International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations...

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International Joint Ventures and Alliances Motivations – Motivations – Complementarities vs. Size: Complementarities vs. Size: – Market access – Risk / experience (lack of / superior) – Too small / resource pooling – Intense competition – Technology (lack of / superior) – Learning

Transcript of International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations...

Page 1: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

International Joint Ventures and Alliances

• Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: – Market access

– Risk / experience (lack of / superior)

– Too small / resource pooling

– Intense competition

– Technology (lack of / superior)

– Learning

Page 2: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Motivation: Size

Acme Inc.U.S.

Braunschweiger AGGermany

Page 3: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Motivation: Complementarities

Acme Inc.U.S.

Braunschweiger AGGermany

Page 4: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

International Joint Ventures

• Cooperative activitiesCooperative activities:– R&D

– Manufacturing

– Marketing

– Sourcing

– Service

– Everything?

Page 5: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

International Joint Ventures• Forms of agreementForms of agreement:

– Equity vs. arms-length contract/agreement

• StructureStructure:– Ownership (50-50 … 51-49 … 90-10)

– Contribution ($, technology, plant, marketing)

– Strategic and operations roles & responsibilities• Active vs. Passive (strategic option)• Value-chain scope

Page 6: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Cooperative Modes

• IndependentIndependent– Act as two separate companies; no constraints

• Coordinated / ComplementaryCoordinated / Complementary– Act as two separate companies with

established operational, product, or geographic domains or constraints

• JointJoint– Act as single company

Page 7: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Independent R&D

Acme Inc.U.S.

Braunschweiger AGGermany

Page 8: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Independent R&DCoordinated Marketing

Acme Inc.U.S.

Braunschweiger AGGermany

NorthAmerica

EuropeanUnion

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Independent R&DCoordinated Marketing

Joint ManufacturingAcme Inc.

U.S.Braunschweiger AG

Germany

NorthAmerica

EuropeanUnion

A-B Mfg. SA, Mexico

Page 10: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

Page 11: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Multidomestic Strategy

Germany

Mexico

Japan

Entry?Entry?

Acme Inc.U.S.

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Multidomestic Strategy

Germany

Mexico

Malaysia

REMEMBER: IJV is also an entry modeREMEMBER: IJV is also an entry mode

Acme Inc.U.S.

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IJV in Multidomestic Strategy

Acme Inc.U.S.

Braunschweiger AGGermany

Cervesa SAMexico

Sashimi LTDJapan

Page 14: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

IJV in Global Strategy

Acme Inc.U.S.

Braunschweiger AGGermany

Cervesa SAMexico

Sashimi LTDJapan

Page 15: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

IJV in Transnational Strategy

Acme Inc.U.S.

Braunschweiger AGGermany

Cervesa SAMexico

Sashimi LTDJapan

Page 16: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Learning and IJVs:1984: The NUMMI Alliance

GM Toyota

NUMMI

Page 17: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

1986: Application of Knowledge I GM Toyota

NUMMI

TMM-K

Toyota learned how to:• Tap into US preference• Work in US environment

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1990: Application of Knowledge II GM Toyota

NUMMISaturn

GM learned:• Lean manufacturing• Quality

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1999: The Fuel Cell AllianceGM Toyota

Alliance

Page 20: International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience.

Learning Race(s)

GM

Toyota

Ford

Daimler-Chrysler

Race toTechnology

#1

Race toTechnology

#2