This case describes the process of introduction and development of a US-Belarus joint venture, wood pellets produced in Belarus for sale in the countries of the European Union. The combination of high demand for biofuels in the EU and the potential for making a good product at a low price in Belarus, offers a compelling business opportunity for brothers Victor and Aleksey Kruglov. Victor, who lives in the USA, had some experience in industry in the United States, and access to capital. Aleksey, wh … Read more »

This case describes the process of introduction and development of a US-Belarus joint venture, wood pellets produced in Belarus for sale in the countries of the European Union. The combination of high demand for biofuels in the EU and the potential for making a good product at a low price in Belarus, offers a compelling business opportunity for brothers Victor and Aleksey Kruglov. Victor, who lives in the USA, had some experience in industry in the United States, and access to capital. Aleksey, who lives in Belarus, has experience in wood products production in Belarus, and has access to a skilled workforce. With a well organized operation and the continuous demand for its products, the company grew rapidly. However, the company’s growth put at risk in the state-controlled Belarus. Local institutions (urban and regional) governments perceived successful companies as revenue sources for the solution of problems urban infrastructure. Central facilities considered successful companies as potential parts of their system of larger state-controlled economy. Government involvement would probably require the company to follow certain guidelines to implement specific procedures for export operations, and revenue sharing. To avoid the danger of government control, the partners saw three options. Could stay its course, her business continues to grow and take on the role of the major contributor to the city’s needs and be a part of the larger state-managed wood processing industry. Alternatively, it could slow its growth or to control splitting into several smaller companies in different regions, yet clearly visible. A third possibility was to move all operations in a country that offers a friendly environment for business operations, but has similar cultural and economic benefits.
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Yuliya V. Ivanova
Joan Winn
Source: North American Case Research Association (NACRA)
16 pages.
Publication Date: Jul 15, 2010. Prod #: NA0015-PDF-ENG
Growing pains: Entrepreneurship in a state-controlled economy HBR case solution