International Business- Failure of Joint Venture as a Result of Culture
1. Joint venture between TCL and Alcatel
In 2004, TCL Technology Holdings Limited, a multinational electronics conglomerate from Huizhou, China entered into a mobile phone manufacturing Joint Venture with Alcatel, a global corporation in telecommunication equipments, services and applications from Paris, France, in a bid to foray into the global market. The joint venture company - TCL and Alcatel Mobile Phones Ltd (TAMP) - managed research and development (R&D), sales and distribution of mobile handsets and related products and services (TCL 2011). TCL invested 55 million euros to garner a fifty five percent stake while Alcatel put in 45 million euros along with its mobile handset business for the remaining forty five percent share (China Daily 2004).
The two corporations each possessed individual strengths that they believed, when joined in partnership, would establish their stronghold in the competitive mobile phone industry and further their geographical reach in sales. TCL is a distinguished brand that fronts the China market and has a vantage point as a low cost manufacturing base in Asia. Alcatel is a leading player in Europe and Latin America and has operations in more than 130 countries. It could contribute an extensive sales network as well as its high aptitude in R&D (TCL 2011). Alcatel also provided patents to TCL, who did not own its own technology, to enable its entry into markets that have intellectual property (IP) rights requirements (Zhu 2005). TCL at that time had faced a waning domestic market and needed Alcatel to help it expand into newer international markets while Alcatel believed that TCL’s lead in manufacturing would improve its product offering that would better meet the varying needs of its customers worldwide. According to Morgan Stanley, a multinational financial services provider, the joint venture (TAMP) had enormous potential to place seventh to become one of the global leaders in the industry (TCL 2011). TAMP began
In 2004, TCL Technology Holdings Limited, a multinational electronics conglomerate from Huizhou, China entered into a mobile phone manufacturing Joint Venture with Alcatel, a global corporation in telecommunication equipments, services and applications from Paris, France, in a bid to foray into the global market. The joint venture company - TCL and Alcatel Mobile Phones Ltd (TAMP) - managed research and development (R&D), sales and distribution of mobile handsets and related products and services (TCL 2011). TCL invested 55 million euros to garner a fifty five percent stake while Alcatel put in 45 million euros along with its mobile handset business for the remaining forty five percent share (China Daily 2004).
The two corporations each possessed individual strengths that they believed, when joined in partnership, would establish their stronghold in the competitive mobile phone industry and further their geographical reach in sales. TCL is a distinguished brand that fronts the China market and has a vantage point as a low cost manufacturing base in Asia. Alcatel is a leading player in Europe and Latin America and has operations in more than 130 countries. It could contribute an extensive sales network as well as its high aptitude in R&D (TCL 2011). Alcatel also provided patents to TCL, who did not own its own technology, to enable its entry into markets that have intellectual property (IP) rights requirements (Zhu 2005). TCL at that time had faced a waning domestic market and needed Alcatel to help it expand into newer international markets while Alcatel believed that TCL’s lead in manufacturing would improve its product offering that would better meet the varying needs of its customers worldwide. According to Morgan Stanley, a multinational financial services provider, the joint venture (TAMP) had enormous potential to place seventh to become one of the global leaders in the industry (TCL 2011). TAMP began