demand of SPF eggs worldwide, Dennis Shaughnessy can easily envision the long-term growth of CRL and profitable opportunity with the joint venture. However, Jim Foster, Chief Executive Officer of CRL and the board members have to consider this proposal as a growth opportunity that could easily be available to their competitors in the market.
Charles River Laboratories had a strategic growth objective of 12 per cent to 15 per cent annually and its entire business bye 20 per cent. Joint Venture is an effective approach to fill “strategic growth gap” of 5 percent to 8 percent per year. CRL considered one of the most profitable divisions in the industry, served customers in biotechnology firms, animal health, medical device, diagnostic companies, hospitals, academic institutions and government agencies worldwide. Also as a current owner of Specific Antigen-Free Eggs and Avian Services, (SPAFAS), CRL scheme was to produce inactivated human vaccines from commercial eggs to SPF eggs. Convincing human vaccine producers to switch from commercial eggs to SPF eggs was costly and time consuming. International franchise fee did not contribute enough in SPAFAS revenue and growth which led the plan purchase the franchises in Mexico (ALPES) to establish the supply of SPF eggs internationally. ALPES realizing the future growth opportunity refused the offer but willing to comply a joint venture with CRL. With SPAFAS’s international growth of 50 million in four to five years, the demand of SPF eggs should be considered as a crucial factor to attain competitive advantage in the...
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