Question

Subject Name:Multinational ManagementCan you cite other examples of international strategic alliances? How are these alliances doing?
can you cite other examples of international strategic alliances? How are these alliances doing?

Answer 1

Example-1: Johnson Controls, Inc. (USA)– Ameraja (INDIA)

Product: Amaron Batteries for Automotive use

The collaboration happened in year of 2000. The Johnson Controls, Inc. (JCI) was the leading battery manufacture in USA and was searching the opportunity for business in India. Their strategies is to collaborate with the India’s local manufacture (Ameraja). They collaboratively set up the manufacturing plant in India. The JCI motive was to have a business in large Indian population and Ameraja’s motive was to bring the new technology and set-up for manufacturing. The alliance was having equal shares to both partners. The alliance is working on below strategies,

Plan for win-win situation: The JCI was aiming market in India and they have successfully done it while Ameraja was seeking technical development in manufacturing and battery specifications. Now, they are among of bestselling Battery Company in India.

Cost Savings: Instead of investing much capital investment in plant infrastructure, JCI has chosen the Indian manufacture to collaborate with equity of shares. So, this was the cost saving for JCI. Instead of investing to understand new technology, Ameraja has used improved technology of JCI.

Legal and regulatory (Task environment and Political impact): It is very difficult to understand the task environment in other countries. So, JCI strategy was not to deal with this and Ameraja took the power of administration.

Branding: JCI is premium Battery supplier for Toyota, BMW, and Skoda and have a good repo in international market. So, it will be beneficial to Ameraja to have associate branding with JCI.

Productivity: India is having comparatively low cost manufacturing. So, it effects the overall cost of production per battery.

Transportation benefit: JCI got benefit of this while selling in India. Even with import in USA also the beneficial as manufacturing cost is low in India.

Example-2: PEB Steel (Vietnam) – Lloyd Insulations (INDIA)

Product: Steel Structure for Pre-Engineered Building (PEB)

This was the Joint venture established in year of 2006. The PEB Steel from Vietnam was seeking market in India. Their main business is to fabricate (manufacture) the building structure for Pre-Engineered building used for Automotive Plant shed, warehouses, Metro stations etc. PEB Steel was having competitive issues in India. Other side, Lloyd Insulations is manufacturer of Rockwool insulations used to keep cool the PEB buildings. Lloyd Insulations were working with PEB Steel (Vietnam)’s competitors and want to set up their own plant as they saw the potential in the market of steel structure. By seeing requirement of each other, they (PEB Steel and Lloyd Insulation) established the joint venture in India and named it “PEB Steel Lloyd (India) Ltd. The alliance is working on below strategies,

Referral Costumer relationships: They are giving combo solutions to customers as both are serving common purpose.   

Quick Deliveries: The PEB steel is having no issue if costumer ask for quick delivery.

Cost Savings: PEB Steel saved cost of capital in Joint venture. The setup of plant was from Lloyd’s side and machines set-up was from PEB Steel side.

Legal and regulatory (Task environment and Political impact): It is very difficult to understand the task environment in other countries. So, PEB Steel’s strategy was not to deal with this and Ameraja took the power of administration.

Productivity: India is having comparatively low cost manufacturing. So, it effects the overall cost of production per battery.

Availability of Raw Material: There are many iron ore mines and steel processing plants in India. Earlier PEB steel were importing these material from India, now they got much competitive benefit by reduction in supply chain cost.

Labor Factor: India is having skilled labor in this profession with comparatively less salary pay scale then Vietnam. Also, there are less challenges in hiring.