Your firm, Lloyd Aviation Company, is a leading U.S. manufacturer of helicopters. While on a trip to Moscow, you met Gennady Tupolev, the head of the former Soviet Air Force division that once manufactured military helicopters. The Russian government has no funds to finance further operations for the Tupolev Division and he needs to privatize its operations. The Russian government is reluctant to cede control over an industry that is so central to its national security. However, its conversion to commercial production will require thorough control by Lloyd. The division has a strong research and development department. Many of the division’s lower-level employees will need to be laid off if it is to be a commercially viable operation.
1. Prepare a memorandum to Lloyd’s board of directors outlining your plan for privatizing the Tupolev Division.
2. What regulatory arrangements should Lloyd make with the Russian government?