Reference no: EM13836000

Case study:

RJR formed a joint venture with Gallaher Group PLC in 2002 to produce and sell a limited variety of American-blend cigarette brands that will be marketed in France, Spain, Italy, and the Canary Islands. The company, known as R.J. Reynolds - Gallaher International Sarl, is based in Switzerland. RJR has a large global presence, with subsidiaries in 57 countries including Finland, Vietnam, Poland, and Tanzania. RJR now controls nearly 4 percent of the international cigarette market and has witnessed a 75 percent global sales increase since 1990.

Global sales now account for 41 percent of the tobacco sales for RJR. RJR purchased a majority share of the Tanzanian Cigarette Company in 1995 for $55 million. This was the largest single investment in the country since it achieved independence in1961. The Dar Es Salaam plant was quickly renovated and will soon produce 4 billion cigarettes per year, making it one of the largest producers in Africa. RJR's facilities also operate in Turkey where they account for half of the country's exports. (David, 2005, p.430)

Reference:

David, F.R. (2005). Strategic management: Concepts and cases (10th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

Step 1: Initial response

1. Illustrate the difficulties of establishing and managing a subsidiary in terms of strategic ethical considerations - not only because of differences in corporate (organizational) cultures, but also in national cultures and laws.

2. Explain in your own words why RJR prefers to work with a local partner to establish a joint venture rather than simply acquiring a company in another country. Support your rationale, based not only on ethical considerations, but also on other external factors that you have learned throughout this course.

Reference: Unknown (2014). Introduction to strategic management. Washington, D.C.: The Saylor Foundation.