Joe Perez

2 Pages Posted: 21 Oct 2008

See all articles by R. Edward Freeman

R. Edward Freeman

University of Virginia - Darden School of Business

Luis Trevino

affiliation not provided to SSRN

Jenny Mead

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

This case examines a situation in which friendship and business interests between company partners clash over a distribution set-up. It also presents potential solutions to the dilemma.

Excerpt

UVA-E-0223

Joe Perez

Joe Perez and Rick Fernandez had been friends since their childhood in Mexico City. Even though Perez had moved to another city 15 years ago, they had remained close. At the beginning of their respective business careers, Fernandez was offered a great opportunity to be a partner for the nationwide distribution of a revolutionary hydro-filter. This new product, protected by several patents, seemed to offer a great opportunity to be the only player in a new and profitable market. However, in order to be involved in it, Fernandez had to partner with a stranger, Calvin Brown.

Brown had bought the rights for the distribution of the product in Mexico, but lacked the knowledge about the market and the culture. He chose Fernandez, who understood the market dynamics well. They set up a partnership according to Mexican law, which stated that majority control should be in the hands of Mexican citizens. Brown invested in the new company by donating the rights for distribution of the product, and Fernandez came up with some cash and the distribution network.

The initial response to the product was extremely good, so Fernandez and Brown quickly introduced it to the rest of the country. They chose Perez as a partner to introduce the product in northern Mexico, and he was given exclusive distribution of the product in his territory. As expected, the product caught on quickly. Sales skyrocketed, and everyone was happy with both the results and the profits. Aside from their business relationship, the three men became first-rate friends. Brown and Fernandez would often vacation together, and Brown would visit Perez in his city and play golf.

One day, however, Perez received an unexpected call from Brown. His business relationship with Fernandez had soured and their partnership was ending. Fernandez was going to buy out Brown's share of the business. (The purchase process was as follows: Brown stated a value for the company and then Fernandez got to choose if he would buy or sell his share at that price. If Fernandez chose to sell, Brown was obligated to buy at that price. This process was designed to eliminate discrepancies between the fair-market value and the actual selling price.) Brown was just calling to say that the dissolution of the partnership should not interfere with the friendship between Perez and himself.

. . .

Keywords: new product introduction, distributiion management, ethical issues, interpersonal relations, new-market entry, partnership

Suggested Citation

Freeman, R. Edward and Trevino, Luis and Mead, Jenny, Joe Perez. Darden Case No. UVA-E-0223, Available at SSRN: https://ssrn.com/abstract=908735 or http://dx.doi.org/10.2139/ssrn.908735

R. Edward Freeman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-0935 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/freeman.htm

Luis Trevino

affiliation not provided to SSRN

No Address Available

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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