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    NIFT 2019 - The Joint Venture Concept

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    Salil Sheikh
    A joint venture is a business agreement where parties come together to invest money, time, and effort into a single project, and share control, revenues, expenses, and assets. A strategic alliance is an agreement between independent organizations to pursue common objectives through collaboration rather than creating a new legal entity like a joint venture. Strategic alliances allow partners to leverage each other's strengths through partnerships without the legal obligations of a joint venture. Alliances are becoming more important for organizations to access new markets and technologies, reduce costs, and gain expertise. Successful alliances require careful partner selection, aligned strategies, cultural compatibility, and ongoing management and evaluation.

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    NIFT 2019 - The Joint Venture Concept

    Uploaded by

    Salil Sheikh
    28 views33 pages
    A joint venture is a business agreement where parties come together to invest money, time, and effort into a single project, and share control, revenues, expenses, and assets. A strategic alliance is an agreement between independent organizations to pursue common objectives through collaboration rather than creating a new legal entity like a joint venture. Strategic alliances allow partners to leverage each other's strengths through partnerships without the legal obligations of a joint venture. Alliances are becoming more important for organizations to access new markets and technologies, reduce costs, and gain expertise. Successful alliances require careful partner selection, aligned strategies, cultural compatibility, and ongoing management and evaluation.

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    A joint venture is a business agreement where parties come together to invest money, time, and effort into a single project, and share control, revenues, expenses, and assets. A strategic alliance is an agreement between independent organizations to pursue common objectives through collaboration rather than creating a new legal entity like a joint venture. Strategic alliances allow partners to leverage each other's strengths through partnerships without the legal obligations of a joint venture. Alliances are becoming more important for organizations to access new markets and technologies, reduce costs, and gain expertise. Successful alliances require careful partner selection, aligned strategies, cultural compatibility, and ongoing management and evaluation.

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    28 views33 pages

    NIFT 2019 - The Joint Venture Concept

    Uploaded by

    Salil Sheikh
    A joint venture is a business agreement where parties come together to invest money, time, and effort into a single project, and share control, revenues, expenses, and assets. A strategic alliance is an agreement between independent organizations to pursue common objectives through collaboration rather than creating a new legal entity like a joint venture. Strategic alliances allow partners to leverage each other's strengths through partnerships without the legal obligations of a joint venture. Alliances are becoming more important for organizations to access new markets and technologies, reduce costs, and gain expertise. Successful alliances require careful partner selection, aligned strategies, cultural compatibility, and ongoing management and evaluation.

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    of 33

    Joint Venture & Acquisition

    The Joint Venture Concept


    (Essential Prerequisite for Corporate Success)
    WHAT IS JOINT VENTURE?
    • A JOINT VENTURE (JV) IS A BUSINESS
    AGREEMENT IN WHICH THE PARTIES COME
    TOGETHER TO TAKE ON ONE PROJECT BY
    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".
    RIL partners with Arvind to
    manufacture high performance fabrics
    (August 09, 2018)
    As a part of Mukesh Ambani-led, Reliance Industries
    Ltd's Hub Excellence Partners (HEP) program, the
    industry leader on Thursday announced formation of
    a partnership with textile major Arvind Limited to
    manufacture co-branded R|Elan high performance
    fabrics.
    As part of this partnership, Arvind will
    provide a high standard quality fabric and
    RIL will ensure timely delivery of R|Elan
    high-quality performance technologies to
    Arvind.
    BUSINESS
    Pepe
    Jeans and Dollar Industries form joint venture
    Tuesday, 15 August 2017
    Denim brand Pepe Jeans Europe has entered into a joint
    venture company with hosiery company Dollar Industries to
    manufacture and market premium fashion innerwear,
    loungewear, gymwear, sleepwear and track suits for adults
    and kids, in India.
    The new joint venture will see both companies holding a 50
    percent stake in Pepe Jeans London, which will produce a
    new range of products to be sold in India, Sri Lanka, Nepal,
    Bhutan and Bangladesh.
    This tie up will help both the companies to work towards
    creating a premium innerwear brand in the country, while
    also bringing in foreign direct investment for the textile
    sector in India.
    Sachin Tendulkar to take clothing brand True
    Blue abroad Aug 02, 2018
    MUMBAI: Former Indian cricketer Sachin Tendulkar
    plans to take his joint venture clothing brand with
    Arvind - True Blue, to global markets including the US
    and UK.
    Incorporated in 1931, Arvind, the country’s largest
    textile company has gradually diversified into higher
    margin retailing business and now runs stores of nearly
    two dozen brands, including Gap, US Polo, Arrow,
    Sephora and Children’s Place as a licensee or JVs. It
    also owns brands such as Flying Machine, Excalibur
    and Ruggers. True Blue will be its first owned brand to
    venture outside India and stretch into a wide range of
    adjacent categories. 
    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.

    MONEY

    INPUT TIME
    EFFORT
    S
    EQUALLY SHARED BETWEEN THE COMPANIES

    REVENUE
    OUTPUT
    EXPENSES
    STEPS TO A SUCCESSFUL
    JOINT VENTURE-
    Lack of co-ordination- Removed Research and
    Development departments- thus, they couldn't make
    innovative products according to customer needs.
    There R & D was slow as compared to other
    mobile
    phone manufacturers.
    Critical Facto rs for the Success o f
    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 w o r k towards the benefit of all
    partners
    WHAT IS STRATEGIC
    ALLIANCE?
    • A STRATEGIC ALLIANCEIS 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.
    T Y P E S O F STRATEGIC
    ALLIANCES-
    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.
    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.
    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.
    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.
    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.
     Setting alliance strategy-
    1.Creating a successful alliance is to develop a
    well- thought-out alliance strategy.
    2.An alliance strategyemerges 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.
     Selecting a
    This is based on the criteria identified in the
    partner-
    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.
     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.
    Managing the alliance-
    “Once the ink is dry, the hardwork 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.
    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..
    STRATEGIC ALLIANCE VS.
    JOINT VENTURE

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