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Metalfabriken Brazil

Metalfabriken Brazil is a small company that manufacturers automatic lathes. The company is based in Germany, but has operations in Brazil, and has since 1976. The company has an innovative product line that offers high quality lathes at competitive prices, although the lathes were originally applicable to a smaller range of applications than their competitors. Through technological innovations, the lathes that the company produced in the mid-1980s had more broad applications through the use of special attachments developed by the company. In addition to a sales force, the company uses highly trained technical specialists to offer technical support during the sales process and shortly after sales.

Brazil during the 1980s faced difficult times in its economy. The country had high inflation, and an increasingly large foreign debt responsibility. Companies such as Metalfabriken Brazil, which were composed of Brazilian units but owned ultimately by companies outside of Brazil, came under increasing scrutiny and regulation as Brazil sought to maintain internal control of its economic situation. Regulations were imposed which determined how much of a product manufactured in Brazil could be comprised of imported components; if this percentage were exceeded, the product itself was considered an import and subject to additional regulation. In MFK's case, so long as the product itself was considered domestic, the all-important attachments would be considered domestic, as well.

Metalfabriken Brazil found that its sales increased from 1984 to 1986 when measured in terms of the Brazilian currency (the cruzado), but when measured in the relatively constant mark, actually decreased. The same was true for profits and dividends to the Germany parent company. This situation caused concern among Metalfabriken Brazil's managers, who wondered if the company could successfully continue operations in Brazil amid the currency fluctuations, the...

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Metalfabriken Brazil. (1969, December 31). In Retrieved 08:24, February 18, 2019, from