Joint venture & strategic alliance

A presentation on joint ventures & strategic alliances along with analysis of successful company ventures & alliances.

1. JOINT VENTURE &
STRATEGIC ALLIANCE

2. WHAT IS JOINT VENTURE??
•A JOINT VENTURE (JV) IS A BUSINESS AGREEMENT IN WHICH
THE PARTIES COME TOGETHER TO TAKE ON ONE PROJECT BY
EQUALLY INVESTING IN THE PROJECT IN TERMS OF MONEY,
TIME, AND EFFORTS.
•THEY EXERCISE CONTROL OVER THE ENTERPRISE AND
CONSEQUENTLY SHARE REVENUES, EXPENSES AND ASSETS.
•WITH INDIVIDUALS FORM A TEMPORARY PARTNERSHIP SUCH
PARTNERSHIP CAN ALSO BE CALLED A JOINT VENTURE WHERE
THE PARTIES ARE "CO-VENTURERS".

3. INPUT
MONEY
TIME
EFFORTS
OUTPUT
REVENUE
EXPENSES
EQUALLY SHARED BETWEEN THE COMPANIES
A joint venture (JV) is a business agreement in which
the parties come together to take on one project by
equally investing in the project in terms of money,
time, and efforts.

6. STEPS TO A SUCCESSFUL
JOINT VENTURE-

10. Lack of co-ordination- Removed Research and
Development departments- thus, they couldn't make
innovative products according to customer needs.

11. There R & D was slow as compared to other mobile
phone manufacturers.

12. Critical Factors for the Success of a
Joint Venture-
1.Good communication, cooperation &
coordination.
2.Common goals & shared vision among
partners.
3.Dedication towards the success &
sustainability of the JV.
4.Proper sharing of profits & benefits.
5.Proper planning & research prior to the
incorporation of the JV.
6.JV should work towards the benefit of all
partners

15. WHAT IS STRATEGIC ALLIANCE?
•A STRATEGIC ALLIANCE IS AN AGREEMENT
BETWEEN TWO OR MORE PARTIES TO PURSUE A
SET OF AGREED UPON OBJECTIVES NEEDED
WHILE REMAINING INDEPENDENT
ORGANIZATIONS.
•THE ALLIANCE IS A COLLABORATION WHERE
EACH PARTNER HOPES THAT THE BENEFITS FROM
THE ALLIANCE WILL BE GREATER THAN THOSE
FROM INDIVIDUAL EFFORTS.
•IT DOES NOT CREATE A NEW LEGAL ENTITY, I.E. A
NEW COMPANY.

18. TYPES OF STRATEGIC ALLIANCES-

19. STRATEGIC ALLIANCES TODAY-
Strategic alliances are critical to organizations for a number of
key reasons:
1. Organic growth alone is insufficient for meeting most
organizations’ required rate of growth.
2. Speed to market is of the essence, and partnerships
greatly reduce speed to market.
3. Complexity is increasing, and no one organization has the
required total expertise to best serve the customer.
4.Partnerships can defray rising research and development
costs.
5. Alliances facilitate access to global markets.

20. 1.February 2001:
a. The Coca-Cola Company and Procter & Gamble -
$4.2-billion joint venture.
b. To use Coca-Cola’s huge distribution system to
increase reach for the P&G products- Pringles and
Sunny Delight.

21. 2. Star Alliance - largest partnership in the airline
industry.
a. Scandinavian Airlines, Thai Airways International, Air
Canada, Lufthansa, and United Airlines came together
to launch Star Alliance.
b. Its reach extends to 130 countries and more than 815
destinations.
c. Collective revenue for the partnership at more than
$63 billion.

22. 3. Hewlett-Packard and NTT DoCoMo created a
partnership .
a.To conduct joint research on technology for fourth-
generation mobile phones.
b.To bring together HP’s network infrastructure and
computer servers with DoCoMo’s wireless broadband
technology.

23. THE STRATEGIC ALLIANCE
PROCESS
The Strategic Alliance Process involves planning,
implementation and evaluation. An alliance has a five-stage
“life cycle,” and a structured methodology is applied to
preparation and negotiations at each stage.

24. 
Setting alliance strategy-
1.Creating a successful alliance is to develop a well-
thought-out alliance strategy.
2.An alliance strategy emerges out of business strategy.
Once a business does decide that a partnership is
desirable, it must develop an alliance strategy.
3.Strategy includes the needs to address the vision for
the partnership, market analysis and a competitive
assessment.
4.Also required is an honest self-assessment to know
organizational strengths and weaknesses, as well as the
organizational culture.

25. 
Selecting a partner-
This is based on the criteria identified in the strategy
session.
1.Once the partner is selected, the key is to determine if
both organizations are strategically aligned and culturally
compatible.
2.It also becomes clear whether all parties have similar
ambitions .
3.Identify any strategic gaps and previously unanticipated
opportunities.
4.Thought needs to be given to the structures for
management and the board.

26. Structuring the alliance-
1.It is during this stage that the deal is financially and
legally structured and negotiated.
2.A negotiating strategy is critical and must begin at the
alliance-strategy stage.
3.Negotiations begins the first time you meet the partner.
4.Every alliance agreement should include an exit
strategy. This does not imply a pessimistic view of the
relationship, but rather recognizes that all alliances have
a natural life.
5.The average lifespan of an alliance is seven years.

27. Managing the alliance-
“Once the ink is dry, the hard work begins.”
1.Making the relationship work on an ongoing basis is a
challenge.
2.In a well-structured alliance, a full launch strategy
needs to have been jointly developed before the deal is
announced.
3.Specific action plans, and the resources assigned to the
alliance, must be known.
4.A conflict-management process and periodic checks is
critical to ensure smooth alignment of the alliance.

28. Re-evaluating the alliance-
Measuring the results of an alliance is critical. Its
important to determine if the alliance is achieving its
objectives.
Where possible, deep relationships are always more
desirable.
For example, by reconfiguring and reinventing their
relationship, Fuji and Xerox have remained partners for
close to 40 years, well above the seven-year average.
It is necessary to evaluate and further develop the
alliance at each stage of the life cycle..

29. STRATEGIC ALLIANCE VS. JOINT
VENTURE