---------------------------------------------------------------------------------------------------------------The decision to terminate the strategic alliance which we formed last year, has now been
made because there are hardly any advantages for us in continuing. This is a result of the
increasing number of problems the company has encountered and the failure to achieve key
objectives. For these reasons, we are currently negotiating the formation of a joint venture
with a large Peruvian construction company in order to build the new housing project in
Lima.
We are doing this in the hope of exchanging technical knowledge and expertise with them.
With the cooperation of this joint venture, we will have access to all the resources we require
as well as the highly specialized staff they employ, both of which will be extremely valuable.
Their company has a good record for city-center with this kind of projects. Furthermore, we
will benefit from their large workforce, which we will need to complete the project on time.
The aspect that a joint venture has additional advantages over a strategic alliance is that it is a
temporary agreement that only lasts for the period of this project. Moreover, a joint venture
will not affect our whole business. It is clear that both companies share the same goals for the
project and this should lead to much more effective communication and fewer problems than
we experienced with the strategic alliance.