Mohit Yadav (096)

Jayeeta (101)
Pallavi
Chopra(103)
Monika
Kataria(112)
Prerna Joshi (130)
Introduction

A joint venture(JV) is an entity

formed between two or more parties
to undertake economic activity
together. The parties agree to create a
new entity by both contributing equity,
and then they share in the revenues,
expenses, and control of the
enterprise.
Reason for Joint
Ventures
JV provides a lower risk option of entering into a
new country. .example- MOTOROLA entered
INDIA in JV with blue star company, a brand with
repute and vast distribution network.

It also provides an opportunity for both

the partners to leverage their core
strengths and increase the profits.

It also provides a learning opportunity

for both the partners.
Other Reasons..
Sharing Capabilities, Expertise and
Liabilities
Parties to a JV may have complementary skills or
resources to contribute to the JV; or parties may have
experience in different industries which it is hoped will
produce synergistic benefits. The basic tenet of a JV is
the sharing of capabilities, expertise and liabilities of
both the partners on mutually agreed terms. Such
sharing grants a competitive advantage to the JV
partners over other players in the market.
Technology.
Types of Joint Ventures

1. Equity or Corporate.

2. Contractual .
Need for setting up a
Joint Venture(JV)
INTERNAL REASONS COMPETITIVE GOALS

STRATEGIC GOALS
Internal Reasons
1) Building on company's strength.

2) Spreading costs and risks.

3) Improving access to financial resources.

4) Economies of scale and advantages of size.

5) Access to new technologies and customers.

6) Access to innovative managerial practices.

Competitive Goals
1) Influencing structural evolution of the
industry.
2) Pre-empting competition.
3) Defensive response to blurring
industry boundaries.
4) Creation of stronger competitive
units.
5) Speed to market.
6) Improved agility.
 Strategic Goals
1) Synergies.

2) Transfer of technology/skills.

3) Diversification.
 Before Entering a Joint
Venture(JV)
Both partners should appreciate the need
for the joint venture.

The partners should clearly agree on the

way the joint venture will be managed.

Take measures to be sure that the partner

has a compatible work culture.

Be sure about the organizational behavior of

the partner to ensure synergies.
Before Entering a Joint
Venture(JV)
It is important that both partners work
towards a system based on trust and
transparency.
To make for the long term success of
the joint venture, it is also important
that both partners are equally able to
service its growing need for capital as
the business expands.
Need to have a clear long term goal
and set the terms and conditions of
the JV.
Successful Joint Venture
Require
Each participant has something of value to
bring to the venture.
The participants should engage in careful
preplanning.
The agreement or contract should provide
for flexibility in the future.
There should be provision in the agreement
for termination including buyout by one of
the participants.
Key executives must be assigned to
implement the joint ventures.
A distinct unit be created in the
organizational structure which has the
Maruti Suzuki India Ltd (formerly Maruti Udyog Ltd)
is India's largest passenger car company,
accounting for over 50 per cent of the domestic car
market.
MUL Maruti Udyog Limited was established in
February 1981, although the actual production
started in 1983 with the Maruti 800 and the first car
was rolled out on 14 December. Maruti Udyog
Limited (MUL) had a joint venture signed with
Suzuki Motor Corporation (SMC) on October 2nd
1982.
The company offers full range of cars from entry
level Maruti 800 & Alto to stylish hatchback Ritz, A-
star, Swift, Wagon R, Estillo and sedans DZire, SX4
and Sports Utility vehicle Grand Vitara and MUV
Ertiga.
Bharati Walmart
Contd
Wal-Mart Stores, Inc. operates Wal-Mart discount stores,
Super centers, Neighborhood Markets and Sams Club
locations in the United States, while Bharti Enterprises is
one of Indias leading business groups with interests in
telecom, agribusiness, insurance and retail. The two
have now joined hands to establish a joint-venture for a
cash and carry and wholesale retail chain in India. Both
retail groups will hold a 50-50 stake in their joint-
venture, which will be called Bharti Wal-Mart Private Ltd

The combined operations of the two retail giants will

make available for small retailers and business owners a
wide range of quality products at competitive wholesale
prices, which will further enhance their businesses and
profitability. Those that will be served by this joint-
Tata Starbucks
Contd.
About Starbucks
Since 1971, Starbucks Coffee Company has been
committed to ethically sourcing and roasting the
highest-qualityarabicacoffee in the world. Today, with
more than 17,000 stores around the globe, the company
is the premier roaster and retailer of specialty coffee in
the world.

About Tata Global Beverages and Tata Coffee

Tata Global Beverages is a part of the global
Tata Group. Tata Global Beverages is a
global beverage business and the worlds second
largest tea
company. The groups annual turnover is US $1.5 bn
and it employs around 3000 people worldwide.
Contd.
Tata Coffee is a subsidiary of Tata Global Beverages.
Tata Global Beverages Limited andStarbucks Coffee
Companyannounced a joint venture betweenthe iconic
international coffee brand and the 2nd largest branded
tea company in the world. The 50/50 joint venture,
named TATA Starbucks Limited, will own and operate
Starbucks cafs which will be branded as Starbucks
Coffee A Tata Alliance.

This agreement paves the way for consumers in India

to enjoy the premium Starbucks Experience,while
further discovering the unique taste of high-quality
Indianarabicacoffee worldwide. TATA Starbucks
Limited brings together two companies with a rich
heritage in and passion for coffee, tea and innovative
beverages. Together, the JV will enable an expanded
Volvo Eicher Motors
Volvo Eicher Motors
The Swedish truck maker is investing $375
Million for a joint venture withEicher
Motors,the third-largest commercial
vehicle manufacturer in India.
Volvo will contribute $275 million in cash and
$75 million by transferring its Indian truck dealer
and service network to Eicher. The Gothenburg,
Sweden-based firm said it also plans to buy 8.1% of
Eicher, giving it 50% of the venture through direct
and indirect holdings
The joint venture will provide [a] platform for all
future truck projects for Volvo in India, for necessary
infusion of funds and technology. We believe this
will drive Eichers future growth in the domestic
market, and market share expansion, Merrill Lynch
Contd.
Eicher will transfer its entire truck and bus
operations and their business and
engineering services to the joint venture. Its
motorcycle-making division will not be part
of the venture, which will employ 2,300 and
focus production at Eicher's current plant in
Pithampur, in the central Indian state of
Madhya Pradesh.
Reasons for failure of a
Joint Venture(JV)
Inadequate preplanning for the joint
venture.
The hoped-for technology never developed.
Agreements could not be reached on
alternative approaches to solving the basic
objectives of the joint venture.
People with expertise in one company
refused to share knowledge with their
counterparts in the joint venture.
Parent companies are unable to share
control or compromise on difficult issues
Kinetic Honda
Kinetic Hondawas a joint venture betweenKinetic
Engineering Limited, India andHonda Motor
Company, Japan. The JV operated during 1984 -
1998, manufacturing 2-strokescootersin India. In
1998, the joint venture was
terminated after whichKinetic
Engineering continued to sell the
models under the brand nameKinetic
until 2008when the interests were
sold toMahindra.

While sales grew slowly, compared to its

competitors, its operating margin was the lowest in
the industry because of the high import content of
raw materials.
Hero BMW
Hero BMW
Hero India based two wheeler
manufacturer and BMW German
automobile manufacturer joined hands
and come in joint venture in 1995 for
Hero BMW F650 but the deal fail in
1996 because of poor consumer
response.
Future of Joint Venture
The number of joint ventures will
continue to increase in the near future
More and more companies are
adopting the JV approach as a part of
their growth strategies.
Foreign companies can benefit
mutually by combining their
technological and monetary resources
and taking advantage of respective
market conditions.