Why Would a Company Want to Enter a Joint Venture in the Former Soviet Union or Eastern Europe?
| Published date | 01 June 1994 |
| Pages | 28-36 |
| DOI | https://doi.org/10.1108/10610429410061924 |
| Date | 01 June 1994 |
| Author | Douglas L. Bartley,Michael S. Minor |
| Subject Matter | Marketing |
One of the major shifts in economic activity
across the globe in the last decade has been
the transition from state-owned enterprises
(SOEs) to private enterprises. Perhaps no
region has felt the effects of this transition
more acutely than the nations of Eastern
Europe and the former Soviet Union.
Since the fall of the communist
governments in these nations, there has been
a major effort to privatize most of the
previously state-owned enterprises (see, e.g.,
Bartley and Minor, 1994; Chubais, 1993;
Kornai, 1992; Minor, 1993, 1994; Sachs.
1992; World Bank, 1992). The speed of
accomplishing this transition varies in each
country, and by each industry in the country.
At first glance it would appear that an
American or a West European company
would be ill-advised to enter into a joint
venture with a company from the former
Soviet Union or Eastern Europe. There are
serious obstacles such as high interest rates,
the rate of exchange, high inflation, an
unstable government, poor banking and court
systems, and the lack of supplies and
services. Any of these conditions make such a
merger questionable.
These are major issues which must be
faced, and the respective governments have
not had any experience in dealing with these
problems. On the surface it looks foolhardy to
enter into such an agreement, yet thousands
of Western firms are investing in companies
in the 15 nations of the newly independent
states (NIS), and in the many nations of
Eastern Europe.
PRODUCT
&
BRAND
MANAGEMENT
28
Why Would a Company Want
to Enter a Joint Venture in the
Former Soviet Union or
Eastern Europe?
Douglas L. Bartley and Michael S. Minor
Journal of Product & Brand Management, Vol. 3 No. 2, 1994, pp. 28-36
© MCB University Press, 1061-0421
The information presented in this article was
obtained by visiting 25 different companies in
five different nations between 1991 and 1993,
with the consulting period for each company
ranging from two days to six weeks. Many of the
companies are in the food manufacturing industry,
but the group also includes work done in
organizations such as banking, distribution,
greenhouses, a seed company, a marble company,
a chicken hatchery, and two farmers’ associations
(Co-ops). The companies are listed in the
Appendix.
To continue reading
Request your trial