China Huiyuan Juice Group
(11 pages of text)
A $2.4 billion bid made by a competing company presented the founder and chairman of China Huiyuan Juice Group Limited with a dilemma. He had successfully transformed his company from a small-scale canned-fruit manufacturer into the largest juice producer in China. Despite the strong need for external funds to achieve further growth, the company’s founder had always been prudent in introducing outside investments into the firm, carefully maintaining his control of the business. To him, Huiyuan Juice was almost like a child that he had nurtured, rather than a product to be sold. However, the company’s rapid expansion had placed its founder under increased pressure and he now had to decide whether or not he should sell.
- Understand the main problem facing the firm: its founder lacks entrepreneurial capacity but is unwilling to relinquish control; identify the reasons behind the problem.
- Understand management capacity as a key resource supporting the growth of a firm that should grow and change with the needs of the firm.
- Achieve an understanding of how the corporate governance structure should evolve with the growth of a firm in order to guarantee management capacity.
- Identify common problems in the governance structures of entrepreneurial firms and family businesses, as well as their impact on corporate management.
This case can be used in courses on entrepreneurship and corporate governance. With respect to entrepreneurship, attention can be given to the specific agency problems facing firms controlled by entrepreneurs and the reasons behind these problems. For courses on corporate governance, emphasis should be attached to how the corporate governance structure can evolve with the growth of a firm based on an understanding of the common governance problem existing in entrepreneurial firms and family businesses.
Accommodation & Food Services
China, Large, 2008
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