Internationalization through Strategic Alliances & Joint Ventures

1. Internationalization through Strategic Alliances & Joint Ventures Helena Grba 0201823 Ulrico Figà-Talamanaca 0200754 Kasia Kozirog 0208736 Anne-Sophie Le Boubennec 0200110

2. Plan • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion

3. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Introduction • Deciding whether to go abroad • Advantages • Risks • Deciding in market to enter • Deciding how to enter the market

4. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Deciding how to enter the market • Indirect or direct exporting • Licensing • Joint Ventures • Direct Investment

5. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion I – Strategic Alliances • “ A strategic alliance typically includes a constellation of agreements involving technology swaps, joint research and development or co-development, and/or the sharing of complementary assets, such as where one party does manufacturing and the other distribution for a co-developed product”

6. Several Kinds of Strategic Alliances • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Licensing : • Manufacturing industries • Services & Franchises • Joint Venture : • Specialization across partners • Shared value adding • A particular one : Network Groups

7. II – Joint Ventures • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • „Joint ventures are business entities that are owned by two or more firms that share resources and skills"

8. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Scale Link Types of Joint Ventures • Nonequity joint ventures • Equity join venture

9. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Nonequity Joint Ventures

10. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Equity Joint Ventures

11. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Joint Venture Frim A 50% Frim B 50% Frim A Firm A Firm B Frim B Scale Joint Ventures

12. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Joint Venture Frim A 50% Frim B 30% Frim C 20% Frim A Firm A Frim B Firm C Link Joint Ventures

13. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Why Joint Ventures? To take existing products to foreign markets To diversify into new business To strengthen the existing business To bring the foreign products to local markets

14. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Strengthening The Existing Business • To obtain economies of scale, new technology and know-how or to diminish the risk of the project • Existing market and existing product

15. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Taking Products To ForeignMarkets • Existing products and new market • Company often looks for a partner in the same branch. Such a partner will have a good feel for the local market • Joint venture covers only some activities

16. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Bringing Foreign Product To Local Markets • Protection against new technology and new competitors • Better use of existing manufacturing plants and of their distribution channels • Existing market and new products

17. Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Diversification Into New Business • Joint venture may be used to enter both into the new business and the new market

18. Access to Expertise Cost Savings Manufacturing Capability Reduced Risk Sharing of Future Profits Creating a Competitor or a Potential Competitor Distractions • Introduction I – Strategic Alliances II – Joint Ventures III – Networks Group IV – Case Study • Conclusion Advantages and Disadvantages

19. Transaction Cost Theory of Equity Joint Venture • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Main Objectives • Economie of Scale • Overcoming Entry Barriers • Pooling Knowledge • Reducing Political Risk

20. Transaction Cost Theory of Equity Joint Venture • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Device inefficient market for intermediate inputs • Raw Materials and Components • Knowledge • Distribution • Loan Capital

21. Transaction Cost Theory of Equity Joint Venture • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Raw Materials and Components • Loan Capital • Distribution • Economies of scale • Quality Control

22. Transaction Cost Theory of Equity Joint Venture • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Knowledge Tacit Knowledge Marketing Knowledge Country Specific • Joint Ventures vs. Licensing Patent rights Patent Rights + Tacit Knowledge

23. Transaction Cost Theory of Equity Joint Venture • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Acquisition Greenfield Investment Joint Venture VS. Assets : Firm – Specific Public Goods Employees

24. III – Network Groups • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Definition Companies joined forces for a common purpose that is to say in a large overarching relationship. Alliance groups are a number of companies linkes together by through collaborative agreements.

25. Schema • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Hitachi Samsung Hitachi H-P Sequoia Stratus Exemple of a Structure Group in 1994

26. Goals and Advantages • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • New technology and implantation « Snowball effect » • Maximize joint volume in order to exploit Economie of Scale • Cooperation & Exploitation • Competitive advantages

27. Management • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Differences in Alliance Network • Size • Pattern of Growth • Composition • Internal Competition • Governance Structure

28. The Constraints • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion Organizational Dependance Strategic Gridlock

29. Key Facts • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • The partnership complement one another • Depends of the competitive advantages • Carefull management

30. OSG Microelectronics • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • 50-50 JV between Olin Corporation (US) and CIBA-GEIGY AG (Switzerland) in January 1, 1991 • Objective of becoming an innovative supplier of photoresist and polyamide products and services to semiconductorcustomers worldwide. • Synergistically combine of unique technological capabilities •  Operating with a total quality Management (TQM) philosophy to reach a goal of innovation and customer satisfaction. •  Early success in the new venture - after six months of operation OSG became number three in microelectronics industry

31. OSG Structure & Management • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Complex AND decentralized • èDepartments in Europe, North America and Pacific Rim, coordinated on a global basis, • è"Triad alliance"; photoresist supplier represented in all three major electronics markets of the world. •  90% of the OSG staff former Olin employees • HR Management area contracted from Olin; to minimize the disruption to employees Olin HR policies was originally adopted. •  Dissatisfaction of former CIBA-GEIGY executives and employees •  Necessary move for the Ardsley group to East Providence

32. The major challenge: JV Integration • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Integration of former CIBA-GEIGY staff into venture: • Company handbook and newsletter: again originally taken from Olin – equalspartners? • Divided loyalty to the parent firm and to the JV • Physical relocation for Ardsley group, causing uncertainty and anger  • Staffing dilemma: "2-year-no-bid-policy"

33. The Solution: Forging a JV Identity • Introduction I – Strategic Alliances II – Joint Ventures III – Network Groups IV – Case Study • Conclusion • Focus on communication: important for reaching personal goals as well as to the strategic requirements of the venture • Creating a new and "fair" HR policy •  Developing a feeling of loyalty by employees to the JV • Creating a new value system unique to OSG

34. Conclusion

35. Vielen Dank für Ihre Aufmerksamkeit