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Medle General Instructions MedDevice, Inc. Medlevice, Inc. is a US-based Fortune 500 company that manufactures high-tech medical equipment and devices like CAT Scanner MRIs and pacemakers. Currently, MedDevice care more than 80% of its smal revenue from US, sales Strategic studies indicate that MedDevice’s greatest growth potential in the next decade is an developing its Asian and Southeast Asian marketi. Maddevice has investigated the possibility of opening a wholly-owned branch office Southeast Asia, Flowever, logistical problems, the complexity of local laws, and the difficulty of breaking into a foreign market that relies heavily on relationships and connections suggests that forming a joint venture may be necessary to gain access to key distribution channels in the region Lee Medical Supply Lee Medical Supply is a family-owned company employing about 30 people, located in Bangkok, Thailand. Lee Medical specializes in the distribution and sales of medical products including operating tables, hospital beds. X-ray machines, ultrasounds, and a variety of disposable medical supplies like bandages and syringes. Ler Medical Supply has been in operation for 30 years under the ownership and direction of An Lee, who is now 64 years old. To date, Lee Medical Supply has focused its business on distributing equipment and supplies for overseas (mostly American and European companies. Under such distributorship arrangements. Lee Medical purchases supplies and equipment from manufactures and then sells them in Thailand. Lee Medical profits from the difference between the prices it charges its customers and the wholesale cost it pays its suppliers. Over the years, Lee Medical Supply has experienced seady growth and strong financial results. However, as the demand for high-tech medical technologies has increased in Thailand, Lor Medical has been seeking opportunities to partner with a major US manufacturer. Such a partnership would allow Lee to share in the greater profit magis associated with high-ticket items as opposed to low-cost items like bandages and so have some equity in the company’s profits (as opposed to acting just as a middleman). A Resort Encounter Mr. An Lee (owner and President of Lee Medical Supply and Me Ralph Thompson (CEO of Medlevice) met while both men were vacationing with their families at a luxury resort on Phuket Island an exclusive vacation spot in Thailand. They met over drinks at the pool one evening and finding that they had much in common in terms of business interests, had several meuls together over the next few days. They became fat friends with great respect for each other’s intellect, business acumen, and sense of humor Mr. Lee and Mr. Thompson were intrigued by each other’s respoctive businesses in general and by the complementary nature of their core competencies and needs specifically, Medbevice had cutting-edge technology and products, but to access to distribution channels and the medical customer base in Thailand. Lee Medical Supply possessed a strong distribution network, a well- framed sales force, relationships with most of the major hospitals and doctors in the country, and Page 1 of 10 an intimate knowledge of the protocol, legal issues, and eccentricities of the Thai market. Lee Medical lacked access to some of the newer, more sophisticated technologies like CAT Scanners, MRIs and pacemakers, the demand for which had been increasing exponentially in the increasingly affluent Thai market. Lee and Thompson spent many hours chatting about the potential synergy between the two companies The vacation ended, but at Mr Lee’s invitation, Mr. Thompson visited Lee Medical Supply in Bangkok before retuming to the States. The two solidified their friendship and respect for each other by signing a Memorandum of Understanding to pursue a joint venture between Lee Medical Supply and MedDevice attached in Exhibit), the purpose of which was to establisha sales office in Bangkok under the name of MedLee, Lad. and to develop the market for Medlevice equipment in Thailand and throughout Southeast Asia. Initial capital would be US S2 million. MedDevice would win of the cataludelec Medical Supply, 0% an intimate knowledge of the protocol, legal issues, and eccentricities of the Thai market. Lee Medical lacked access to some of the newer, more sophisticated technologies like CAT Scanners, MRIs and pacemakers, the demand for which had been increasing exponentially in the increasingly affluent Thai market. Lee and Thompson spent many hours chatting about the potential synergy between their two companies. The vacation ended, but at Mr. Lee’s invitation, Mr. Thompson visited Lee Medical Supply in Bangkok before returning to the States. The two solidified their friendship and respect for each other by signing a Memorandum of Understanding to pursue a joint venture between Lee Medical Supply and MedDevice (attached in Exhibit A), the purpose of which was to establish a sales office in Bangkok under the name of MedLee, Ltd. and to develop the market for MedDevice equipment in Thailand and throughout Southeast Asia. Initial capital would be U.S. $2 million. MedDevice would provide 60% of the capital, and Lee Medical Supply, 40%. Mr. Lee and Mr. Thompson are delighted by their new venture. In particular, Mr. Lee was impressed by Mr. Thompson’s ability to forge a relationship, while Mr. Thompson was impressed by Mr. Lee’s thorough approach to business. Both fully expect to be in business together very soon. They parted, agreeing that they would have their subordinates work out the details of the arrangement in preliminary negotiations. Specifically, they agreed their subordinates should discuss the following issues for the joint venture: 1) Decision-making 2) Staffing 3) Profit Distribution 4) Conflict Resolution Mechanism Mr. Lee and Mr. Thompson would meet at MedDevice headquarters in three weeks (when Mr. Lee would be in the States on other business) to review the results of the preliminary negotiations. You will be conducting preliminary negotiations as either a representative of MedDevice, Inc. or Lee Medical Supply. You recently read an article stating that 60% of all joint ventures fail within four years. How would you prepare for your discussion with your counterpart? In particular, what concern might you have about cultural differences between MedDevice and Lee Medical Supply? Profiles of the two companies are attached in Exhibits B and C.