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Mohit Yadav (096) Jayeeta (101) Pallavi Chopra(103) Monika Kataria(112) Prerna Joshi (130)
A joint venture(JV) is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and then they share in the revenues, expenses, and control of the enterprise.
example. It also provides an opportunity for both the partners to leverage their core strengths and increase the profits. It also provides a learning opportunity for both the partners. .MOTOROLA entered INDIA in JV with blue star company.Reason for Joint Ventures JV provides a lower risk option of entering into a new country. a brand with repute and vast distribution network. .
or parties may have experience in different industries which it is hoped will produce synergistic benefits. Sharing Capabilities. Technology. .Other Reasons…. Such sharing grants a competitive advantage to the JV partners over other players in the market. The basic tenet of a JV is the sharing of capabilities.. expertise and liabilities of both the partners on mutually agreed terms. Expertise and Liabilities Parties to a JV may have complementary skills or resources to contribute to the JV.
Contractual . Equity or Corporate.Types of Joint Ventures 1. . 2.
Need for setting up a Joint Venture(JV) INTERNAL REASONS COMPETITIVE GOALS STRATEGIC GOALS .
Internal Reasons 1) Building on company's strength. 2) Spreading costs and risks. 5) Access to new technologies and customers. 3) Improving access to financial resources. . 4) Economies of scale and advantages of size. 6) Access to innovative managerial practices.
. 3) Defensive response to blurring industry boundaries. 4) Creation of stronger competitive units.Competitive Goals 1) Influencing structural evolution of the industry. 2) Pre-empting competition. 6) Improved agility. 5) Speed to market.
3) Diversification. .Strategic Goals 1) Synergies. 2) Transfer of technology/skills.
. • The partners should clearly agree on the way the joint venture will be managed.Before Entering a Joint Venture(JV) • Both partners should appreciate the need for the joint venture. • Be sure about the organizational behavior of the partner to ensure synergies. • Take measures to be sure that the partner has a compatible work culture.
. it is also important that both partners are equally able to service its growing need for capital as the business expands. Clearly define the role and responsibility of each partner.Before Entering a Joint Venture(JV) It is important that both partners work towards a system based on trust and transparency. To make for the long term success of the joint venture. Need to have a clear long term goal and set the terms and conditions of the JV.
The agreement or contract should provide for flexibility in the future.Successful Joint Venture Require Each participant has something of value to bring to the venture. There should be provision in the agreement for termination including buyout by one of the participants. The participants should engage in careful preplanning. A distinct unit be created in the organizational structure which has the authority for negotiating and making decisions . Key executives must be assigned to implement the joint ventures.
A-star.000 cars annually and has an extremely large domestic market in India selling over 730. The company offers full range of cars from entry level Maruti 800 & Alto to stylish hatchback Ritz. although the actual production started in 1983 with the Maruti 800 and the first car was rolled out on 14 December.000 cars annually. Maruti Udyog Limited (MUL) had a joint venture signed with Suzuki Motor Corporation (SMC) on October 2nd 1982. The company exports more than 50. MUL Maruti Udyog Limited was established in February 1981. accounting for over 50 per cent of the domestic car market. Estillo and sedans DZire.Maruti Suzuki India Ltd (formerly Maruti Udyog Ltd) is India's largest passenger car company. SX4 and Sports Utility vehicle Grand Vitara and MUV Ertiga. Wagon R. . Swift.
Bharati Walmart .
while Bharti Enterprises is one of India’s leading business groups with interests in telecom. which will be called Bharti Wal-Mart Private Ltd The combined operations of the two retail giants will make available for small retailers and business owners a wide range of quality products at competitive wholesale prices. Neighborhood Markets and Sam’s Club locations in the United States. operates Wal-Mart discount stores. restaurants and other business owners. which will further enhance their businesses and profitability. Both retail groups will hold a 50-50 stake in their joint-venture. Inc. insurance and retail. The two have now joined hands to establish a joint-venture for a cash and carry and wholesale retail chain in India. fruit and vegetable resellers. Super centers. Those that will be served by this joint-venture include kirana stores.Contd… Wal-Mart Stores. . agribusiness.
Tata Starbucks .
Tata Global Beverages is a global beverage business and the world’s second largest tea company. the company is the premier roaster and retailer of specialty coffee in the world.Contd….5 bn and it employs around 3000 people worldwide. The group’s annual turnover is US $1. About Tata Global Beverages and Tata Coffee Tata Global Beverages is a part of the global Tata Group. . Today. with more than 17. About Starbucks Since 1971.000 stores around the globe. Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest-quality arabicacoffee in the world.
. TATA Starbucks Limited brings together two companies with a rich heritage in and passion for coffee. Tata Global Beverages Limited and Starbucks Coffee Company announced a joint venture between the iconic international coffee brand and the 2nd largest branded tea company in the world. while further discovering the unique taste of high-quality Indian arabica coffee worldwide. tea and innovative beverages. the JV will enable an expanded range of beverage offerings for Indian consumers.Contd….” This agreement paves the way for consumers in India to enjoy the premium Starbucks Experience. named TATA Starbucks Limited. The 50/50 joint venture. will own and operate Starbucks cafés which will be branded as Starbucks Coffee “A Tata Alliance. Tata Coffee is a subsidiary of Tata Global Beverages. Together.
Volvo Eicher Motors .
Volvo Eicher Motors The Swedish truck maker is investing $375 Million for a joint venture with Eicher Motors. . giving it 50% of the venture through direct and indirect holdings The joint venture will provide [a] platform for all future truck projects for Volvo in India. the third-largest commercial vehicle manufacturer in India. The Gothenburg. for necessary infusion of funds and technology. We believe this will drive Eicher’s future growth in the domestic market. and market share expansion.” Merrill Lynch said in a research note. Sweden-based firm said it also plans to buy 8. Volvo will contribute $275 million in cash and $75 million by transferring its Indian truck dealer and service network to Eicher.1% of Eicher.
Its motorcycle-making division will not be part of the venture.300 and focus production at Eicher's current plant in Pithampur. in the central Indian state of Madhya Pradesh. Eicher will transfer its entire truck and bus operations and their business and engineering services to the joint venture. . which will employ 2.Contd….
People with expertise in one company refused to share knowledge with their counterparts in the joint venture. Parent companies are unable to share control or compromise on difficult issues .Reasons for failure of a Joint Venture(JV) Inadequate preplanning for the joint venture. The hoped-for technology never developed. Agreements could not be reached on alternative approaches to solving the basic objectives of the joint venture.
Kinetic Honda .
Kinetic Honda Kinetic Honda was a joint venture between Kinetic Engineering Limited. compared to its competitors. its operating margin was the lowest in the industry because of the high import content of raw materials. India and Honda Motor Company.1998. While sales grew slowly. . The JV operated during 1984 . Japan. manufacturing 2-stroke scooters in India. In 1998. the joint venture was terminated after which Kinetic Engineering continued to sell the models under the brand name Kinetic until 2008 when the interests were sold to Mahindra.
Hero BMW .
Hero BMW Hero India based two wheeler manufacturer and BMW German automobile manufacturer joined hands and come in joint venture in 1995 for Hero BMW F650 but the deal fail in 1996 because of poor consumer response. .
Foreign companies can benefit mutually by combining their technological and monetary resources and taking advantage of respective market conditions. .Future of Joint Venture The number of joint ventures will continue to increase in the near future More and more companies are adopting the JV approach as a part of their growth strategies.
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