Culture adaptation in case of international joint venture

“A case study of Bharti Walmart”

Concept of International Joint Venture

According to Culpan, the process of IJV involves two or more firms from different countries to collaborate in creating an independent business unit by contributing their resources.

Wallace defines joint venture as the working together of two or more firms for achieving a specific outcome that would not have been possible by any of the firm working alone.

we look at both of the definitions, we could easily recognize the following three variables:

1. Multiple independent companies

2. A well defined purpose

3. The level of interdependence

Process of International Joint Venture

The decision whether to establish a joint venture involves four different stages:

SOME EXAMPLES OF INTERNATIONAL JOINT VENTURE

• Japanese consumer electronics company Sony Corporation

• Swedish telecommunications company Ericsson

Sony-Ericsson

• Tata Tele service, an Indian broadband and telecommunications

• Richard Branson's Service Group, a British multinational branded venture capital conglomerate company

Virgin Mobile India Limited

• Bharti Enterprises, one of India's leading business groups

• Walmart, the world’s leading retailer

Bharti Walmart Private Limited

• Japanese automobile and motorcycle manufacturer Suzuki

• Maruti, company of Government of India

Maruti Suzuki India

Limited

• Brazilian company (local partner), Algar

• a French company Bull

ALGAR – BULL

• HERO group of India• Honda of Japan

HERO HONDA

• Indian Motorcycle company Bajaj• German Insurance Giant Allianz

Insurance.

Bajaj Allianz Life Insurance

Co., Ltd.

CULTURES IN IJVHofstede defines culture as “the collective programming of mind that distinguishes the members of one group or category from another”.

There are two types of cultures that directly affect the joint venture:

1. National culture2. Organizational culture

Company profile of Bharti EnterprisesBharti Enterprises

Type Private

Industry Conglomerate

Founded 1980

Headquarters New Delhi, India

Key people

Sunil Bharti Mittal(Chairman & Group CEO)Rakesh Bharti Mittal(Vice Chairman)Rajan Bharti Mittal

ProductsTelecommunications, Retail, Insurance, Digital TV, Real estate

Subsidiaries

Bharti AirtelBharti AXA General InsuranceBharti AXA Life InsuranceBharti InfratelBharti RetailBharti Softbank HoldingsBharti WalmartFieldFresh FoodsIndus Towers

Website www.bharti.com

Company profile of Wal-MartWal-Mart Stores, Inc.

Type Public

Industry Retail

Founded 1962 - Rogers, Arkansas, United States

Founder(s) Sam Walton

Headquarters Bentonville, Arkansas, United States

Area served Worldwide

Key peopleS. Robson Walton, ChairmanMike Duke, President/CEO

Products

Apparel/footwear specialty, cash & carry/warehouse club, discount store, hypermarket/supercenter/superstore, supermarket

Owner(s) Walton family

Employees 2.2 million (2013)

Subsidiaries Asda, Sam's Club, Seiyu Group, Walmex

WebsiteCorporate.Walmart.comWalmart.com

The Joint Venture Formation of Bharti Wal-Mart

• The world's largest retailer, Wal-Mart, announced a 50:50 joint venture with Bharti Enterprises for wholesale cash-and-carry business in India to roll out 10-15 such outlets over seven years. This also covers a supply chain and back-end logistics.

• The joint venture has been christened Bharti Wal-Mart Pvt Ltd and the first outlet was opened by end-2008.

National Culture in Bharti Enterprise & Wal-Mart

Dimensions of National

Culture

Bharti Enterprises(INDIA)

Wal-Mart(UNITED STATES)

1. Power Distance India scores high on this dimension, 77

The United States score low on this dimension, 40

2. Uncertainty Avoidance India scores 40 on this dimension

The US scores 46 on this dimension

3. Individualism and

Collectivism

India, with a score of 48 is a society with clear collectivistic traits.

The United States, with a score of 91 is a highly individualistic culture.

4. Masculinity and

Femininity

India scores 56 on this dimension and is thus considered a masculine society.

The United States score 62 on this dimension and is considered a “masculine” society.

5. Long vs. Short Term

Orientation

The Indians score 61, making it a long term, pragmatic culture.

The United States scores 29 on this dimension and is a short-term oriented culture.

Organizational Culture in Bharti Enterprise & Wal-Mart

Dimensions of Organizational Culture Bharti Enterprises Wal-Mart

1. Process vs. Result Orientation Result Oriented Result Oriented

2. Employee vs. Job Orientation Employee oriented Employee oriented

3. Parochial vs. Professional

Orientation

Parochial Orientation Professional Orientation

4. Open vs. Closed System

Orientation

Open System Orientation Open System Orientation

5. Loose vs. Tight Control

Orientation

Loose Control Orientation Tight Control Orientation

6. Normative vs. Pragmatic

Orientation

Pragmatic Orientation Pragmatic Orientation

National Culture of Bharti Wal-Mart

Dimensions India US

Power Distance Index (PDI) 77 40

Uncertainty Avoidance Index (UAI) 40 46

Individual Index Value (IDV) 48 91

Masculinity Index Value (MAS) 56 62

Long-term orientation Index Value

(LTO)

61 29

Corporate Culture at Bharti Wal-Mart

Result oriented.

Customer oriented.

It’s about running their operations in a way that help and support

people, sustains the environment and builds their business.

Engaging, inclusive and supports their vision of saving people money

so they can live better.

Employee oriented rather than job oriented.

• They believe each and every associate is important and contributes to

their journey to success. Calling each other “associates” is symbolic to

this belief.

• Encourages sharing of thoughts, ideas and feedback. They ‘listen’ to

their associates. This indicates that they are having open system.

• There is less power distance which is implies by the way that the

offer positions at the store management as well as team member

levels.

Conclusion

we find out that the culture integrated at Bharti Wal-Mart is quite similar to

that of Bharti enterprise. The reason may be due to both the companies

are based in India and also there is very less difference in their respective

national cultures. Another reason for showing similarity with Bharti is that

the ratio of Indian employees working at Bharti Wal-Mart is quite high, thus

giving a similar notion. It can be assumed that the culture incorporated at

Bharti Wal-Mart is partially based on some commonalities between the

parent firms and partially influenced by the national culture as well.

Recommendations Evaluation of differences in terms of vision,

strategy, goals should be done before entering into joint venture.

Following key issues should be considered:(a) the nature of the top management team(b) the corporate culture in the local organization(c) good coordination between the parent

company and the subsidiary