The legislation and the regulations by Nigerian officias has become one of the major problems of Larson. The value of the company by the Securities and Exchange Committee has been extremely low and the sales collection and payment to suppler are delayed in Nigeria. All these factors affect the liquidity and cash flow and raise the total cost of the company.
Maintaining the operation was also complicated by problems in staffing. Expatiate staff is very costly. Additionally, entry visas for those expatriate are very complicated. The recruitment of qualified skilled experts is difficult and they are not staying long in the country.
Because Larson had a promise to increase the share of local ownership, the local partner's participation seems very important. If the local equity participation keeps very low like current situation, the profit of both companies will become little or even lost capital.
The vice-president of international operations should decide to continue the company's joint venture in Nigeria.
However, the company needs to address the problems of coping with local indigenization and hire a new joint venture general manager.
Although the expatriate general manager of the Nigerian operation has delivered a very negative report, the operation should still continue. There are great amount of demands for products in Nigeria and competitions seem not very high. Since different country have different business cultural, to successfully operate the company in Nigeria, we have to cope with their way of doing business. After the share of local ownership increase, they cultural of the business might change to the local way. And the company will have more access to negotiate with the government. As a result, after increase the local equity percentage, in order to maintain the business in Nigeria, Larson's first step is to deal with the Nigerian business...