1. International Joint Ventures and Alliances Motivations – Complementarities vs. Size:Motivations – Complementarities vs. Size: –Market access –Risk / experience (lack of / superior) –Too small / resource pooling –Intense competition –Technology (lack of / superior) –Learning

2. Motivation: Size Acme Inc. U.S. Braunschweiger AG Germany

3. Motivation: Complementarities Acme Inc. U.S. Braunschweiger AG Germany

4. International Joint Ventures Cooperative activitiesCooperative activities: –R&D –Manufacturing –Marketing –Sourcing –Service –Everything?

5. International Joint Ventures Forms of agreementForms of agreement: –Equity vs. arms-length contract/agreement StructureStructure: –Ownership (50-50 … 51-49 … 90-10) –Contribution ($, technology, plant, marketing) –Strategic and operations roles & responsibilities Active vs. Passive ( strategic option ) Value-chain scope

6. Cooperative Modes IndependentIndependent –Act as two separate companies; no constraints Coordinated / ComplementaryCoordinated / Complementary –Act as two separate companies with established operational, product, or geographic domains or constraints JointJoint –Act as single company

7. Independent R&D Acme Inc. U.S. Braunschweiger AG Germany

8. Independent R&D Coordinated Marketing Acme Inc. U.S. Braunschweiger AG Germany North America European Union

9. Independent R&D Coordinated Marketing Joint Manufacturing Acme Inc. U.S. Braunschweiger AG Germany North America European Union A-B Mfg. SA, Mexico

10. International Strategy: Managing Dual Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low

11. Multidomestic Strategy Germany Mexico Japan Entry? Acme Inc. U.S.

12. Multidomestic Strategy Germany Mexico Malaysia REMEMBER: IJV is also an entry mode Acme Inc. U.S.

13. IJV in Multidomestic Strategy Acme Inc. U.S. Braunschweiger AG Germany Cervesa SA Mexico Sashimi LTD Japan

14. IJV in Global Strategy Acme Inc. U.S. Braunschweiger AG Germany Cervesa SA Mexico Sashimi LTD Japan

15. IJV in Transnational Strategy Acme Inc. U.S. Braunschweiger AG Germany Cervesa SA Mexico Sashimi LTD Japan

16. Learning and IJVs: 1984: The NUMMI Alliance GMToyota NUMMI

17. 1986: Application of Knowledge I GMToyota NUMMI TMM-K Toyota learned how to: Tap into US preference Work in US environment

18. 1990: Application of Knowledge II GMToyota NUMMI Saturn GM learned: Lean manufacturing Quality

19. 1999: The Fuel Cell Alliance GMToyota Alliance

20. Learning Race(s) GM Toyota Ford Daimler-Chrysler Race to Technology #1 Race to Technology #2