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Hydrofruit Case

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Is HydroFruit still an attractive investment opportunity for MegaBank? Making an investment in a company with potential legal issues is a risk, but with plausible solutions investment looks to be rewarding. MegaBank is looking to make a $65million equity investment in HydroFruit, but there is risk in this new investment. HydroFruit does face two major legal risks which involves: the hiring of illegal immigrants, and potential discrimination lawsuits.
Objective and Goal: MegaBank’s main objective is to reduce the risks concerning HydroFruit. In the long run MegaBank’s goal is to reduce all legal risk and create new profits. This new investment would allow for an annual return yield between the 25% - 35% range . It would also bring cheap labor, an abundant work force, and lower turnover. …show more content…

In the agriculture industry a “standard” is to hire illegal employees even though it is against the law. Although companies ask new employees for proof of authorized employment, if the employer determines that the documents appear to be genuine then employers are not held legally responsible for receiving false documents.
Significance of Problem: Social and Political Risk:
Hydrofruit has tried to change its hiring process by voluntary implementing a Immigration Reform and Control Act-pilot program, in 1989, by sending in the documents to the government actual permission to work was determined but the process took months and many workers were gone by the time it was determined (Advanced Business Communication 54). As of now HydroFruit is in compliance with legal requirements, however HydroFruit maybe pretend to know less about false documents so they can comply with Anti discrimination laws .

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