Blue Ridge Spain Harvard Case Solution & Analysis

Key Issues in the case

The major issue that has been presented in the case is regarding the fact that new owners of Blue Ridge want to make an arrangement where they want to end the partnership with one of the joint venture companies, Terralumen. The regional director, Costas has been asked to make a dissolution strategy which can allow Delta Foods to move out of the joint venture with Terralumen which has been a profitable venture in the past. However, as the new owners have set unrealistic targets to be met by Terralumen, therefore the company has been unable to meet the requirements of the owners.

The major issue which Delta has been faced with is that it needs to expand itself in Germany and France while also opening up more stores in Spain; therefore, it has asked Terralumen to increase the expected returns. The issue that Blue Ridge has been facing in the current situation is the fact that Blue Ridge and Terralumen have formed a profitable partnership and relation for a long time with the decision to eliminate the partnership, as the relationship amongst the two companies shall affect in a negative manner.

Södergran is only concerned about the sales and wants to focus on operating business which can reap in even more profits and returns. The main issue as per Alvarez is that he has been given the authority of real estate trisection. He has to sell off the property, which is an ethically false decision.

Costos is the central figure in the case. The issue he has been facing is to make a strategy to form a dissolution strategy, which can allow Delta to move away from the joint venture with Terralumen.

Recommendations

Mikael Södergran:

The recommendation for Södergran in the current situation will be to allow Terralumen to run the Spanish operations. The reason is simple, as for now, Södergran should focus on France and Germany. Once they start reaping in decent profits, Södergran can purchase Terralumen and operate it according to his business rules and regulations. Moreover, by letting the business run, the company can stay in the Spanish market also which has been a positive revenue market for the company.

Yannis Costas:

In the current situation where Costas has built a sound relationship with Terralumen, the idea of forming a dissolution strategy is inappropriate. The recommendation for Costas would be to ensure that the targets for Terralumen are reasonable and achievable. As Södergran is concerned about the limited profitability of Terralumen, Costas should revise the targets and make them achievable. This would allow the two parties to continue doing business and ensuring that Terralumen stays as a joint partner for the new company.

Delta Foods:

In the end, it is recommended that Delta Foods should not go for the dissolution of Blue Ridge Spain. The company has been a long standing partner. In addition, it has been accumulating reasonable profits. The collaboration has been a beneficial one for both the parties involved; therefore, dissolution will present a negative image of the situation.

Alternatives

Mikael Södergran:

      Buy Terralumen out and take over control

      Allow Terralumen to run the Spanish operations

Blue Ridge Spain Case Solution

Yannis Costas:

      Dissolution strategy

      Revise targets for Terralumen.................

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