Shanghai Motor Jv

Page 1 of 3

Shanghai Motor Jv

By | October 2012
Page 1 of 3
The Way to Win in Cross-Border Alliances

Outline
• The definition of Cross Border Alliance • Differences between Cross Border Acquisition and Cross Border Alliance • M&A or JV • Key success Factors in Cross Border Alliance

Cross Border Alliance
“ A strategic partnership that is formed between two or more firms from different countries for the purpose of pursuing mutual interests through sharing their resources and capabilities.” (Doz, Y.L and Hamel, G 1998 )

Cross Border Alliance (Joint Ventures) “ The cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise.”

M&A VS. JV
Cross Border Merger and Acquisition • an activity in which an enterprise from one country buys the whole asset or controlling percentage of an enterprise in another country Both entry modes are good for international but they are not interchangeable.

What are deciding criteria?
• Types of business (Existing business vs. Related business vs. New business) • Target market • The capability and possessing skills in operational functions

Failing to select the right mode of alliance
Acquirer co.(UK)

- Lack of direct experiences in new market
- Unable to manage and set up distribution channel and sales in new market

Acquired co.(CA)

- Prior to M&A week, Co. was
under competitive pressure . Price was falling

Expanding into existing(related) business into new markets
• Formed a joint venture in 1978 to expand into Eurobond market. Access to investors in Europe

Eurobond market

Key success Factors in Cross Border Alliance
• Forms of alliance • Clear Objective, Mutual goals, Expected Requirement from counterparts. • Equal strength of both partners • Autonomy and Flexibility

Equal Strength
Success rate of alliance
80 70 60 50 40 30 20 10 0

67

33

39

Both Strong

Strong &Average/weak Success Fail

Weak&Weak

Win –Win situation
• CamiAutomotive Inc. (...