Charles River Laboratories: Case Study: Charles River Laboratories

KEY ISSUES

Charles River Laboratories (“CRL”), a profitable division of Bausch & Lomb, produces and supplies laboratory animal models for the use of research and development of new pharmaceuticals. CRL has been given the opportunity to invest up to 2 million dollars in a Mexican joint venture with Alpes, a family owned company in the same industry. Such a joint venture would be used to create a specific pathogen free egg farm. With the potential for appealing financial returns, CRL must consider the risks and problems in entering the proposed joint venture. These problems include the dangers of investing in Mexico, the reliance of the franchisee Alpes on CRLas well as the lack of transparency into their potential partners business. Other

This joint venture will provide the two companies with a competitive advantage as the relationship they share is a rare one. As a result of the concerns of political instability and instability of the currency in Mexico, many businesses left Mexico. SPAFAS under CRL, however, was able to realize the economic benefits and the increasing demand and thus took advantage of the opportunity to propose a Joint-Venture with ALPES as buying it entirely was not possible. Arguably, this adds to the notion of rarity as not many other companies have done

This made it difficult for other firms to compete with ALPES using substitute products while also bringing friendlier relations with potential competitors. When competition from imports failed to appear, ALPES doubled its production to meet rising demand from the American and Canadian markets they now supplied under NAFTA.Overall, the threat of new entrants is minimal. Threat of Substitutes
As the sole producer of SPF eggs in Mexico, consumers are unable to switch to SPF eggs produced by other companies.It is possible for companies to use farm grade eggs for vaccines due to their lower costs. They cost pennies per egg while SPF eggs cost as much as a dollar per egg. Shaughnessy had difficulty getting CRL 's customers to switch to SPF eggs which is why the joint venture with ALPES was