Question: You re the CFO of the Kraknee Roller Skate Company which
You're the CFO of the Kraknee Roller Skate Company, which sells roller skates worldwide and also builds and operates roller rinks. Some time ago Archie Speedo, the head of international marketing proposed selling skates in Russia. Everyone thought he was crazy, but the idea turned out to be very successful. Archie lined up a talented Russian importer who managed to sell more skates than anyone imagined possible. Now Archie has proposed a new Russian venture. He wants to open and operate a roller rink in Moscow. He says that since the breakup of the Soviet Union, Russians are interested in Western pastimes and a roller rink in the capital city would make a fortune. Based on his earlier success in Russia, the rest of the executive team is in favor of the idea. You, however, have some concerns. Write a memo explaining how the roller rink proposal differs from exporting skates to Russia, and what problem is likely to exist even if the venture is as commercially successful as the skates. What other risk is involved?
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