Case 6-3: Eli Lilly in India: Rethinking the Joint Venture Strategy
1. Was the country wrong? Why India?
No, India has a very huge market because of the large number of its populations. For Lilly, there are large potential market share and profits in India. Also, India stimulated the foreign direct investment through increasing the maximum limit of foreign ownership from 40% to 51%.
2. Was deciding to partner wrong? Is partnership a good or bad thing? No. Firstly, because of the maximum limit policy of foreign ownership, Lilly had to find a local company to cooperate. Secondly, because Lily has no ideas for the local market of India, and also there are some government regulations in drugs and pharmaceutical industry that Lilly might not be familiar with. Thirdly, Lilly was a name that most Indian people did not recognize. In order to enter into Indian market quickly and efficiently, Lilly needed a partnership in Indian market.
Usually partnership creates internal conflicts. Because the companies from different backgrounds have different cultures, different strategies, different management styles. The conflicts were created during the daily operation and the decision making process. However, in the case, Lilly utilized many advantages from Ranbaxy and both companies tried their best to cooperate so that they had successfully avoided and solved most of the problems and expanded their business.
3. Was the partner choice wrong?
No. Ranbaxy, a famous producer of drugs and pharmaceutical industry in India, was the leader of low-end products and traditional products, so that they can help Lilly to enter into Indian market, let customer be more familiar with the products of Lilly, and get the approvals and licenses from governments more easily, thus partnership with Ranbaxy is a good choice for Lilly.
4. Was the JV structure wrong?
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