1. Background Information

People / Key Players

Geoff Dryden VP of Finance in Europe

Francisco Alvarez VP of Restaurant Operations

Mikael Sodergran VP International Operations for Delta

Yannis Costas European Managing Director for Blue Ridge

Chronology of Events
Delta from USA and Terralumen from Spain entered into a joint venture for the subsidiary in Spain
The Company was successful under the management of Yannis Costas from Greece.
Delta has an aggressive business strategy where it is looking for ways to expand to other markets through the process of acquisition as the most appropriate market strategy.
Delta wants to take advantage of the looming business prospects and the projected growth by making sure that their partner is unable to cope with the business environment to facilitate dissolution of the joint venture.
1. Key Facts
Delta is an American company that has been in operation for some time and looking to grow its business in Europe.
Delta’s ventures in other countries have not been doing well thanks to the company’s strategies and management practices.
Terralumen is a Spanish company that is family owned and enjoyed business protection in Spain before Spain’s entry in the EU. The joint venture allowed the company to grow in market share across Spain.
The top management appointed by the companies comes from different countries, which means that they come from different cultures from the Spanish ones.
The American culture is based on individualism while the Spanish approach is one that fosters interpersonal relationships.
1. Concepts
The business cultures in Spain and USA are different. The US is a country based on competition and individualism. Companies are only concerned about their profits and the revenue.
The Spanish and the Greek business culture is one that is collective and based on business leaders focusing on interpersonal relationships. Therefore, Costas was in good relationship with the Spaniards operating Terralumen.
Ethical business practices are one of the main issues that surround the case study with Delta engaged in unethical business practices behind their partner Terralumen. For example, Delta wanted Terralumen to fail in their loan payment to ensure that it was to have a foundation on which to dissolve the union. All these were done without any communication to Terralumen.
The use of acquisitions as the market entry method is also outlined as one of those prospects that may not lead to better results. Delta wanted to make an entry based on the projected growth at the expense of their partner. However, they were outwitted in the end with most of the appropriate assets going to Delta.
The issue of culture plays a major role when it comes to joint ventures. Costas was not supportive of the project that was being undertaken by Delta as he felt it was against his principle and culture has come from Greece.
1. Assumptions

Costs assume that the joint venture would continue and that his dissatisfaction with the intended company takeover by Delta would be appreciated based on his experience. Dryden thinks that the company would be able to make a mark in the market based on the experience the company had gained during the venture. This was not to be the case as he later failed to make a mark in the company’s ventures and left the company.

Point of view

The case attempts to show the impact of poor decisions when it comes to the use of acquisitions as the market strategy. The focus of the story is the impact of cultural differences when it comes to management of joint ventures.

2. Problem Statement

It is important for a company to evaluate the issue of culture when it comes to international business ventures such as joint ventures. On the same note, a company should ensure it has evaluated the market entry method that it should adopt when it comes to entering a new market that is a characterized by a difference in culture.

3. Causes and Problem Analysis

Culture and values differences between Spaniards and Americans:
Individualism vs. collectivism. Spain is a collective society while the US is individualistic. Therefore, the Spaniards focus on interpersonal relationships when it comes to doing businesses (Groves, Feyerherm, & Gu, 2015).
In Spain, it is not right for an individual to decide without communicating to his or her partner.
The Spanish business culture is similar to the one in the USA.
Different Management styles between the Board of Directors of the two companies made it hard for them to agree on important policies. The differences in culture and negotiations were evident in the meetings held between the two companies. Spaniards are characterized by patience and respect when it comes to negotiations (Yan & Luo, 2016).

4. Relevant Management Theory, Process, or Approach

Global leadership competencies

For the joint venture to succeed and for Delta to succeed well beyond some of the concepts that pertain to doing business in Europe, it would be ideal for the company to employ leaders who are aware of the cultural differences between different countries (Thomas & Peterson, 2017).

Cross-Cultural Training

Dryden should have been trained on how to do business in Spain where the business culture is different. There were stark contrasts in cultural values between managers belonging to the two companies. This hampered the success of the joint venture because Spain is high on power distance as well as uncertainty avoidance (Thomas & Peterson, 2017).

5. Recommendations

American expatriates should be trained on how to handle operations in a foreign country that has a different business culture.
Delta should focus on employing people from those countries it enters in and should avoid using acquisitions as the best entry strategy that the company uses.
The company should have undertaken some level of compromise when entering into joint ventures with companies from other countries (Groves, Feyerherm, & Gu, 2015).
Delta should also conduct more research when dissolving a joint venture to ensure that it does not lose some of the assets that are in prime areas. It occurred when Delta was dissolving the joint venture in Spain.
Delta should observe business ethics when doing business in other countries. Therefore, it should ensure that it communicates any of the decisions that it is making to their partners to ensure it does not face a situation like the one it faced in Spain with the failure of the joint venture (Groves, Feyerherm, & Gu, 2015).

6. Implications

The implication is that a joint venture cannot succeed if the partners do not compromise on some of the cultural aspects that control the way they do business in their countries. For example, Dryden is an American focused on individualism. This means that personal decisions are of importance. In contrast, Costas and Alvarez come from countries that have a high power distance and collectivist in nature. This means that they focus on the interpersonal relationship as evidenced by the long working relationship between the two individuals from Greece and Spain respectively. One can argue that cross-cultural training is important when a company is sending expatriates to another country.

References

Groves, K. S., Feyerherm, A., & Gu, M. (2015). Examining cultural intelligence and cross-cultural negotiation effectiveness. Journal of Management Education, 39(2), 209-243.

Thomas, D. C., & Peterson, M. F. (2017). Cross-cultural management: Essential concepts. Sage Publications.

Yan, A., & Luo, Y. (2016). International joint ventures: Theory and practice. Routledge.