Multiquimica Do Brasil
Multiquimica do Brasil (MB) is the wholly owned Brazilian subsidiary of Multichemical Industries, Inc., of the United States. MB is responsible for all-Brazilian manufacturing and sales of Multichemical's principal chemical and pharmaceutical products in Brazil. As management reviewed preliminary 1998 results in early January 1999, concern was growing that Multichemical's own pricing, billing, and performance measurement policies were contributing to falling profits and market share of MB's primary pharmaceutical product, in the Brazilian marketplace.
This case has been used in a variety of executive education programs in which the difficulty of managing multinational operations in High-inflation emerging markets is typical. The case, while reasonably short in length, raises questions related to such broad topics as foreign exchange accounting, the impact of inflation on reported financial results, the linkages between government policies and corporate competitive positioning, the advantages and disadvantages of multiple sets of corporate books, the effects of allocated costs on management performance measurement, and the age-old debate of centralized versus decentralized management of multinational business operations.