Richard Ivey School of Business
The University of Western Ontario
For the exclusive use of M. Khan
Ivey
W13095
MABE: LEARNING TO BE A MULTINATIONAL
Jose Luis Rivas and Luis Arciniega wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-04-09
It was a sunny afternoon in March 2012, and Ramiro Perez, Mabe’s international vice-president, was wondering what to do about Mabe’s joint venture (JV) in Russia. It had been the firm’s most difficult market entry in terms of return on time invested. The timing had certainly not helped, as the JV had occurred just before Lehman Brothers’ fall in the summer of 2008. Mabe had chosen Russia based on the premise that it was the “last frontier,” much like a Wild West gold-hunting opportunity in 19th century America. Backed by optimistic predictions of Russia’s future, investment bankers and industry players contributed to fuelling this “wild frontier vision” of a vast territory boasting one of the world’s largest populations, a highly educated workforce, an unlimited supply of energy and natural resources, and a political regime favourable to business. It had all seemed like a great idea — until the financial crises hit and the foundations of this last frontier started falling apart. Expanding Mabe to other Latin American countries and to Canada had been, to some extent, so natural and easy that Perez had a difficult time understanding how he could have done things differently when the company had entered Russia. Should Mabe have taken a more aggressive approach? Had Mabe become arrogant as a result of its past success?
HISTORY
Mabe was founded in 1946 by the Mabardi and Berrondo families. Although initially dedicated to building kitchen cabinets, in 1950, the company expanded to manufacture its first appliance, a stove. By 1968, the company had expanded its involvement in appliances and it began exporting fridges and stoves to Central America and the Caribbean. The first industrial plant for manufacturing refrigerators was built in Queretaro, Mexico, in 1976, the same year the company began exporting to the United States. By 1980, Mabe was the market leader of stoves and refrigerators in Mexico. General Electric (GE) acquired 48 per cent of Mabe in a JV in 1987. As part of the JV deal, Mabe retained full management responsibility and would build gas stoves for the U.S. market, in exchange for receiving U.S. technology and technical advice. By virtue of this deal, GE had become Mabe’s main business partner and its largest customer.
In 1989, Mabe acquired Easy, one of the industry’s key players, In 1990, Mabe opened a new stove plant spanning 1.5 million square feet in San Luis Potosi, Mexico. The production at this new plant would be mostly devoted to the U.S. market.
This document is authorized for use only by Mustafa Khan in Strategic Management Winter 2014 taught by Kerr, Lee, Stomp from January 2014 to April 2014.