Essay about Alpes: Case Analysis

2683 Words Mar 27th, 2013 11 Pages
Key Issues
The ALPES S.A. case deals with Charles River Laboratories (CRL) and their consideration of a joint venture proposal with an animal vaccine company in Mexico. The senior V.P. is preparing to present the proposal of a $2 million investment for the firm. The CEO, Jim Foster, is concerned with the associated risks that CRL would be undertaking if they accept this venture. Key issues of concern are; the partnership with a relatively small, family run business; having operations in Mexico, which could pose difficulties; maintaining CRL’s focus on U.S. expansion; and the proposed partner’s lack of funds to invest, which will leave CRL to bear the entire cost of the venture.
Internal Analysis: Business Strategy Diamond 1.
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EXTERNAL ANALYSIS: PESTEL 1. Political Factors
The NAFTA agreement with Mexico resulted in an increase in vaccine production and had therefore created a direct impact on ALPES. Some businesses left Mexico, although the overall effect of NAFTA proved positive as excess competition failed to materialize. Moreover, changes to European and Asian vaccine regulations may result in an increase demand for SPF eggs from Mexico. 2. Economic Factors
There is a large market for CRL’s SPF eggs, as they have potential customers in more than 15 countries and a shortage of supply by 5-10% worldwide. Although CRL is a market leader in the commercial supply and production of laboratory animal models, Mexico is known for its unstable currency and market. The public debt is 42.9% of GDP, which confirms ALPES’ lack of financial resources. Unfortunately, business in Mexico has a high borrowing cost and the inflation rate is averaged at approximately 4% over the most recent three years. Furthermore, investment is inefficient and weakened by violence, corruption, and instability. 3. Sociocultural Factors
Mexico is the largest Spanish speaking country in the world with a population growth rate at 1.08% and a labour force mostly employed within the agricultural sector. ALPES’ two main customers are InterVet, a company based in the Netherland who is one of the world’s largest poultry vaccine

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