Trouble in Paradise - article by Katherine Xin and Vladmir Pucik - blog by Karl Janowski
This article was published in Harvard Business Review
This article gives a fictitious story about Mike. Mike is a manger in China who is having problems with the equity joint venture that he has inherited. His home company is not happy with the 4% ROI that they are getting out of the venture. They want to update equiptment and layoff employees to create higher quality products to pursue 20% ROI. Homebase assumes Mike will make this happen. The Chinese partners do not want to layoff anyone, they want to expand. At a dinner the Chinese high level manager gives a speech that sets the expectations that they will expand. What should Mike do? Four authors give their opinions.
Summary of what Mark should do
Mike needs to determine what the goals of the EJV were when they started and if the goals are still true or if the long term goals of each member of the EJV are different. Is this relationship worth saving?
Mike needs to be honest when communicating with his homebase.
Mike needs to realize that relationships drive business in China and that senior management from back home needs to be a part of forming these relationships.
4% ROI is pretty poor, what is the problem: the market, the venture, or Mike?