International Joint Ventures and Alliances

1
International Joint Ventures and Alliances

• Motivations Complementarities vs. Size
• Market access
• Risk / experience (lack of / superior)
• Too small / resource pooling
• Intense competition
• Technology (lack of / superior)
• Learning

2
Motivation Size
Braunschweiger AG Germany
Acme Inc. U.S.
3
Motivation Complementarities
Braunschweiger AG Germany
Acme Inc. U.S.
4
International Joint Ventures

• Cooperative activities
• RD
• Manufacturing
• Marketing
• Sourcing
• Service
• Everything?

5
International Joint Ventures

• Forms of agreement
• Equity vs. arms-length contract/agreement
• Structure
• Ownership (50-50 51-49 90-10)
• Contribution (, technology, plant, marketing)
• Strategic and operations roles responsibilities
• Active vs. Passive (strategic option)
• Value-chain scope

6
Cooperative Modes

• Independent
• Act as two separate companies no constraints
• Coordinated / Complementary
• Act as two separate companies with established
  operational, product, or geographic domains or
  constraints
• Joint
• Act as single company

7
Independent RD
Braunschweiger AG Germany
Acme Inc. U.S.
8
Independent RDCoordinated Marketing
Braunschweiger AG Germany
Acme Inc. U.S.
North America
European Union
9
Independent RDCoordinated MarketingJoint
Manufacturing
Acme Inc. U.S.
Braunschweiger AG Germany
North America
European Union
A-B Mfg. SA, Mexico
10
International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Low
Low
High
Pressures for Local Responsiveness
11
Multidomestic Strategy
Germany
Acme Inc. U.S.
Mexico
Japan
Entry?
12
Multidomestic Strategy
Germany
Acme Inc. U.S.
Mexico
Malaysia
REMEMBER IJV is also an entry mode
13
IJV in Multidomestic Strategy
Braunschweiger AG Germany
Acme Inc. U.S.
Cervesa SA Mexico
Sashimi LTD Japan
14
IJV in Global Strategy
Braunschweiger AG Germany
Acme Inc. U.S.
Cervesa SA Mexico
Sashimi LTD Japan
15
IJV in Transnational Strategy
Braunschweiger AG Germany
Acme Inc. U.S.
Cervesa SA Mexico
Sashimi LTD Japan
16
Learning and IJVs1984 The NUMMI Alliance
GM
Toyota
NUMMI
17
1986 Application of Knowledge I
GM
Toyota
TMM-K
NUMMI

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

18
1990 Application of Knowledge II
GM
Toyota
Saturn
NUMMI

• GM learned
• Lean manufacturing
• Quality

19
1999 The Fuel Cell Alliance
GM
Toyota
Alliance
20
Learning Race(s)
GM
Ford
Race to Technology 2
Race to Technology 1
Toyota
Daimler-Chrysler