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MABE: LEARNING TO BE A MULTINATIONAL (A)
SYNOPSIS
Mabe was a Mexico-based multimillion-dollar family business that manufactured stoves and refrigerators. In 1987,
GE acquired 48 per cent of the business. Due to this infusion of both capital and knowledge, Mabe became the
market leader in appliances in Mexico and started expanding to other Latin American countries. Mabe acquired
TEACHING OBJECTIVES
POSITION IN THE COURSE
This case is suitable for both undergraduate and graduate audiences. It can be used as a standalone case or in
combination with the second Mabe case (“Mabe: Learning to Be a Multinational (B),” also available from Ivey
Publishing, product #9B15M121) in the following courses or areas of study:
SUGGESTED ASSIGNMENT QUESTIONS
SUPPLEMENTARY READINGS
Christopher A. Bartlett and Paul W. Beamish, Transnational Management, McGraw Hill /Irwin, Boston, 2011.
Chapter 1: Expanding abroad: motivations, means and mentalities.
1. What action should Ramiro Perez take with regard to Mabe`s joint venture in Russia?
2. Commit further: Buy a domestic manufacturing facility and/or open commercial offices in other large
3. Exit: Mabe can sell its stake to its Spanish partner in the JV (i.e., Fagor) and remain as a supplier to the
Russian market. This option would enable Mabe to devote more resources to other new emerging markets,
such as India or China.
The first option is probably in the middle range of risk taking; because Mabe has not yet invested in manufacturing
facilities in Russia, the stakes of staying in Russia are not that high. Mabe can consider the Russian experience to
second scenario would be for Mabe to buy a domestic manufacturing facility; unless Mabe finds a special
opportunity, this strategy could make matters much worse for the JV. Putin was just re-elected, and many have
expressed serious doubts in terms of his commitment to improving the country’s institutional environment. Even
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The third option is the most conservative of the three, as leaving Russia does not involve significant sunk costs.
Mabe has learned some important lessons and can likely apply these learnings to return to Russia in the future with
2. What lessons has Mabe learned that it can apply to future international expansions?
Mabe had been very successful in its efforts toward international expansion. The alliance with GE had proved to be
a win-win situation but it seems that Mabe’s top team had become overconfident. Mabe’s expansion to Latin
American countries was relatively simple, as language, religion, time zones and culture were similar to Mabe’s
1. Not to rely so much on the “action learning methodology” that was originally brought from GE’s know-how.
2. To understand the significant effect of culture on business performance. While they devoted themselves to
3. To reconsider the use of Mabe brands in markets outside Latin America due to the “provenance paradox,”
3. Would another emerging country have been a better investment for Mabe than Russia?
This question is a difficult one to answer. Back in 2004, Mabe wanted to expand to a BRIC country. It had already
entered Brazil, and China seemed too complex. The only countries remaining were India and Russia. During 2004,
4. Assess whether Fagor is the appropriate partner for the Russian joint venture?
Several issues need to be considered:
The case does not provide evidence to discuss several of these issues, but students should be able to mention a few
of them.
Mabe and Fagor seem to be learning from each other. For example, consider the evidence of how they combined
their product lines in Russia. Management roles have also evolved. Whereas at first they had a Brazilian chief
WHAT HAPPENED?
During 2012, Mabe studied the Indian market. An action learning team had been working on an entry strategy and
was considering the mistakes made in Russia (i.e., the wide product line used to enter the market). One of the team’s
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For now, Mabe is not seeking to acquire a local manufacturer in Russia. The company first wants to recover from
the losses incurred in Russia. After that, it will likely consider acquiring a local manufacturer that is not Russian.
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EXHIBIT TN-1: SWOT ANALYSIS OF RUSSIA
Strengths
Weaknesses
• Poor legal safeguards, high levels of bureaucracy and corruption, and the Kremlin’s apparently
politically motivated campaign against foreign firms in some industries.
Opportunities
• A reform of the banking sector is under way, since the passage of a law in 2003. This reform should
erode the monopoly position of state-owned Sberbank.
Threats
• The state influence over business is rising. For example, foreign energy firms are under pressure to
allow greater involvement by state-owned firms; however, a reversal of the privatization in the 1990s
