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International Joint Ventures and Alliances

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. Motivation: Size. Braunschweiger AG Germany.

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International Joint Ventures and Alliances

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  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: • R&D • 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 R&D Braunschweiger AG Germany Acme Inc. U.S.

  8. Independent R&DCoordinated Marketing Braunschweiger AG Germany Acme Inc. U.S. North America European Union

  9. Independent R&DCoordinated MarketingJoint Manufacturing Acme Inc. U.S. Braunschweiger AG Germany North America European Union A-B Mfg. SA, Mexico

  10. International Strategy:Managing 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 IJVs:1984: 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

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