Management
Market Failure
Running head: CASE OF TCL & ALCATEL
Market Failure Paper: Case of TCL and Alcatel Joint Adventure
Jennifer Long
Grand Canyon University: ECN 601
April 11, 2012
In the contemporary society, many multinational enterprises would like to use joint venture as their favorite entry mode due to its unique advantages, such as: directly access to the partner’s knowledge, sharing development costs and risks. Meanwhile, it is important to figure out the factors that will cause failure of a joint venture. Some major factors are culture difference, poor leadership and insufficient planning which are all fatal to the operation of joint venture. Cultural differences have direct influences on international joint venture performance through management practice and organizational learning; poor leadership will result in bad business integration and even wasting the preciously initial funds; insufficient planning may trouble company in the long term.
In the article from the China Daily, many Chinese companies are now hoping to utilize global partnerships to make inroads in the major international markets (China Daily, 2011). If a company wants to speed up the expansion, it may decide to use surplus resources or raise further cash by cooperating with another existing business. Joint venture can be defined as an entity formed between two or more parties to undertake economic activity together. Chairman of TCL Corporation explained that TCL was most attracted to the joint venture with Alcatel and acquiring and using their technology. Partnering with Alcatel meant that Alcatel would provide some of its technologies and patents to the joint venture, including the resources from its two researches and development centers.
By the two businesses agreeing to set up a joint venture they have formed together using the same name but they are separate businesses, both of the companies could gain from this is that they are able to access new market, they are also
Running head: CASE OF TCL & ALCATEL
Market Failure Paper: Case of TCL and Alcatel Joint Adventure
Jennifer Long
Grand Canyon University: ECN 601
April 11, 2012
In the contemporary society, many multinational enterprises would like to use joint venture as their favorite entry mode due to its unique advantages, such as: directly access to the partner’s knowledge, sharing development costs and risks. Meanwhile, it is important to figure out the factors that will cause failure of a joint venture. Some major factors are culture difference, poor leadership and insufficient planning which are all fatal to the operation of joint venture. Cultural differences have direct influences on international joint venture performance through management practice and organizational learning; poor leadership will result in bad business integration and even wasting the preciously initial funds; insufficient planning may trouble company in the long term.
In the article from the China Daily, many Chinese companies are now hoping to utilize global partnerships to make inroads in the major international markets (China Daily, 2011). If a company wants to speed up the expansion, it may decide to use surplus resources or raise further cash by cooperating with another existing business. Joint venture can be defined as an entity formed between two or more parties to undertake economic activity together. Chairman of TCL Corporation explained that TCL was most attracted to the joint venture with Alcatel and acquiring and using their technology. Partnering with Alcatel meant that Alcatel would provide some of its technologies and patents to the joint venture, including the resources from its two researches and development centers.
By the two businesses agreeing to set up a joint venture they have formed together using the same name but they are separate businesses, both of the companies could gain from this is that they are able to access new market, they are also
References: Koen, CL. (2005). Comparative International Management. Mcgraw-Hill Irwin Press, Sydney, pgs. 54-136. Kotelnikov, V. (2007). Most Common Causes of Joint Venture Failure. http://www.1000ventures.com/business_guide/jv_failure_reasons Marney, C. (2009). Joint Venture: Success and Failure. http://va4growth.com/blog China Daily, 12/9/2011, http://www.chinadaily.com.cn