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Transcript of 0 JOINT VENTURES THAT WORK IDENTIFYINVESTIGATEINTEGRATEIMPLEMENT “THE JOURNEY TO SUCCESSFUL JOINT...
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JOINT VENTURES THAT WORK
IDENTIFY INVESTIGATE INTEGRATE IMPLEMENT
“THE JOURNEY TO SUCCESSFUL JOINT VENTURES”
4200 Montrose, Suite 590 Houston, TX 77006(713) 522-9656 Phone (713) 522-9661 Fax
www.wjmurray-assoc.com
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BENEFITS OF THE W J MURRAY & ASSOCIATES’ PROCESS:• Fewer False Starts• Shorter Cycle Times• Joint Ventures That Create Value For All Parties ( Or Don’t Do It)• An Organization To Accomplish The Joint Venture • Successful Approaches To Search For And Value Potential Partners• Proven Due Diligence Techniques• Effective Integration Techniques Manage The Conflicts•Effective Governance Models• Avoid The Pitfalls
LEADING TO: SUCCESSFUL JOINT VENTURES
IDENTIFY INVESTIGATE INTEGRATE IMPLEMENT
JOINT VENTURES THAT WORK
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• Enterprise Strategy * The Customer, Vision, Goals, The Path Forward• Alternatives * Internal Development * Alliance * Acquisition • How Does Joint Venture Fit The Playbook?• Costs/Benefits of JV • Type of Alliance That Match Costs/Benefits * Cross Selling/Distribution * Joint Development * Supplier - Customer * Strategic Alliance * Joint Venture• Initial Screening Criteria• Partnership Executive Team (PET)
• Partner Selection Criteria * Strategic Compatibility * Commitment * Cultural Fit * Ability to Add Value Over The Long Term * Past History• Engage The Search Engine• Complete Initial Screening • Gain Consensus On The Short List• Complete Benefits Contributions Matrix If not balanced stop!• Clearly articulate what you want, what you won’t give up and what you will give up.
• Company Contact• Shared Business Plan• Understand each party’s expectation’s• Structure of Joint Venture• Operating Procedure * Metrics * Make It Work Provisions• Customer, Competitor, Regulatory Reactions• Risk/Reward Sharing Methodology
• Manage Employee Concerns• Harvest The “Low Hanging Plums”• Communication: Roles and Responsibilities• Staffing• Linking Budgets/ Processes• Driving Costs Out Of The Systems• Managing The Path Forward The “Scorecard”
THE JOURNEY TO SUCESSFUL JOINT VENTURES
IDENTIFY INVESTIGATE INTEGRATE IMPLEMENT
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IDENTIFY
WHAT TO DO
•Confirm The Enterprise Strategy• The Business• The Vision• The Goals• The Competitors• The Value Proposition• The Critical Success Factors
• Gain Consensus That Joint Venture Is Better Than Acquisition/Sale, Internal Development or Strategic Alliance
• Demonstrate How The Joint Venture Supports The Critical Success Factors
• Strategic Alliance Versus Joint Venture
• Expectations - Contributions - Benefits
• Select Partnership Execution Team (PET) • Initial Screening Criteria
WHO DOES IT
Senior Managers
Senior Managers
Senior Managers
Senior Managers
Senior Managers
Senior Managers
Senior Managers & PET
OUTPUTS
• Internal Commitment
• Reconfirmation of, And Consensus For Partnership
• Decision on Strategic Alliance Or Joint Venture
• Expected Benefits/Costs
• Initial Selection Criteria
• PET Team membership
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WHY JOINT VENTURE RATHER THAN INTERNALLY DEVELOP OR ACQUIRE?
FAVORS
FAVORSINTERNAL
DEVELOPMENT
COSTLOWER HIGH
TIME AVAILABLEFOR EXECUTION
SHORTER LONGER
NATURE OF ACTIVITYCOMPLEMENTARY CORE
VENTURE EXPERIENCE/EXPERTISE
HIGH LOW
AMOUNT OF CONTROLLOWER HIGHER
JOINT
VENTURE
IDENTIFY
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CRITERIA WEIGHT
MOSTDESIRABLE
10 7 5 3
LEASTDESIRABLE
1
Market Access Geographic CustomersSales Revenue
Capacity
Profitability
Best-in-ClassIn Specific Strength
Quality ofManagement Team
Value CreationPotential
Reputation
SAMPLE INITIAL SCREENING CRITERIA
IDENTIFY
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WHAT TO DO
• Partner Selection Criteria
• Engage The Search Vehicle * Customer/Supplier
* Business Network * Board Members * Law/Accounting firm * Banks * Business Network
• Complete Initial Screen
• Gain Consensus On Short List
• Second Phase Screen Based On Partner Selection Criteria
• Benefits/Contributions Evaluation
• Discuss With Management
• Memorandum Of Understanding
WHO DOES IT
Senior Managers & PET
Senior Managers & PET
PET
Senior Managers & PET
PET
PET
Senior Managers & PET
Senior Managers & PET
OUTPUTS
• Criteria For Ranking Candidates
• Consensus On Top Candidates • Advantages/Disadvantages Associated With Prospective Partner
• Alliance Costs * Management Time * Dollars, Other Resources
• Reaffirmation Of Purpose /Goals
• Commitment To Continue
INVESTIGATE
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SAMPLE SECOND-PHASE SCREENING CRITERIA
CRITERIA WEIGHTMOST
DESIRABLE10 7 5 3
LEASTDESIRABLE
1Size
Technology Synergy
Product Synergy
Competitive Synergy
Market Access
Cost Position
Financial Performance
Patents, Technology
Know-How, Expertise
Sales/Marketing Synergy
Supply Chain Synergy
INVESTIGATE
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SAMPLE SECOND PHASE SCREEN: COMPATIBILITY AND CULTURAL ASSESSMENT
GOALROI GROWTH
STRATEGYCOST QUALITY INNOVATION
DECISION MAKINGPLAN CRISIS
COMMAND CONSENSUS
ENVIRONMENTAL/OSHARECORD
GOOD POOR
ORGANIZATIONSTABLE HIRE/FIRE
TEAM BASED INDIVIDUAL EXCELLENCE
INVESTIGATE
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WHAT TO DO
• Complete Negotiations
• Sign Joint Venture Agreement
• Create Shared Business Plan
• Agree On Structure of JV
• Agree On Exit Provisions
• Align Operating Procedures/ Metrics (Balanced Scorecard)
• Address Customer/Competitor Regulatory Concerns
WHO DOES IT
PET
Senior Managers
PET
Senior Managers & PET
PET
PET
Senior Managers & PET
OUTPUT
• Joint Venture Agreement
• Business Plan
• Joint Venture Structure and Governance
• Metrics For Tracking Performance
• Clarity Of Contributions And Benefits
INTEGRATE
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WHAT TO DO
• Internal Communication * Scope Of Alliance * Expectations * How It Will Work
• External Communication * Customers * Suppliers
• Staffing * People * Rotation Schedule
• Linking Budgets / Process To Alliance
• Managing “The Path Forward” * Meeting Schedules * Processes
• Building Trust
WHO DOES IT
PET
Senior Managers & PET
Senior Managers
Senior Managers & PET
PET
Senior Managers & PET
OUTPUT
• Integrated Alliance * Direction * Commitment * Metrics in Place * Budgets * Key issues Defined * Roles and Responsibilities Defined* Expectation are clear
IMPLEMENT
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IMPLEMENT
SAMPLE ELEMENTS OF BUILDING TRUST
HIGH TRUST LOW TRUST
LEADERSHIPSHARED UNILATERAL
COMMUNICATIONFREQUENT OCCASIONAL
FACE-TO-FACE ARMS LENGTH
PROBLEM SOLVINGROOT CAUSE SUBJECTIVE,QUALITATIVE
TOP MANAGEMENTVISIBLE SUPPORT
HIGH LOW