group 7 joint venture
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Joint Ventures as Business Strategy
Group 7
SUCCESSEFUL JOINT VENTURES are like marriages: Made in Heaven, materialized on earth
Brahmos: India 50.5%, Russia 49.5% • Named after Brahmaputra and Moskva
river• Built to counter the US Tomahawk and
Harpoon Missiles• Land launched, Land attack variant
To produce 2000 Brahmos missiles, • Indian Army and Navy and Russian
Navy have already inducted Brahmos
• Export to friendly countries initiated, Malaysia is the first customer.
50:50 JV formed in 2001 after 10 yrs of cooperation• Leveraging strength of both
partners – Products of Nestle in Tea segment and Distribution capabilities of Coca Cola
• Employees drawn from both parent companies.
• Brings experience and diversity
Presence in 60+ countries• More than 10% YoY growth and • The products – Nestea and YuanYe
are leaders in their segments• Detailed agreement allows
competition in coffee segment and cooperation in tea segment
Maruti(India) & Suzuki(Japan): 1981• Maruti(Govt. of India) – 74%• Suzuki – 26%• Major Competitors:
• Hindustan Ambassador• Premier Padmini
1992: Suzuki’s share 50%• Effective marketing• No.1 in after sales service: Maruti
True Value• Car for common man• Met Indian mindset• 2010 market share: 55%• 2010: Govt: 0% & Suzuki: 54%
26% Each : Hero Honda Motors in 1984• Honda to provide technology, set
up manufacturing facility, support R&D
• Honda wanted entry in Indian market
2009: JV has 57% market share in India • World’s largest two wheeler
manufacturer since 2001• Sold 3.7 mn bike & grew 12% YoY in
2009
TAGIC: Jan’2001• TATA– 74%, AIG – 26%• TATA’s leadership in Indian market• AIG’s global expertise
2010 profit: INR 15mn• Revenue 2010: INR 5.8 bn • Complete range of general
insurance products for automobile, home & personal accident
• Expanded to 372 offices all over India
FAILED JOINT VENTURES:BUT all marriages are not made in Heaven…
Pandesic founded in 1997• Aim : E-Commerce Services • Packaged SAP S/W & intel H/W• Website Support & management
Lasted till 2001: Burned $200 mn• Who owns Strategy execution • Lack of clarity in roles &
responsibilities• No clear plan for venture
profitability• Unscalable system disabling ability
to gain economies of scale• High set up cost & fees as
percentage of client’s revenue
TVS (India) & Suzuki (Japan) : 1983• Suzuki: Technology contributor• TVS: Provided access to Indian
market
2001: Joint venture called off• 1989-1991: posted losses• 1991: Company shuts due to labor
issues• Technology, Capital &
manufacturing Independence• TVS lobbied for increasing stake in
JV & Suzuki’s share shrunk• Suzuki entered in agreement with
Kawasaki in 2001• Confident about business without
collaboration
Global One: 1996• To respond to customers and
market place with unprecedented service
• Combined & extended businesses of parent companies
• One global network• Started with 2500 employees &
1200 points of presence in 50 countries
Lasted for 3 years• Disagreements over target
customers• Cultural differences in German &
French• Now run by France Telecom
Dabhol power Corporation• formed by GE, Bechtel and Enron• Project started in 1992• GE – Technology• Bechtel – Manufacturing facilities• Enron – Operational management
Enron bankruptcy 2001 & Govt backs out plan in 1996• Wrong technology of using Naptha
instead of LNG or coal• Financial irregularities and Kick
backs by Enron surfaced• Power generated is double the cost
and half the capacity• Now run by Ratnagiri Gas and
Power plant in 2005
1984: GM Daewoo – 50:50 Joint venture• GM to provide technology &
process knowledge• Daewoo to provide cheap labor &
manufacturing facility
2008: $775 mn losses, never profited• South Korea: democracy & lost cost
advantages• Conflict of interest: Daewoo’s
expansion in US market• Blame game: Marketing or Quality