The world headquarters of Controls, Inc. were in Chicago, Illinois. It had operations in several countries in Europe, Asia, and South America but, with the exception of several maquiladoras, all of its expansion had occurred very recently. Its first involvement in joint ventures began only three years ago. As an in- house supplier to Filtration Inc., a huge Chicago- based international manufacturing conglomerate specializing in the design and production of temperature control and filtration systems, it had been shielded from significant competition, and most of its product lines of various electronic control mechanisms had been produced in North America. Ten years ago, however when Controls became a subsidiary of Filtration Inc. and it was given a charter to pursue business beyond that transacted with its parent. At the same time, the rules for acquiring in-house business changed as well. Controls now bid for Filtration Inc.'s business against many of the world's best producers of this equipment. The need to use cheaper labor and to be located closer to key prospective customers drove the company to expand internationally at a rate that only a few years earlier would have been completely outside its corporate comfort zone.
A IV in China would provide Controls with an opportunity to gain a foothold in this untapped market for temperature control systems. This could pave the way for a greater thrust into the expanding Chinese economy. lithe JV were successful, it could also lead to the establishment of plants to manufacture various products for the entire Asia/Pacific market.
The corporation's involvement in the joint yen- hire seemed less planned than its other expansion efforts. The Freezer and Cooler Controls Business Unit (one of Controls' key business units), headquartered in Lakeland, Minnesota, sent a team of four, consisting of two engineers and two representatives from the Finance and Business Flashing Departments to investigate the possibility of partnering with a yet-to- be-identified Chinese electronics assembly operation. The team was not given an adequate budget and was limited to a visit of one month. Not being experienced international negotiators, they were only able to identify one potential partner, a Chinese state-
owned firm. They quickly realized that they did not have time to conclude negotiations and returned to HQ without having met their objective. After debriefing them upon their return to the United States, the corporation's planners decided that the Chinese fl' presented a good opportunity and sent another team to continue these negotiations. Eventually an agreement was reached with the Chinese state-owned firm. Exhibit Co-I shows the organizational relationships between Filtration Inc. and its subsidiaries,
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