Blue Ridge Restaurant Corporation is a successful fast food chain that gained significant sales growth due to their reputation for quality fast food. The corporation was acquired by several companies, which continued their international business strategy of entering joint venture with local partners. Delta was a successful soft drink and a snack food company that does not believe in joint venture as a strategy in entering international market. At the time of the acquisition of Blue Ridge, joint venture with Terralumen, a Spanish agricultural firm, was in operation. However, it appears that the Spain growth is slower than expected. Delta started direct involvement in Spain operation and reorganized its European management team. Delta decided to dissolve partnership with Terralumen despite the success of the joint venture. Delta’s decision shocked Costas, and what made matters worse is that he had to develop a dissolution strategy despite his disagreement to end the partnership.
Cultural differences are often at the root of joint venture challenges. Understanding cultural differences plays a key role in establishing a trusting relationship with partners. Significant cross-cultural differences started the conflict and dissolution between Delta and Terralumen. Both companies did not display cultural compatibility and lacked a shared vision or common ground. Delta failed to emphasize the need to challenge new strategy and move into a new direction. Delta did not allow Terralumen to establish their credibility, instead assumed that Terralumen’s business growth is not within their standards. This has resulted in a cross cultural clash, which made it difficult to ensure the success and longevity of the joint venture.
According to Geert Hofstede, there is no such thing as universal managing method or management theory across the globe. Delta hired Sodergran, from Finland, and Dryden, an American. Both came from high...