Tate & Lyle Case Study

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Lucas Lenoir The Nghe An Tate & Lyle Sugar Company Case Study I - The Tate and Life company: Founded in Londen (Great Britain) in 1921, Tate and Lyle is a producer of white and raw sugar. With markets in Europe, USA, Canada, Latin America and Africa, the company was the world's largest sugar producer with 5 billions GBP revenue in 1997. In order to keep growing, the company decided to start developping in the Asian Market during the 1990s. They started their enterprise in China using a strategy of joint venture. At the same time, they were considering investing in Vietnam as well. Their original plan was to use the same strategy of joint venture as in China. But their local potential partners declined their offers because they did not want to work with foreign partners. Tate and Lyle, so, had to use a Greenfield development strategy. Following advice from local institution, they decided to create their business in the Nghe An province, in North Vietnam. I - The Nghe An project: The development plan of Tate and Lyle in Nghe An consisted of three parts: • The creation of a sugarmill and rafinery with a capacity of 900 000 tons per year. • An outreach program to help local farmers convert to the production of cane. • The development of infrastructures such as roads and bridges in the area, financed by the Nghe An region for 800 000 $. Their expectations were to start production by the 1998-1999 season with a first production of 300 000 tons, and to reach full capacity by the 2002-2003 season. Most of the production would be sold in the North of the country, mostly Hanoï. In order to reach these levels of production, the company would employ 750 people, and to proceed to in-house training for most of them. The plan was to purchase cane from local farmers (located within 50 kms from the plant). With a potential of 50 tons of cane per hectare,
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