MARTINEZ CONSTRUCTION COMPANY IN GERMANY

1. General presentation of the case study (Summary)

Martinez Construction is a well-established construction company in Eastern Spain. Because of a recent decline in contracts in the Spain society, Martinez Construction Company needed to expand to international market in order to survive (expand and grow). After a survey in the international market, the newly formed Democratic Germany seemed the perfect place. Furthermore, the best solution was to acquire an existing firm with the help of Treuhandanstalt (privatization agency). This was a result of the lack of liquidity of the Martinez Company.
* Exposure to unfamiliar business practices such as strict environmental and employee protection regulations that forced unexpected large investments in plant modifications. * Other costly projects that have not been foreseen during the negotiations process that would have required attention. * Cash flow problems

The negative effects in the long run: * Cash flow problems that finally may threaten the existence of the German company or even of the whole company’s * Closing the German enterprise would mean losing the whole investment (money invested in research, development, implementation, the price itself paid to THA and other costs that incurred over the time). * Inability to achieve the forecasted figures

3. Identification of alternative solutions for identified problems

Solution 1: Joint – Venture with a company from Western Germany
Joint ventures are the most common method of entering the market, especially in Europe, because it allows companies to gain competitive advantage through access to a partner’s resources, including markets, technologies, capital and people.