Internationalization through Internationalization through

Strategic Alliances & Joint Strategic Alliances & Joint

VenturesVentures

Helena Grba 0201823

Ulrico Figà-Talamanaca 0200754

Kasia Kozirog 0208736

Anne-Sophie Le Boubennec 0200110

PlanPlan

Introduction

I – Strategic Alliances

II – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

IntroductionIntroduction

Deciding whether to go abroad Advantages

Risks

Deciding in market to enter

Deciding how to enter the

market

IntroductionIntroduction

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

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

I – Strategic AlliancesI – 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”

Introduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

Several Kinds of Strategic Several Kinds of Strategic AlliancesAlliances

Licensing : Manufacturing industries Services & Franchises

Joint Venture : Specialization across partners Shared value adding

A particular one : Network Groups

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

II – Joint VenturesII – Joint Ventures

„Joint ventures are business entities that are owned by two or more firms that share resources and skills"

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Types of Joint Ventures

Nonequity joint ventures

Equity join venture

Scale Link

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Nonequity Joint VenturesNonequity Joint Ventures

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Equity Joint VenturesEquity Joint Ventures IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Firm A

Firm B

Joint Venture

Frim A 50%Frim B 50%

Frim A

Frim B

Scale Joint VenturesScale Joint Ventures IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Link Joint VenturesLink Joint Ventures

Firm A Joint Venture

Frim A 50%Frim B 30%Frim C 20%

Frim A

Frim B

Firm C

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Why Joint Ventures?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

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – 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

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Taking Products To Foreign Markets

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

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – 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

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – 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

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Access to Expertise

Cost Savings Manufacturing

Capability Reduced Risk

Sharing of Future Profits

Creating a Competitor or a Potential Competitor

Distractions

IntroductionIntroduction

I – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Networks Group

IV – Case Study

Conclusion

Advantages and Disadvantages

Transaction Cost Theory of Equity Joint Venture

Main Objectives

Economie of Scale

Overcoming Entry Barriers

Pooling Knowledge

Reducing Political Risk

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Transaction Cost Theory of Equity Joint Venture

Device inefficient market for

intermediate inputs

Raw Materials and

Components

Knowledge

Distribution

Loan Capital

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Transaction Cost Theory of Equity Joint Venture

Raw Materials and Components

Loan Capital

Distribution Economies of scale Quality Control

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Transaction Cost Theory of Equity Joint Venture

Knowledge Tacit KnowledgeMarketing

KnowledgeCountry

Specific

Joint Ventures vs. Licensing

Patent rights Patent Rights+ Tacit Knowledge

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

Transaction Cost Theory of Equity Joint Venture

Acquisition Acquisition

Greenfield InvestmentGreenfield Investment Joint VentureJoint VentureVS.

Assets :

Firm – Specific

Public Goods

Employees

IntroductionIntroduction

I – Strategic AlliancesI – Strategic Alliances

II – Joint VenturesII – Joint Ventures

III – Network Groups

IV – Case Study

Conclusion

III – Network GroupsIII – Network GroupsDefinition

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.

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

SchemaSchema

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

ConclusionExemple of a Structure Group in 1994Exemple of a Structure Group in 1994

H-P

HitachiHitachi

HitachiHitachiSamsungSamsung

SequoiaSequoia

StratusStratus

Goals and AdvantagesGoals and Advantages

New technology and implantation

« Snowball effect »

Maximize joint volume in order to

exploit Economie of Scale

Cooperation & Exploitation

Competitive advantages

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

ManagementManagement

Differences in Alliance Network SizePattern of GrowthComposition Internal CompetitionGovernance Structure

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

The ConstraintsThe Constraints

Organizational Dependance

Strategic Gridlock

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

Key FactsKey Facts

The partnership complement one another

Depends of the competitive advantages

Carefull management

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study

Conclusion

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study IV – Case Study

Conclusion

OSG Microelectronics

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 semiconductor customers 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

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study IV – Case Study

Conclusion

OSGOSG Structure & Management Structure & Management Complex AND decentralized Departments in Europe, North America and

Pacific Rim, coordinated on a global basis, "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

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study IV – Case Study

Conclusion

The major challenge: JV Integration

Integration of former CIBA-GEIGY staff into venture:

Company handbook and newsletter: again originally taken from Olin – equals partners?

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"

The Solution: Forging a JV IdentityThe Solution: Forging a JV Identity  

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

IntroductionIntroduction

I – Strategic Alliances

II – Joint Ventures

III – Network GroupsIII – Network Groups

IV – Case Study IV – Case Study

Conclusion

ConclusionConclusion

Vielen Dank für Ihre Vielen Dank für Ihre

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