GROWING PAINS: Entrepreneurship in a State-Controlled Economy Harvard Case Solution & Analysis

This case describes the process of start-up and development of US-Belarusian joint venture that manufactures wood pellets for sale in Belarus in the European Union. The combination of high demand for biofuels in the EU and the potential to create a good product at a low price in Belarus, provides a compelling business opportunity for the brothers Victor and Alexey Kruglov. Victor, who lives in the U.S., have had experience in business in the United States, and access to capital. Alex, who lives in Belarus, has experience in the wood products in Belarus, and has access to qualified employees. Having a well-organized work and the constant demand for its products, the company grew rapidly. However, the growth put the company at risk in state-controlled Belarus. Local agencies (city and regional authorities) perceived successful firms as sources of income to address urban infrastructure. Headquarters considered successful firms as potential of their systems over the government-controlled economy. Government involvement is likely to require firms follow specific instructions to carry out specific procedures for export, and the share of income. To avoid the threat of government control, the partners saw the three options. Stay their course, their company can continue to grow and take on the role of the main donor for the needs of the city and become part of a larger government controlled woodworking. In addition, it can control its growth, slowing down or split into several smaller firms located in different regions and are still much invisible. A third option was to move to full operations in the country, which provides a more friendly environment for business, but has a similar cultural and economic benefits. "Hide
by Julia Ivanova, Joan Winn Source: North American Case Research Association (NACRA) 16 pages. Publication Date: July 15, 2010. Prod. #: NA0015-PDF-ENG

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