Groupo Ariel: A Project Analysis
On June 23, 2008, a Monday morning, Francois Belliard arrived at his office in Groupo Ariel’s corporate headquarters in Toulon, France. The prior week, Belliard had requested additional financial information about an investment proposal from Ariel-Mexicana, a wholly-owned subsidiary that operated a manufacturing facility and a regional sales office in Jalisco, Mexico. The information had arrived late Friday, too late for Belliard to analyze due to the weekend. He sat down this morning to examine the proposal, as it was Belliard’s job to evaluate cross-border projects for Ariel, a global manufacturer of printing and imaging equipment. This type of cross-border proposal was not unusual as Ariel was in the process of expanding its global presence beyond Europe.
The Mexican investment proposal called for the purchase and installation of new automated machinery to recycle and refurbish toner and printer cartridges for the local market. Recycling and refurbishment had become a large portion of Ariel’s business in all its markets; both European and foreign. This process and market had burgeoning margins and was proving to be a centerpiece of Ariel’s future growth. Many office product retailers operated formal toner cartridge recycling programs, both for environmental reasons of keeping reusable waste from landfills and demonstrating cost savings to customers over continually buying new OEM product. Writing in a leading trade journal, one industry analyst stated, “We are going to see more and more refined approaches to recycling and refurbishment in the coming years…Both corporate and individual customers are becoming used to these reusable products. They simply come to expect these products to be high quality, available at all times, and at lower price points than new OEM cartridges”.
Ariel-Mexicana’s Jalisco plant began operations in