loss. A brief description of Venezuela will help set the scene for the analysis that follows.
Venezuela is a nation of some 21 million people in a space more than twice the size of California. The major cities that were the primary part of the market for P&G were the capital Caracas (1,800,000); Maracaibo (1,400,000; Barquisimeto (907,000; and Valencia (955,000). The official currency is the Bolivar, which because of its volatile swings in value is often not listed in the foreign exchange markets. Venezuela helped found the Organization of Petroleum Exporting States (OPEC). The government, Jan. 1, 1976, nationalized the oil industry with compensation. Oil accounts for much of total export earnings and the economy suffered a severe cash crisis in the 1980s as the result of falling oil revenues.
According to the case study, in 1988, the nation reached its import quota for phosphates and P & G had to stop manufacturing detergents. When P & G announced it would close its plants, buyer's panic e
...