LARSON INC. IN NIGERIA
SYNOPSIS
David Larson, vice-president of international operations for Larson Inc., must decide whether to continue
to operate or to abandon the company’s Nigerian joint venture. Although the expatriate general manager
POSITION IN THE COURSE
We use this case in our International Management course as the transition between the segments on The
Headquarters Perspective and The Subsidiary Perspective. While the decision maker in the case is the
SUGGESTED TEACHING APPROACH
This case is short but rich. In order to get through the desired material, we follow quite a structured
ASSIGNMENT QUESTIONS
1. What are the three major issues (in order) confronting David Larson?
2. How would you recommend that each be handled?
ANALYSIS
1(a) Should Larson stay in Nigeria?
Addressing the questions in order, the first step in making a decision regarding Nigeria would be to assess
the returns versus risks. Given a difficult environment and assuming for a moment that staffing and
Due to lack of familiarity with less developed countries (LDCs), some students may advocate pulling out
of Nigeria for no really rational reason. Students should be pushed to decide whether they feel Nigeria is
(b) How can you corroborate or refute what is claimed by others?
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The point here is that David Larson does not have to accept everything Ridley says at face value. He has
numerous alternative sources of data.
(c) What other issues would David Larson be considering which Ridley has perhaps omitted?
The risk/return question suggests we want to at least try to remain in Nigeria in some way or other.
2. How do you handle Ridley?
Having tentatively decided to try to maintain an operation in Nigeria, as David Larson, the student must
still resolve how to deal with the Nigerian affiliate’s chief executive officer, George Ridley. His character
(a) What sort of title would you put on “The Ridley Report”?
Most students generally respond with something to the effect, “Why business in Nigeria stinks?” I then
ask what title/subject matter might be more appropriate. What I am looking for here is something such as
“A Strategic Plan for Dealing with a Difficult Situation.”
(b) What is the typical pattern of work adaptation of expatriates?
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(c) What does an expatriate’s satisfaction with his foreign assignment mainly depend on?
(d) What does Ridley’s problem seem to be?
Without reading too much into the case, Ridley may well be affected by two factors:
Exile Complex
(e) Given this background, what do we do about Ridley?
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At a minimum, he has to be taken out of Nigeria soon (perhaps within three months). We must have his
substitute in place before he leaves to ensure a smooth transition. For Ridley, early retirement? Staff
(f) “In which cell is the general manager’s task least complex? Most complex? Why”?
The complexity of the general manager’s task:
1. What do you do about the local partner?
Having made the assumption that a presence in Nigeria is desirable, (i.e., that adequate returns cannot be
earned through exporting or licensing), the issue is how to make the joint venture work or how and when
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discussed above (i.e., the 2 by 2 matrix), and (c) Larson’s years of experience in Nigeria limits the need
for local partner to understand local economy, politics, and culture.
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EXHIBIT TN-1
“THOSE BLOODY PEOPLE” SYNDROME
The expatriate goes young and fresh to his first
“new” country and makes a big effort to
integrate. He learns about local culture, travels
the country, and tries to learn the language.
Then he is moved. The next country is a little
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EXHIBIT TN-2
EXILE COMPLEX
• Have I been forgotten at head office?
• Have I been passed over for promotion by
those who stayed home?
1. Need a Replacement
2. When? Within three months
3. Ridley in Nigeria
4. Ridley out of Nigeria
5. Manage Partner Relations
6. Larson expatriates in other countries are watching
Options
– in country, within operations
– other subsidiaries
– poach
– David Larson
– start packing
– do a data dump
– handover via introductions
(i.e. customers, government
officials)
– have the written formal
record
– need the tacit knowledge
(institutional memory)
Options
– assess potential value
– ask him what he wants
– give him a holiday
– don’t delegate to a new, green General Manager
– there is need for perceived continuity
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EXHIBIT TN-4: THE ROLE OF THE GENERAL MANAGER: TWO PERSPECTIVES
AS THEY APPLY TO GM OF
WHOLLY OWNED SUB, IN A DC
AS THEY APPLY TO GM OF JV IN AN LDC
INTERPERSONAL ROLES
1. Figurehead Role
Additional legal requirements in the country necessitate greater
emphasis in this role. Plus, there is an increased number of
occasions due to ceremonial situations relating to two
nationalities.
Represents organization on
ceremonial occasions.
2. Liaison Role
Very prominent role in the LDC. Must frequently interact with
government officials. May have problems if the GM is an
expatriate and working/dealing with nationals outside
organizational unit.
Interacts with other managers and
groups outside the organizational
unit.
3. Leader Role
More complex than in subsidiaries. May find it difficult to
motivate and supervise nationals due to different values, ethics,
and so on. Must make do with the expatriates and nationals who
are likely from different countries. Hence, must understand how
to motivate people from other countries.
Establishes relationships with
subordinates (motivating,
supervising), and exercises formal
authority within the organizational
unit.
INFORMATIONAL ROLES
1. Monitor Role
Outside information searching is harder for an expatriate in an
LDC than in a DC. Monitoring is easier if the JVGM and
managers can gain access to information from the two partners.
Receives and collects information
from both inside and outside the
organizational units.
2. Disseminator Role
If GM is an expatriate, may have communication problems.
General managers usually are nationals themselves. Hence,
role is easier.
Transmits information to members
within the organizational unit.
3. Spokesperson Role
If GM is an expatriate, the spokesperson role is often difficult. As
a JV, there are more groups (partners) for information to be
conveyed to.
Informs those outside the
organizational unit.
DECISION-RELATED
1. Innovator Role
More complex than in subsidiary since physical distance means
GM cannot rely on others. Also, must convince both parents and
the board of directors.
Initiates change.
2. RESOURCE-ALLOCATION
ROLE
Very difficult due to two sets of resources and expectations.
Decides where efforts and energies
will be directed.
3. NEGOTIATOR ROLE
Due to GM being expatriate, role may be difficult. As well,
presence in an LDC environment may complicate negotiations.
Perhaps the primary skill required of the JVGM.
Deals with situations involving
negotiations on behalf of the
organization.
4. DISTURBANCE-HANDLER
ROLE
Handles individually but has other influences (both parents and
board of directors) which complicate the decision.
Takes charge when crises arise and
the organization is threatened.