A JOINT VENTURE BETWEEN HEALTH SNACKS AND TOKA FOODS

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When Health Snacks and Toka Foods formed a joint venture four years ago, the future looked very promising. Health Snacks was looking for opportunities to enter the Japanese market, and Toka Foods was well positioned in Japan to facilitate that process. Toka Foods, was interested in gaining access to new technology. Since Health Snacks was a leader in the adaptation of new technology to business processes, the joint venture seemed ideal. At the time of the establishment of the joint venture executives both from Health Snacks and Toka Foods had spent many hours hammering out an agreement that would help both sides realize their objectives.

Both sides were excited about new opportunities; however, after the first six months several disagreements surfaced regarding the management of the joint venture. One of the issues was who should get copies of written communications regarding production schedules and marketing plans. The Americans felt that they were not sufficiently included in discussions relating to the joint venture. The Japanese managers were frustrated by the number of requests for reports from the American side.

At first the disagreements seemed rather superficial, but as time went by both sides became increasingly unhappy and started to blame each other for any difficulties.Health Snacks had tried to solve the problems via electronic communication, faxes, and e-mails. It even had organized a teleconference to meet "face to face" so that each side could hear the other's viewpoint, but the problems remained. After much soul-searching, Ron Carter decided that it was time to fly to Nagoya and face the problems head-on.

Carter had joined Health Snacks as president of international operations only nine months earlier. In that position he also served as vice president for the joint venture with Toka Foods. He had received a thorough briefing at the time and also had studied the history of the joint venture on his own. He had been an expatriate in Australia and France, managing international subsidiaries in both countries. He was 40 years old and was expected to have a bright future.

The negotiations had been very difficult and had taken much longer than executives from Health Snacks had anticipated. The Japanese were slow and deliberate in their approach to the negotiation. Everything seemed to take a long time, and once the Japanese side had made up its mind on a point, it was difficult to agree on any changes. Everything had to go back and be rediscussed by Japanese executives.

The composition of the negotiation team also became an issue. After the initial contacts Health Snacks knew that Toka Foods was interested in technical details. To speed up the process and provide technical details, Health Snacks initially had sent an engineer from production and one from packaging, both in their early thirties and with no international experience. The two engineers took detailed reports, diagrams, and illustrations with them.

They knew the technology inside out, but the Japanese, despite asking many questions, did not move toward an agreement. When the two engineers from Health Snacks could not answer questions relating to projections of production and sales, the Japanese became impatient. The two engineers found the talks tiring, and sitting across from a team of eight Japanese managers was intimidating and exhausting. Furthermore, the Japanese repeatedly asked the same questions. It was only after the president of the international division at Health Snacks, Tim Davis, participated in the negotiations that progress was made. He visited several times, and an agreement finally was signed.

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