Description
International Joint Ventures (IJVs) are becoming increasingly popular in the business world as they aid companies to form strategic alliances.
Agenda
? Definition of IJV
? Difference between domestic and international joint
venture ? Types of IJV ? 5 Focal Areas of IJV ? Recommendations ? Conclusion
Definition of IJV
? A newly formed company by two or more enterprises
in two or more countries.
? The purpose of an IJV is to acquire technical know-
how, production equipment, distribution facilities and/or capital endowment as well as to develop a new product or manufacturing process.
? The primary motive in most cases for the creation of
an IJV is to close the gap between strategic intent and resource availability to achieve a strategic objective not attainable by acting autonomously.
Difference Between Domestic and IJV
Domestic joint venture To seek collusive practices To get access to the know-how of the others To penetrate new sectors More than one partner Partners have similar size Greater predominance of equal equity International joint venture To facilitate the penetration in new markets To develop a new product and/or production process To reduce risks of cross-border transactions Small number of partners Partners have different sizes Less balanced distribution of equity in IJVs
Types of IJV
? Independent IJV
? Shared management IJV ? Dominant parent IJV
5 Focal Areas of IJV
? Diversified workforce
? Management control ? Conflict ? Managing Change for Competitiveness ? Job Insecurity
Diversified Workforce
Positive Impacts of Diversified Workforce ? Improved organizational performance ? Diversified workforce can create a creative and innovative knowledge base ? Higher Quality Problem-Solving in Teams
Negative Impacts of Diversified Workforce ? Diversity Can Increase Coordination and Control Costs ? Culture Shock--Toronto Hotels
Management Control
? Who actually controls the operation can depend on
who is responsible for the day-to-day management of the IJV.
? Top manager will be expected to make decisions that
deal with the demands of both companies.
? The most common management error in IJVs is a
tendency for each partner to want control.
? Control plays an important role in determining a
firm’s ability to achieve its strategic objective.
Management Control
? Without effective control efforts, firms are likely to
experience increased difficulty in successfully managing their operations and achieving their objectives.
? This is a particular concern in the case of IJVs since,
due to the shared ownership and decision making nature of these ventures
Conflict
Sources of Conflict:
• Cultural differences between partners
• The desire for control and autonomy
• The differences in goals • Role conflict and role ambiguity
Conflict
Negative Impact on IJV ? Create stress, hostility, dissatisfaction, low productivity, difficulties in decision making, and distortion of reality Positive Impact on IJV • Conflicts serve as filters of incoming information
• Conflict also serve the creation of alternative solution
to unexpected managerial situations
Managing Change for Competitiveness
• Restructuring Organization (Godrej Soaps Limited –
P &G)
• Restructuring Supply Chain ( Tata Engineering-
TELCO, contracts with small manufacturers to supply complete subassemblies instead of components )
• Redesigning Management Practice (Maruti Udyog
Ltd- Suzuki Motors)
Job Insecurity
Definition Effects ? Employee Health ? Wellbeing ? Job Attitude ? Work Behaviour Case IJV Between Western Companies and Chinese Companies
Diversified Workforce
Organizations are constantly seeking to maximize the benefits of diversity while minimizing the drawbacks. A number of strategies that can be adopted by organizations seeking to benefit from diversity, Leadership, Organizational Policy and Providing Training and Development are most recommended.
? Leadership and Organizational Policy ? Providing Training and Development
Management Control
? Recruitment and staffing of IJV employees, particularly those
in the venture’s top management position.
? IJV partners should involved in the recruitment and selection
of staff.
? Performance appraisal will be left to the discretion of the new
general manager.
? Appraising employee performance is important because it
provides information about how well jobs are being performed and objectives are being met.
? Job design
Conflict
clearly define the roles and goals
? Regular meeting
provide more opportunity for people to communicate with each other due to the cultural differences
? Teamwork assignment
provide opportunity for people to work with each other and get more involved within the organization
Managing Change for Competitiveness
o Reinforce the vision of the future. ? Keep the vision of where we want to get to, crystal clear in
our minds. ? Reduce ambiguity. ? Emphasize benefits.
o Minimize the pain of the transition.
? Have a plan of action to reduce the chaos.
? Celebrate every little success. ? Reward effort, even when the results are not perfect.
Managing Change for Competitiveness
o Seek Consultants advice o Seek to manage change instead of controlling it. o Maintain a flat organizational team structure and rely on
minimal and informal reporting requirements.
Job Insecurity
? ? ? ? ?
Employer Benefits Good Job Performance Good Organisational Citizenship Behaviour Trust In The Organisation Reduction Of Job Insecurity
Closing Thoughts…
IJV are becoming a popular means to enter competitive markets for global giants. However, the risks of crossborder expansion still remains. To have a successful IJV, both partners should have a good understanding of each other’s cultures, establish a good work collaboration and work towards a common objective. The risks of cultural integration would still exist - often times management from both the sides often ignore the cultural integration issue assuming that they can take care of it - but cultural integration often falls between the cracks - and the IJV ultimately fails.
doc_501512160.ppt
International Joint Ventures (IJVs) are becoming increasingly popular in the business world as they aid companies to form strategic alliances.
Agenda
? Definition of IJV
? Difference between domestic and international joint
venture ? Types of IJV ? 5 Focal Areas of IJV ? Recommendations ? Conclusion
Definition of IJV
? A newly formed company by two or more enterprises
in two or more countries.
? The purpose of an IJV is to acquire technical know-
how, production equipment, distribution facilities and/or capital endowment as well as to develop a new product or manufacturing process.
? The primary motive in most cases for the creation of
an IJV is to close the gap between strategic intent and resource availability to achieve a strategic objective not attainable by acting autonomously.
Difference Between Domestic and IJV
Domestic joint venture To seek collusive practices To get access to the know-how of the others To penetrate new sectors More than one partner Partners have similar size Greater predominance of equal equity International joint venture To facilitate the penetration in new markets To develop a new product and/or production process To reduce risks of cross-border transactions Small number of partners Partners have different sizes Less balanced distribution of equity in IJVs
Types of IJV
? Independent IJV
? Shared management IJV ? Dominant parent IJV
5 Focal Areas of IJV
? Diversified workforce
? Management control ? Conflict ? Managing Change for Competitiveness ? Job Insecurity
Diversified Workforce
Positive Impacts of Diversified Workforce ? Improved organizational performance ? Diversified workforce can create a creative and innovative knowledge base ? Higher Quality Problem-Solving in Teams
Negative Impacts of Diversified Workforce ? Diversity Can Increase Coordination and Control Costs ? Culture Shock--Toronto Hotels
Management Control
? Who actually controls the operation can depend on
who is responsible for the day-to-day management of the IJV.
? Top manager will be expected to make decisions that
deal with the demands of both companies.
? The most common management error in IJVs is a
tendency for each partner to want control.
? Control plays an important role in determining a
firm’s ability to achieve its strategic objective.
Management Control
? Without effective control efforts, firms are likely to
experience increased difficulty in successfully managing their operations and achieving their objectives.
? This is a particular concern in the case of IJVs since,
due to the shared ownership and decision making nature of these ventures
Conflict
Sources of Conflict:
• Cultural differences between partners
• The desire for control and autonomy
• The differences in goals • Role conflict and role ambiguity
Conflict
Negative Impact on IJV ? Create stress, hostility, dissatisfaction, low productivity, difficulties in decision making, and distortion of reality Positive Impact on IJV • Conflicts serve as filters of incoming information
• Conflict also serve the creation of alternative solution
to unexpected managerial situations
Managing Change for Competitiveness
• Restructuring Organization (Godrej Soaps Limited –
P &G)
• Restructuring Supply Chain ( Tata Engineering-
TELCO, contracts with small manufacturers to supply complete subassemblies instead of components )
• Redesigning Management Practice (Maruti Udyog
Ltd- Suzuki Motors)
Job Insecurity
Definition Effects ? Employee Health ? Wellbeing ? Job Attitude ? Work Behaviour Case IJV Between Western Companies and Chinese Companies
Diversified Workforce
Organizations are constantly seeking to maximize the benefits of diversity while minimizing the drawbacks. A number of strategies that can be adopted by organizations seeking to benefit from diversity, Leadership, Organizational Policy and Providing Training and Development are most recommended.
? Leadership and Organizational Policy ? Providing Training and Development
Management Control
? Recruitment and staffing of IJV employees, particularly those
in the venture’s top management position.
? IJV partners should involved in the recruitment and selection
of staff.
? Performance appraisal will be left to the discretion of the new
general manager.
? Appraising employee performance is important because it
provides information about how well jobs are being performed and objectives are being met.
? Job design
Conflict
clearly define the roles and goals
? Regular meeting
provide more opportunity for people to communicate with each other due to the cultural differences
? Teamwork assignment
provide opportunity for people to work with each other and get more involved within the organization
Managing Change for Competitiveness
o Reinforce the vision of the future. ? Keep the vision of where we want to get to, crystal clear in
our minds. ? Reduce ambiguity. ? Emphasize benefits.
o Minimize the pain of the transition.
? Have a plan of action to reduce the chaos.
? Celebrate every little success. ? Reward effort, even when the results are not perfect.
Managing Change for Competitiveness
o Seek Consultants advice o Seek to manage change instead of controlling it. o Maintain a flat organizational team structure and rely on
minimal and informal reporting requirements.
Job Insecurity
? ? ? ? ?
Employer Benefits Good Job Performance Good Organisational Citizenship Behaviour Trust In The Organisation Reduction Of Job Insecurity
Closing Thoughts…
IJV are becoming a popular means to enter competitive markets for global giants. However, the risks of crossborder expansion still remains. To have a successful IJV, both partners should have a good understanding of each other’s cultures, establish a good work collaboration and work towards a common objective. The risks of cultural integration would still exist - often times management from both the sides often ignore the cultural integration issue assuming that they can take care of it - but cultural integration often falls between the cracks - and the IJV ultimately fails.
doc_501512160.ppt