The Case of the Pharmaceutical Joint Venture

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Read the Case Study entitled The Case of the Pharmaceutical Joint Venture in Chapter 4 and then answer
the question at the end of the case.
Please be sure to back up your answer to the case with facts from the textbook.
Mr. Geddy Teok, an American-Chinese (second generation) employee of a large New Jersey
pharmaceutical firm, was based in Tokyo. His main aim was to get a major join venture going with one of
the largest Japanese pharmaceutical manufactures. After four year of negotiating, the supreme moment
had come for signing contracts. Obviously the lawyers from HQ in New Jersey were well prepared, and they
sent the contract to Geddy one week before the “ceremony.”
After four year of Japanese experience, Geddy was dumbfounded when he received the document form the
US. He told us at the time, “I could not even count the number of pages. There were just too many. But I
remember the number of inches it measured when I laid it on the table. I would guess that with every inch,
one of the Japanese would leave the room in despair. I hope they will come with a group of then; then at
least I will keep one person to talk to. The Japanese will sign contract, but you should not take it too far.”
Geddy Teok decided to call HQ and ask for some help. The legal department said that the relationship was
so complex that the contract needed to cover many possible instances. Moreover, a consultancy firm that
regularly advised the department said that Asians in general and Japanese in particular had a reputation of
been loose in defining what was developed by them and what came from the US: “It is better to have some
pain now and be clear in the terms of our relationship, than to run into problems later because of
miscommunication. If they sign it, at least they show they are serious.”
Geddy was in despair, but he had only a day to decide what to do. The meeting was tomorrow. Should he
perhaps call the Japanese CEO, with whom he had built a solid relationship? Or should he just go for it?
Geddy framed his dilemma clearly to us: “Whatever I do, it would hurt my career. If I insist on the Japanese
partners signing the contract, they will see it as proof of how little trust has been developed over the years
of negotiation. This might mean a postponement of the discussions and, in the worst case, the end of the
deal. If I reduce the contract to a couple of pages and present it as a “letter of intent,” HQ in general and,
even worse, the whole legal department will jump on me, jeopardizing my career.”
If you were Geddy, what would you do?

Sample Solution

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