MARTINEZ CONSTRUCTION COMPANY IN GERMANY
Juan Sanchez glanced out the window of the Boeing jetliner and admired the countryside below. The overcast skies failed to dampen his enthusiasm for the challenges and opportunities he and his company now faced. Two generations of local services had done little to prepare Martinez Construction for the coming days. Nevertheless, Juan remained confident that once the spirit of cooperation and trust was established, the new German operation would be a success.
Martinez Construction Company
Martinez Construction is a well-established construction company in Eastern Spain. Founded in Barcelona in the mid-1940s, its reputation and quality of service ...view middle of the document...
They also depended on accountants, lawyers, consultants, and others to provide advice. After the initial research and discussion of the alternatives with other members of management, Diego has come to the conclusion that the best approach to this venture will be through the acquisition of an existing company from the Treuhandanstalt. This decision was made after concluding that Martinez Construction lacked the resources necessary to risk a Greenfield operation. Added to this was the certainty that an alliance with other German companies would not allow Martinez Construction to establish itself as a serious competitor in the international construction market. Diego chose his brother-in-law and manager of the Barcelona branch of Martinez Construction, Juan Sanchez, to act as the negotiator for the company with THA. Although Juan is unfamiliar with German business practices, Diego feels that Juan’s friendly character and expertise in the needs of the company will ensure the establishment of the necessary trust to build a strong cooperative venture with THA. Juan will be accompanied by Diego’s nephew and projected manager of the new German acquisition, Miguel Martinez. Miguel is the youngest and most educated of the Martinez managerial staff. His background includes a business degree from a university in the United States, as well as years of employment in the family business. Although lacking in practical managerial experience, it was largely due to his influence that Diego saw the wisdom and necessity of expanding operations abroad. Miguel’s opportunity has fuelled his optimism despite the challenges he faces in the management of a foreign subsidiary.
Because of the collapse of communism in the German Democratic Republic, the two Germanys were finally going to be reunified. The Treuhandanstalt was created in what was the German Democratic Republic. The sole purpose of the THA was to find private buyers for some 13,500 businesses and 15,000 parcels of real estate that had been previously owned by the German Democratic Republic. The government knew that the economy in this sector had to be stimulated quickly. There were hopes that many investors would take advantage of the new markets opening up. However, little thought was given to the immensity of the job. No guidelines were issued, which later led to charges of dubious deals, and limited funds were made available to run the agency. Therefore, any firm wishing to purchase an existing facility in East Germany had no choice in the matter – they had to deal with the THA. The primary job of the THA was to sell the companies and to match existing companies with buyers. However, this proved to be an almost impossible task because the THA had insufficient or no information about the financial positions of the companies it was supposed to sell. In some cases, it could not ascertain what companies were to be sold. The firms wishing to purchase properties through the THA were...