OBJECTIVES
As a person with knowledge of various joint venture cases, the author has always brought up to his superiors the viability of strategy formation regarding successful joint ventures and at times fail to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how successful joint venture procedures are thought up, formulated and then implemented down into the subsidiaries of the companies involved. The author hopes to have an in-depth understanding as to how the successful joint ventures of companies enable them to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon, i.e. innovation and diversity. Innovation was discussed with regard to the joint ventures of companies where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the joint venturing companies considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in their bid to become a leading player in their industry.
INTRODUCTION
Companies today have to be efficient, flexible and profitable. Without these factors, it would be very difficult to compete in the global economy. Aside from participating in strategic alliances to fully enhance the resources they need to become competitive, many companies now evolve and expand through partnerships or joint ventures.
Consequently, as companies and organizations enter into partnerships and joint ventures, the efficient and effective implementation of the policies and tasks necessary after entering into joint ventures of one or more companies or organizations must be done. Change management focuses on the careful management of the processes involved in the gradual adjustment of the “new” management and its workforce.
More often than not, the newly formed partnerships among business entities don’t really have an easy time adjusting to the changes brought about by the joint venture. As a result, these entities engage in activities that are somehow resisting to changes. Therefore, the major activities of the company such as the manufacturing of products, product development, production and distribution become severely hampered.
However, change management deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of human resources, logistics and evaluations are often the focus of change management. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, change management includes the analysis and management of internal processes.
COMMON PROBLEMS IN PARTNERSHIPS / JOINT VENTURE
A. MANAGEMENT / POLITICAL REASONS
The aftermath of most partnership and joint venture cases among organizations and companies often leads to the implementation of a somewhat autocratic type of leadership and management. Because of the adjustments that the newly combined workforce would have to endure, it is not surprising that at first the new management would hold so much power and decision-making authority. The management would have the tendency to seldom consult its employees especially in making crucial decisions. As a precautionary measure, the change management would include having a perfectionist type of management to make sure that the new reporting system would remain consistently efficient. The motivation environment is often characterized through the establishment of a new structured set of rewards and punishments.
However, as time goes by the workforce and the new management gets to jive with each other. Along with this is the changing of leadership type from autocratic to a democratic type. This way, the participation of all key stakeholders especially the workers will be more encouraged. If they feel something is right or wrong, or if they want to tell something important to the management, they can now be free do so without any worries. Also, a democratic leadership approach allows the management to have a feedback regarding the policies and regulations being implemented. They will immediately know if there is any tension going on between or among the stakeholders involved. Thus, immediate action can be planned and implemented by the management to keep matters from getting worse.
B. CULTURAL REASONS
It is normal that when the new management starts to assume its post, it will have to implement stricter rights and privileges for its workers. There is a possibility that the once strong and transparent relationship that existed between the management and workers prior to the partnership or joint venture would be replaced by frustration and hatred. The differences in the culture of the personnel involved could also contribute to this friction. When this happens, the performance of the new workforce will surely be severely affected and their efficiency will decline. This is because of concentrating on their work, they will now be more concerned about the diminished benefits they would be possibly be getting. These worries and anxieties will pave the way for them to inhibit frustration and anger towards their new supervisors and the management as a whole, feeling they are already taken for granted.
It is a well known fact that human resources play a crucial role towards differentiation and a potent source of competitiveness for any organization or company. Therefore, any organization must take care and constantly invest in human resource development especially during these periods of adjustment to a new management and environment. However, the determination of the extent to which an organization can invest in terms of human resources development depends on the financial capabilities of the company or organization. The rights and privileges of the workers must be carefully studied under the change management program of the company, because it should jive with the basic policies of an organization’s human resource development strategy.
Critical Partnership / Joint Venture Success Conditions
· Financial Stability
Financial stability is crucial especially in the pursuit of partnership and joint venturing activities. In any industry, it is important to remain updated with the latest developments to be able to stay competitive in the market.
· Product Performance and Price
The production of the products and services comes as a result of well-funded research and development activities. The strong performance of products in the market could also be linked to their cost-effectiveness. However, the company has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market.
· Marketing Strategy and Distribution
High brand awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new models.
Benefits of Joint Ventures / Partnerships
Among the competitive advantages enjoyed by both companies upon partnership includes the following:
· Economies of Scale and Scope in manufacturing and research and development.
· Unique Quality Technology owing to heavy emphasis on research
The commitment to research & development activities has always been one of its top strategies to remain competitive in the market.
· Differentiated Products
Through the production and marketing of differentiated products originating from their research and development activities, the joint venturing companies are able to create its own firm-specific advantages. The continuous pursuit of research and development processes enables them to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, these companies are able to market their products worldwide, which enable them in turn to maximize the returns on research and development expenditures.
CONCLUSION
The results of the analysis carried out on the issues / problems mentioned in the partnership / joint venture indicated very significant effects for Shirley Associates Ltd., even amidst the threats of unrest. Therefore, we could conclude that Shirley Associates Ltd. could still be expected to grow faster than average.
The review of Shirley Associates’ capabilities and resources brought about by the joint ventures revealed very little inconsistencies regarding their strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now as part of the joint venturing process.
The gap analysis among the environment, strategy and capabilities of Shirley Associates Ltd. revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the company’s competitiveness.
Also, the company has to find a balance between adherence to internal forces within the company and to the changing forces of the environment in order to implement such strategic options.
Credit:ivythesis.typepad.com
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