The Mutual Strategic Development for International Organizations: Collaborative Ventures 0.1
Examination of the Sony Ericsson Joint Venture as an International Collaborative Venture and evaluating the rationales and motives from each partner’s perspective. 0.2
For: CEM Assignments Office
From: Deniz Berkan Unsal
Moscow, Russian Federation
The competitive nature of today’s international business world pushes the companies to find a common ground between each other. Even market giants have considerable tendency in creating collaborative arrangements with their competitors in order to keep their positions in the market. The competencies of competitor companies differ from each other often. Collaborative agreements provide companies to gain varied knowledge and specialties with less R&D costs. Also competitors can access each other’s established markets with collaborative ventures. Nevertheless, the accomplishment of an international collaborative venture depends on the harmony between national and organizational cultures of the partners. Hence, the cultural examination of the venture has a crucial role in the success. The partners should state a suitable integration method considering the cultural impacts in the negotiation period.
Definition of the International Collaborative Venture
Collaborative ventures, sometimes called international partnerships or international strategic alliances, are essentially partnerships between two or more firms. They help companies overcome together the often substantial risks and costs involved in achieving international projects that might exceed the capabilities of any one firm operating alone. (Cavusgil, et al. 2011)
Cavusgil, et al. (2011) also state that there are two basic types of collaborative ventures: equity joint ventures and project based, non-equity ventures. In this essay we are going to examine an equity joint venture between Sony and Ericsson. Equity joint ventures are traditional collaborations of a type that has existed for decades. (Cavusgil, et al. 2011). According to Wallace (2004, citing in Ahmed and Pang 2009), joint ventures are usually formed on the basis of a common objectives or mutual goals of all the parties. This objective should serve the needs of the companies in a proportionate manner otherwise the success of the joint venture will be short-lived.
The motives for Collaborative Ventures
Daniels, et al. (2011) state the motives for collaborative ventures as: ● Spreading and reducing costs: When the volume of business is small, or one partner has excess capacity, it may be less expensive to collaborate with another firm. Nonetheless, the costs of negotiation and technology transfer must not be overlooked. ● Specializing in competencies: The resource-based view of the firm holds that each firm has a unique combination of competencies. Thus, a firm can maximize its performance by concentrating on those activities that best fit its competencies and relying on partners to supply other products, services, or support activities. ● Avoiding or countering competition: When markets are not large enough for numerous competitors, or when firms need to confront a market leader, they may band together in ways to avoid competing with one another or combine resources to increase their market presence. ● Securing vertical and horizontal links: If a firm lacks the competence and/or resources to own and manage all of the activities of the value-added chain, a collaborative arrangement may yield greater vertical access and control. At the horizontal level, economies of scope in distribution, a better smoothing of sales and earnings through diversification and an ability to pursue projects too large for any single firm can all be realized through collaboration.
● Gaining knowledge: Many firms pursue collaborative arrangements in order to learn about their partners’ technology,...
References: ° Anon (2011) Ericsson and Sony go separate ways. The Local, 27 October. Available at: http://www.thelocal.se/36986/ [Accessed 12 October 2013].
° BBC News Business (2011) Can Sony succeed where Sony-Ericsson partnership failed? Available at: http://www.bbc.co.uk /news/business-15285258 [Accessed 12 October 2013].
° Ericsson (2013) The Leader in Mobile Communication Patents. Available at: http://www.ericsson.com/the company/company_facts/patents [Accessed 11 October 2013].
° Ericsson (2002) The Annual Report 2001 Financial Statements. Available at:http://www.ericsson.com/res/investors/docs/annual-reports-1970-2002/annual01_financial_en.pdf [Accessed 12 October 2013].
° Kapner S (2001) ‘Ericsson and Sony Discussing Mobile Phone Joint Venture’. The New York Times, 20 April. Available at: http://www.nytimes.com/2001/04/20/business/ericsson-and-sony-discussing-mobile-phone-joint-venture.html [Accessed 11 October 2013].
°Sonymobile (2012) Sony Completes Full Acquisition of Sony Ericsson. Available at: http://blogs.sonymobile.com/ press_release/sony-completes-full-acquisition-of-sony-ericsson/ [Accessed 10 October 2013].
° Tharp A (2009) Joint Venture: Sony Ericsson. Available at: http://tortora.wordpress.com/2009/04/27/joint-venture-sony-ericsson/ [Accessed 10 October 2013].
° Wallace, R. (2004) Strategic Partnerships: An Entrepreneur 's Guide to Joint Ventures and Alliances, Chicago: Dearborn Trade, A Kaplan Professional Company. ISBN-13: 978-0-79-318828-4
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