In or Out: the Corning/Vitro Joint Venture
This case simulation focuses on the response of two North American firms -- Vitro and Corning -- to the challenges presented by economic integration and globalization. Some of the information and observations are draw from the author’s personal experiences. The case is not intended to support a particular approach to management, nor is there a correct solution to the case analysis. Key issues include international strategic alliances and joint ventures, corporate response to trade liberalization, organizational and national culture, and cross-cultural management and negotiation.
INTRODUCTION/SUMMARY During the NAFTA negotiations, many U.S. firms were concerned about the reduction of U.S. tariffs on flat glass, which averaged 20%, and the perceived competitive advantages Mexican glass firms would have in the event these tariffs were removed. In the fall of 1991, in the midst of the NAFTA negotiations, Vitro, S.A., the $3 billion Mexican glass maker, signed a tentative $800 million joint venture with Corning Inc. in which two mirror companies were established – Corning-Vitro and Vitro-Corning – with each company taking an equity stake in each of these JV firms. In addition, the two parent companies agreed to a series of marketing, sales, and distribution relationships to support the activities of each of the new companies. Just two years later, the joint venture was under distress, with some of the interested parties suggesting that it be dissolved.
VITRO AND CORNING
Vitro Sociedad Anonima is a 100 year old Mexican company with roughly $ 3.5 billion in sales and 40,000 employees. As Vitro positioned itself to take advantage of the emerging North American market, CEO Ernesto Martens Rebolledo described the tightrope the company must walk: "We don't want to lose our identity as a Mexican company with a unique culture and relationship with our employees, but we don't want to be battered in the world marketplace either." In 1989, Vitro completed a
INTRODUCTION/SUMMARY During the NAFTA negotiations, many U.S. firms were concerned about the reduction of U.S. tariffs on flat glass, which averaged 20%, and the perceived competitive advantages Mexican glass firms would have in the event these tariffs were removed. In the fall of 1991, in the midst of the NAFTA negotiations, Vitro, S.A., the $3 billion Mexican glass maker, signed a tentative $800 million joint venture with Corning Inc. in which two mirror companies were established – Corning-Vitro and Vitro-Corning – with each company taking an equity stake in each of these JV firms. In addition, the two parent companies agreed to a series of marketing, sales, and distribution relationships to support the activities of each of the new companies. Just two years later, the joint venture was under distress, with some of the interested parties suggesting that it be dissolved.
VITRO AND CORNING
Vitro Sociedad Anonima is a 100 year old Mexican company with roughly $ 3.5 billion in sales and 40,000 employees. As Vitro positioned itself to take advantage of the emerging North American market, CEO Ernesto Martens Rebolledo described the tightrope the company must walk: "We don't want to lose our identity as a Mexican company with a unique culture and relationship with our employees, but we don't want to be battered in the world marketplace either." In 1989, Vitro completed a