Maculan Case Analysis

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Challenges in the Restructuring Process A Case Study on the Fatal Experience of a Western Firm in Eastern Europe Maria Rauscher and Peter Haiss, Vienna University on Economics and Business Administration, Vienne, Austria ABSTRACT The Austrian construction company Maculan started a large scale expansion strategy into East Germany and related CEE markets immediately once those markets became accessible – a strategy that turned out fatal soon. The paper discusses company-specific and market-related issues that led to this drastic outcome of an internationalization strategy that initially was seen as a role model for others. The goal is to depict the mistakes made in course of the companys internationalization process and thus to provide a „learning experience“ for companies in similar situations, i.e. seemingly huge growth opportunities all of a sudden opening up in hitherto uncommon territory. Key Words Mergers and acquisition, construction industry, foreign direct investment, East Germany, acquisition finance. INTRODUCTION This paper deals with the case of the Austrian construction company Maculan. It analyses its expansion into the former GDR (German Democratic Republic) after the fall of the iron curtain in 1989. The goal is to depict the mistakes made in course of the company’s internationalizing process which ultimately lead to its bankruptcy and dissolution. Our intention is to provide reflections on the company’s breakdown in the 1990s that can be useful for other companies entering new territory. The paper provides an insight on into managerial experience in Eastern Europe and as such, it states an impressive example of potential dangers which might be of a high impact for a company when making foreign direct investments: entering new territory fast and in bold moves implys high risk. Therefore it is important to
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