TO: Team TS Lee (Lee Medical Supply PAT ARMSTRONG Representative)
FROM: Mr. An Lee (Owner and President of Lee Medical Supply Company)
RE: Preliminary Negotiations
Meeting Purpose
The Lee Medical Supply company representatives will meet with the MedDevice company representatives to discuss the expected joint venture of the two companies. The representatives will discuss how the two companies will share profits, solve conflict, and also how the staffing of the joint venture will appear.
Objective
- To set up an international joint venture with MedDevice company in Thailand. The new entity will be named MedLee company and will focus on selling and distributing MedDevice equipment such as the CAT scanners, MRIs and pacemakers in Thailand.
- To agree on how the staffing structure of the new international entity will appear.
- To decide on how the profit will be distributed between the MedDevice company and the Lee Medical Supply company depending on the information provided in the Memorandum of Understanding.
- To decide on how the decisions will be made in the new joint venture to achieve the expected success.
Task for Lee Medical Supply Company representative
Team Ts Lee, who will be representing the Lee Medical Supply Company, will meet with a counterpart from MedDevice Company to discuss the proposed joint venture. The representatives will discuss and create a preliminary proposal for the MedLee joint venture on the key issues. To ensure that the Lee Medical Supply Company fully benefits from the proposed joint venture, what follows are my thoughts on each of the key issues.
Key Issues and Instructions for Preliminary Negotiation
Staffing
To avoid the international joint venture from failing in its first years, I expect the following structure for the time being:
- Two managers: The Lee Medical Supply Company will appoint one manager, and the MedDevice company will appoint the second manager. The two managers will offer advice to each other for the benefit of the MedLee joint venture. The manager from MedDevice will oversee the manufacturing of the medical equipment, while the manager from Lee Medical Supply will oversee the sales activities of medical equipment in Thailand.
- Three Sales Representative: The Lee Medical Supply Company should appoint two representatives while the MedDevice company will appoint the other representative. The salespersons should have basic knowledge of the customers in Thailand.
- One secretary: The Lee Medical Supply Company is based in Thailand, and has a better understanding of the local market. Therefore, the secretary will be appointed by the Lee Medical Supply Company.
Profit Distribution
- For the first four years of the joint venture, there should be no profits drawn from the operations of the joint venture. Both the Lee Medical Supply Company and MedDevice are stable companies, and this policy will have no problem for the two companies. Retaining profit for the first years will stabilize the operations of the joint venture.
Conflict Resolution Mechanism
- Any major dispute that arises in the MedLee joint venture should be referred back to Mr. Thompson (CEO for MedDevice) and me for resolution. The managers of the joint venture will solve minor disputes. If the resolution for the dispute cannot be reached, then the dispute should be solved through any court system.
Decision making/Control
- The managers will make the decisions after majority approval by the Board of Directors to be appointed by Mr. Thompson and myself. Each company will provide two directors so that the joint venture company has four Board of Directors for fair decision making.