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Ritza Suazo

10 joint-venture examples you should know about.

We’ve listed 10 inspiring, real-world joint-venture examples that showcase how you can leverage the strategy to grow your business to unprecedented heights.

Companies of all sizes, from startups to established multinationals, are increasingly turning to joint-ventures as a way to drive growth, diversify their portfolio, and gain a competitive edge, in a fast-moving market. And it’s easy to see why. 

These partnerships have proven to be an effective strategy for companies looking to enter new markets, develop innovative offerings, test new business models, create new revenue streams and more. Companies that enter into a joint-venture can: 

• Share risks and liabilities in large projects
• Lower costs by creating economies of scale
• Boost brand image with reputable partners
• Acquire new skills and capabilities from partner companies

In addition, when executed skillfully, and with the right partner(s), joint-ventures have the potential to deliver results fast compared to starting on venture on your own from scratch.

To give you a better idea of how this strategy can be leveraged to boost growth, we’ve compiled a list of 10 inspiring real-world examples. 

But first, let's kick things off with some context. 

Find out how to build an innovation-led corporate ecosystem.

1. polaris and zero motorcycles.

Type : Horizontal joint-venture

In late 2020, Polaris, a leading manufacturer of all-terrain vehicles, joined forces with Zero Motorcycles, an established electric bike developer. The goal? To integrate Zero's advanced electric powertrain technology into Polaris' off-road vehicles and snowmobiles.

Polaris showcased the first tangible results of the venture in December 2021 – the Ranger XP Kinetic (the electric version of their Ranger utility terrain vehicle).

Although Polaris already had an electric Ranger in its lineup, it relied on a lead-acid battery. In contrast, the Ranger XP Kinetic boasts a state-of-the-art lithium-ion battery derived from Zero's cutting-edge EV technology.

The announcement generated significant buzz, resulting in hundreds of millions of media impressions and a surge in site traffic. Preorders for the Ranger XP Kinetic sold out within just two hours of going live. 

What made this joint-venture successful?

• Complementary expertise: Each company brought unique strengths. Polaris' vast experience in off-road vehicle design and engineering complemented Zero Motorcycles' innovative electric power technology - resulting in a superior offering. 
• Market demand: This joint-venture allowed Polaris and Zero Motorcycles to capitalise on the growing market demand for sustainable options in the electric off-road vehicle space.
• Technological advancements: The partnership enabled the companies to leverage each other's resources to push the boundaries in electric off-road vehicle design and performance.
• Effective marketing: The launch of the Ranger XP Kinetic generated significant buzz, increasing visibility for both brands. 
• Shared vision: Both companies shared a common vision for a more sustainable future, focusing on the electrification of off-road vehicles, ensuring a strong foundation for the venture.

2. Deutsche Telekom, Orange, Telefónica, and Vodafone

Earlier this year, four major European telecommunications companies, Deutsche Telekom, Orange, Telefónica, and Vodafone, announced a joint-venture to develop a new “privacy-by-design” ad tech platform . The platform, which started off as a Vodaphone project, works by enabling consumers to opt-in or deny communications from brands via publishers with one single click. 

The only data shared in the process is a pseudo-anonymous digital token that cannot be reverse-engineered, providing consumers with more control, transparency and protection of their data, which is currently collected, distributed and stored at scale by major, non-European players.

Each company will hold an equal 25% stake in the newly-formed joint-venture, which will be based in Belgium and managed by an independent team under the supervision of a shareholder-appointed supervisory board.

• Synergy: By combining their resources, these companies were able to create a competitive edge that enabled them to challenge established ad tech industry players.
• Innovation: By pooling their resources, these companies were able to provide a cutting-edge solution with better-targeted ads and an improved user experience.  
• Data privacy and security: As concerns about data privacy and security escalate, the joint-venture's dedication to creating a transparent and secure platform is a significant advantage, helping to gain the trust of both consumers and advertisers.
• Expanding reach: By collaborating, Deutsche Telekom, Orange, Telefónica, and Vodafone can broaden their reach in the European market, providing a wider audience for advertisers.

3. Spotify and Hulu

In 2018, music streaming giant Spotify and streaming platform Hulu joined forces to offer a combined subscription bundle, “ Spotify Premium, now with Hulu ”, providing users access to both services at a discounted price. The collaboration allowed both companies to expand their user base, enhance customer loyalty, and gain a competitive advantage over rival streaming platforms (e.g. Apple, which offers Apple Music and Apple TV+).

Despite operating in the same industry—streaming services—these companies collaborated to achieve common goals, successfully expanding their user base and achieving growth they couldn’t have reached on their own. 

• Expanded user base: The joint subscription bundle made it easier for users to access both platforms, attracting new customers and retaining existing ones.
• Increased customer loyalty: By offering a discounted price for both services, Spotify and Hulu incentivised users to remain subscribed, enhancing customer loyalty.
• Competitive edge: The partnership resulted in a unique value proposition; different from other platforms, providing an edge in the highly competitive streaming market.
• Cross-promotion opportunities: The collaboration allowed Spotify and Hulu to cross-promote their content and services, increasing visibility for both brands.

4. Honda and LG Energy Solution

Type : Vertical joint-venture

In 2022, Honda and LG announced a joint-venture aimed at leveraging LG’s expertise to boost the production of lithium-ion EV batteries for Honda's electric vehicles. Plans include the construction of a state-of-the-art battery plant in Colombus, Ohio, by the end of 2024 and commencing mass production by the end of 2025. 

The companies jointly agreed to set up their battery manufacturing facility in the U.S., stemming from their mutual understanding that increasing local electric vehicle production and securing a timely battery supply would optimally position them to tap into the fast-expanding North American EV market. The venture will not only help meet the increasing demand for electric vehicles but also bring significant economic benefits to the region (e.g. 3,000 new jobs in Ohio). 

The collaboration illustrates how vertical joint-ventures can enhance supply chain capabilities, foster innovation, and help meet demand in new markets.

• Combined expertise: This partnership allows Honda to build on its expertise in vehicle manufacturing while benefiting from LG's expertise in lithium-ion battery technology.
• Strengthening the supply chain: By pooling resources from both companies, the joint-venture has been able to strengthen the overall supply chain. 
• Fostering innovation: The collaboration has resulted in a cross-pollination of expertise that will feed the growing demand for EV vehicles and create profits for both companies. 

5. Adidas and Allbirds

Type : Project-based joint-venture

In May 2021, Adidas and Allbirds announced a joint-venture to create a sustainable and eco-friendly concept shoe called “Futurecraft.Footprint”. The new venture combined the sustainability advancements of both companies to make a shoe that required 2.94 kg of CO2 emissions, compared to Allbirds' flagship Wool Runners' carbon footprint of 9.9 kg of CO2 emissions. The shoe's midsole is based on Adidas' Lightstrike technology but is crafted using Allbirds' bio-based sugarcane material. 

Unlike many concept projects, the Futurecraft.Footprint transitioned from an idea to a commercially available product by mid-December of that year. Priced at $120, the all-white sneakers quickly sold out, with only some outlier sizes remaining.

• Expertise pooling: The venture brought together Adidas and Allbirds' expertise in athletic footwear and commitment to sustainability to develop a superior product.
• Shared values: Both companies shared a common goal of promoting sustainability and reducing their carbon footprint, making the collaboration more focused and effective.
• Market differentiation: The companies differentiated themselves in the crowded athletic footwear market by offering unique products that cater to environmentally conscious consumers. 
• Positive brand association: Adidas and Allbirds benefited from the positive association of their respective brands, enhancing their reputation for environmental responsibility.

6. Geely and Volvo

Type : Functional-based joint-venture

LYNK & CO is an automotive joint-venture between Geely Auto Group and Volvo Car Group, aimed at challenging the established automotive industry by catering to the needs of a new generation of connected consumers. With LYNK & CO, customers can choose to borrow, buy or subscribe for access to a car with added services that include insurance, maintenance and more. The process of choosing a car is simple, with two options of hybrid motor available as well as a myriad of fun high-tech details customers can add. 

Since its inception, LYNK & CO has delivered over 600,000 vehicles to users, setting new records for growth among global automotive brands. In Europe, the brand continues to expand with seven permanent Lynk & Co Clubs in the Netherlands, Sweden, Belgium, and Germany, as well as numerous pop-up experience centres. There are also plans to expand to the US in 2024. 

• Combined expertise: The joint-venture blends Geely's understanding of the Chinese market and cost-effective manufacturing capabilities with Volvo's proficiency in safety, quality, and design.
• Unique sales and ownership models: The brand's offering includes sharing possibilities, personalised services, and an open API, setting it apart from traditional automakers.
• Global scale potential: LYNK & CO's expansion in Europe and plans to enter the US and Asia-Pacific markets demonstrate its potential for growth and global appeal.
• Sustainability: The brand's commitment to offering an electrified lineup aligns with the worldwide shift towards sustainable mobility.

7. Sony and Honda

Type: Functional-based joint-venture

Sony and Honda announced a new electric vehicle (EV) joint-venture, Sony Honda Mobility,

earlier this year at the CES 2023 . The collaboration aims to create innovative and advanced EVs by combining Sony's expertise in AI, entertainment, and VR technology with Honda's automotive manufacturing capabilities and experience. Their first prototype, the "afeela," is designed to deliver an unparalleled in-car experience with a focus on entertainment, connectivity, and comfort. 

With over 40 sensors, including cameras, radar, ultrasonic, and lidar, integrated throughout the vehicle's exterior, Afeela's ability to detect objects and drive autonomously will be significantly enhanced. As explained by Sony Honda Mobility CEO Yasuhide Mizuno: “Afeela represents our concept of an interactive relationship where people feel the sensation of interactive mobility and where mobility can detect and understand people and society by utilising sensing and AI technologies”.

Preorders are expected to open in 2025, and the EV will be sold first in the US in 2026, with plans for expansion to Japan and Europe at a later date.

• Complementary expertise: Sony's proficiency in AI, entertainment, and technology, coupled with Honda's extensive experience in automotive manufacturing, resulted in a superior product.
• Innovation: The "afeela," features a large panoramic display, an advanced sound system, and an array of innovative capabilities, pioneering future EV offerings.
• Enhanced experience: The focus on entertainment, connectivity, and comfort sets it apart from competitors and provides a unique experience that appeals to modern consumers.
• Market demand: The new venture is well-positioned to capitalise on the growing global demand for electric vehicles and the shift towards sustainable transportation.
• Strong brand reputation: Both Sony and Honda are well-established and respected brands in their respective industries, which lends credibility to their joint-venture.

8. H&M Group and Remondis

In a bid to close the textile loop and promote circularity in the fashion industry, H&M Group partnered with Remondis, a leading waste management and recycling company, to form a joint-venture called Looper Textile Co . The company aims to gather, sort, and sell pre-owned and discarded garments and textiles, maximising their utilisation, reducing waste and minimising their environmental impact.

Owned 50% by H&M Group and 50% by REMONDIS, part of Looper’s goal is to become a provider for companies in the textile resale and recycling sector. Operations are set to start in Europe with plans to save approximately 40 million garments during the course of 2023. 

• Shared sustainability goals: Both companies are committed to promoting circularity. Their shared goals provide a solid foundation for a successful partnership.
• Consumer awareness: The collaboration offers a timely and innovative solution that addresses environmental concerns and provides a guilt-free shopping experience for customers.  

9. DBS, JPMorgan and Temasek

In 2021, JPMorgan Chase, Singapore-based DBS Bank, and Temasek, a Singaporean sovereign wealth fund, announced a joint-venture to create a new blockchain-based platform for cross-border payments, trade, and foreign exchange settlement. The platform, named " Partior ," aims to use blockchain and Distributed Ledger Technology (DLT) to reduce transaction times, lower costs, and improve transparency in cross-border payments.

Since its inception, Standard Chartered joined as a backer, and Partior has made strides on its mission to develop a blockchain-based interbank payment network, having engaged with 60 banks across 15 jurisdictions. There are also plans to expand beyond its initially supported currencies (i.e. USD and SGD) to include GBP, EUR, AUD, JPY, CNH and HKD. As explained by CEO Jason Thompson: “Our vision has always been to transform global payments and become the worldwide ledger for Financial Institutions’ value exchange.”

• Technological innovation: The platform leverages blockchain to address inefficiencies in traditional cross-border payment systems, setting new standards for speed and transparency.
• Collaboration across industries: The joint-venture involves key stakeholders from the banking, investment, and technology sectors, fostering a collaborative approach that benefits from diverse perspectives and resources.

10. L'Oréal, Hotel Shilla, and Anchor Equity Partners 

In 2022, L'Oréal, partnered with Hotel Shilla, a high-end Korean hotel chain, and Anchor Equity Partners, a private equity firm specialising in the Korean and North Asia markets, to launch a new luxury cosmetics brand called "Shihyo." 

Shihyo, which means "the wisdom of time" in Korean, focuses on products tailored to North Asian consumers, with a product line that includes facial cleansers, creams, shampoos, and conditioners. The products feature 24 ingredients produced by local farmers and are inspired by the 24 solar subdivisions of the traditional far-eastern calendar. The formulations also feature a patented ingredient called ShiHyo24, a nutrient-rich concentrate infused with fermented rice water and ginseng water.

The first Shihyo store, called Seoul Garden, will open in the coming months inside the Shilla Seoul Hotel in South Korea's capital, Seoul. The brand plans to expand into other countries in the region after its initial launch.

• Combined expertise: The joint-venture leverages the strengths of each partner, combining L'Oréal's beauty expertise, Hotel Shilla’s luxury retail channels, and Anchor’s robust financial business model.
• Local appeal: By incorporating locally sourced ingredients and cultural elements, Shihyo appeals to the unique preferences and needs of North Asian consumers, making it a strong contender in the region's luxury cosmetics market.
• Clean, quality ingredients: High-quality, locally sourced ingredients are highly coveted in the luxury skincare sector, particularly among millennials and Gen Z. 

Final thoughts

These joint-venture examples demonstrate the power of strategic partnerships in driving innovation, expanding market reach, and achieving business goals. By pooling resources and expertise, companies can unlock new opportunities and overcome challenges, creating a win-win situation for all parties involved. 

As the business landscape becomes more global and competitive, joint-ventures will likely continue to play a critical role in fostering collaboration and success across industries.

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Are you looking to reach new markets, boost growth and create new revenue through strategic joint-venture initiatives? We can help you find the right partners to bring new ventures to life, increasing your chances of long-term success.

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Hero Honda Joint Venture: A Case of Graceful Separation

A Beacon across Economics, Finance, Governance and Leadership in Recent Era, Himalaya Publishing House, 2017

7 Pages Posted: 22 Aug 2017

Pratik C Patel

Veer Narmad South Gujarat University (VNSGU) - B.R.C.M. College of Business Administration

Mrunal Joshi

B.R.C.M. College of Business Administration

Date Written: July 2017

Joint Venture (JV) is a combined effort of two or more companies to form a new company. JVs are undertaken to bring the distinctive competence of two or more parties together. When these resources are put together, these give birth to a new entity which is quite distinct from its parents. Usually, a joint venture is formed between two or more partners to take the advantage of their complementary skills. In India, Joint Venture was a very common mode of entry before liberalisation due to government condition to have local partner for foreign players to enter in Indian market. One such Joint Venture which was highly successful is Hero Honda. Hero Honda started its operations in 1984 as a joint venture between Hero Cycles of India and Honda of Japan with equity of ? 16 crore, which became the world’s largest two-wheeler company in early 2001. In 2010, when Honda decided to move out of the joint venture, a new company Hero MotoCorp was born. This case study talks about how the joint venture was formed why it was so successful and why it ultimately got dissolved. The Joint Venture is a classic case of how a separation can be done gracefully. This holds lessons for other JVs that will eventually split when the interests of the partners cease to align. Keywords: Joint Venture, Gracq‘itl Separation, Hero Honda, Hero Motocorp.

Keywords: Joint Venture, Graceful Separation, Hero Honda, Hero Motocorp

Suggested Citation: Suggested Citation

Veer Narmad South Gujarat University (VNSGU) - B.R.C.M. College of Business Administration ( email )

Lal Bunglow Athwalines Surat, 395001 India

Mrunal Joshi (Contact Author)

B.r.c.m. college of business administration ( email ).

V.T.Choksi Campus, Lal Bunglow Athwalines Surat, Gujarat, 395007 India 02612257340 (Phone)

HOME PAGE: http://www.joshimrunalbrcm.blogspot.in

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Designing More Durable JV Agreements

Kira Medish is a Summer Business Analyst, Tracy Branding Pyle is a Director, and James Bamford is a Managing Director at Water Street Partners, an Ankura Company. This post is based on their Water Street memorandum.

When Honeywell restructured its highly-successful joint venture in Japan with Yamatake in 1990, the dealmakers included vaguely-defined scope and exclusivity terms—a decision that ultimately contributed to the end of the 40-year partnership. These terms allowed both Honeywell and the JV to compete in “Other Asia,” a geographic market which included China; the parties felt their history and senior-level ties meant any issues would be quickly resolved. Yet as the business grew and markets globalized, Honeywell and the JV found themselves in repeated head-to-head competition, and personal relationships were no match for potential profits. With customers caught in the crossfire and competitors growing stronger, the partners debated for years over structuring a solution that should have been negotiated at the outset, and the relationship never fully recovered; Yamatake ultimately bought out Honeywell in 2002. [1] [2]

Or consider a media joint venture in India between an international conglomerate and a local partner. In this case, the international partner assigned exclusive use of its brands and the right to market all its products in the country to the JV. When the JV seriously underperformed, the international partner had no choice but to negotiate an expensive buyout of the local partner to regain its ability to compete in a key global market.

Such predicaments may seem like rare errors of strategic thinking and contract drafting. But our recent benchmarking study of 40 JV agreements shows that non-competition and exclusivity terms tend to lack adequate elasticity and contingency provisions in defining the activities the JV and each parent can and cannot do. In our experience, rigid joint venture agreements can lead to otherwise avoidable conflicts between the JV and one or more parents, and thus to suboptimal performance or even failure of the venture. Conversely, smart JV agreements anticipate an array of changed circumstances and other business contingencies and provide a least a degree of elasticity or future-proofing in the exclusivity and non-competes. [3]

To help companies understand how to structure exclusivity and non-competition provisions in joint venture agreements, we recently reviewed the legal agreements of 40 large joint ventures. The ventures in our dataset were drawn from across industries and geographies and involved three types of ventures: technology commercialization JVs, market entry JVs, and consolidation JVs. All JVs in our analysis were incorporated business entities. Below, we explore the prevalence and contours of exclusivity and non-competition provisions in JV agreements [4] , share examples of how parties have planned such provisions to automatically adjust in the event that JV or parent circumstances change in the future, and offer advice to dealmakers on how to improve JV agreement durability by thinking more fulsomely about future evolution and designing a JV agreement with the flexibility to function in a constantly evolving world.

Exclusivity and Non-Compete Provisions

Types and General Prevalence . Joint venture exclusivity and non-competition provisions come in many forms, and are often housed in different contractual agreements and provisions. Such contractual terms may impose requirements or limitations on either the venture or a parent with regard to geographic scope, product or service scope, customers, sales channels, use of technology or intellectual property, or services and other supply (Exhibit 1). [5]

Our analysis shows that product and geographic limitations are by far the most prevalent types of exclusivity in joint ventures, with 70% of agreements including both these types of limitations. Terms limiting freedoms to sell to specific groups of customers were least common in our dataset, present in only 8% of agreements.

An important note is that certain non-competition arrangements may be prohibited by antitrust laws, which vary by jurisdiction but generally allow some contractual prohibitions on competition in joint venture agreements if the pro-competitive benefits of such an arrangement outweigh anti-competitive effects. JV partners should consult antitrust counsel prior to entering into any exclusive arrangements, and, in particular, should be wary when allocating geographic markets or customers.

Parties mix and match different forms of non-competition and exclusivity to create fit-for-purpose boundaries for a JV and its parents. Because exclusivity provisions are tied to the particular context, certain types of exclusivity are more prevalent in JVs in different industries or venture types. For example, only 36% of downstream oil and gas, chemicals, and agriculture ventures include limitations on both the parents and the JV regarding geography—a prevalence significantly lower than JVs in other industries. One reason for this discrepancy is that such JVs often consist of large facilities located near natural resources and require large capital expenditures (and partner approval) to expand elsewhere and thus geographic limitations are implicit even if not defined by the JV’s scope or limitations on where partners can do business. By contrast, 70% of JVs to develop and commercialize technology included exclusivity or non-competition limitations on one or more parent companies related to intellectual property—a figure which is substantially higher than for consolidation JVs, for instance.

Exclusivity provisions also vary in terms of their level of complexity. In certain joint ventures, such as MillerCoors—a multi-billion-dollar JV that consolidated the U.S. beer operations of SAB Miller and Molson Coors beginning in 2008– the exclusivity regime was straightforward. The JV exclusively did business related to beer and beverages in the U.S. and Puerto Rico and the parents could not compete with the JV in those geographic markets. Indeed, it is quite common to see language in JV agreements stating something to the effect of “the parties shall engage in the JV Business (whether directly or indirectly through affiliates or collaborations with third parties) exclusively through the JV Company.”

It gets more complex when mixing and matching geographies, describing who acts where instead of stating that one or more parents cannot compete with the JV. Consider Kirin-Amgen, a highly successful 50:50 joint venture formed in 1984 between Kirin and biotechnology pioneer Amgen to produce and sell erythropoietin (EPO), a genetically-engineered biochemical for human therapeutics. In this case, the parties defined the geographic boundaries of the venture as the whole world except Japan and the U.S., the home countries of Kirin and Amgen, respectively—where both companies already had business they could continue. In addition, both parents were subject to non-competes within the EPO market up to 20 years after the closing date.

Most complex is when provisions include a combination of exclusivity and competition. For example, in a global joint venture to develop, manufacture, and sell soy-based ingredients and soy polymers, the parents were not allowed to conduct business within the JV scope except in certain countries, where one partner was allowed to manufacture and sell a subset of the JV products within Germany, Spain, Hungary, and Austria (which were also within the JV’s geographic scope and thus a source of competition).

Parent Company Exclusivity Carve-Outs . Going further, our analysis shows that 53% of agreements establish certain “exclusivity carve-outs” for the parents—that is, terms that allow one or more parent to compete in the JV’s market under certain circumstances (Exhibit 2).

Typically, such terms are derived from the unique starting context of the venture, and come in one of the following forms:

• Pre – Existing Parent Businesses (e.g., a parent can compete with JV for products parent sells on the effective date);
• Pre-Defined Period (e.g., a parent can compete with the JV for the first two years following JV formation);
• Limited Volume of Products or Services (e.g., a parent can sell its own products in the JV territory provided that such volumes do not exceed 5% of the JVs sales).

For example, in the JV agreement for Ciphergen Biosystems, a JV between Sumitomo and Ciphergen to develop and market biosystems for protein discovery and other protein-related R&D, both parents were prohibited from competing within the JV business. However, although Sumitomo was prohibited from competing with JV products, it was exempt from that provision with regard to substitutable or similar products already being sold before the effective date. This carve-out allowed Sumitomo to compete with the JV in a narrow set of circumstances with clearly-defined limitations.

Carve-outs tend to be more prevalent in JVs in certain industries. For example, 64% of the downstream, chemicals, and agriculture JVs we reviewed included carve-outs while only 40% of high technology JVs did. This discrepancy may, in part, be due to the fact that many downstream, chemical and agriculture companies use similar, if not the same, processes to develop products across a range of ventures or subsidiaries which makes carve-outs particularly attractive as they allow companies to “carve up” the world and continue performing a subset of operations across ventures. Whereas companies in the high technology industry, which entails expensive R&D, are less likely to invest in multiple, competing technologies.

Future Flexibility in Exclusivity Provisions . In our benchmarking of JV agreements, we also looked at whether joint venture agreements sought to “future proof” their exclusivity and non-competition terms by contemplating changes to the arrangements upon the occurrence of six types of potential future events.

These events were:

• Parent Exit from JV: What effect, if any, will a parent’s exit from a joint venture have on exclusivity provisions? For example, will the exiting partner be prohibited from competing with the JV for any period of time or do any exclusivity arrangements with the exiting partner terminate upon exit?
• Parent Change of Control: What occurs if a parent is acquired by third party that may or may not be a competitor of the JV or the other venture partner(s)? Would this give either parent the right to exit the JV or to terminate exclusivity?
• Outside Business Opportunities: Are there obligations or exceptions to exclusivity regarding business opportunities within the JV’s scope? For instance, would a parent need to offer a business opportunity (e.g., investment, partnership, acquisition) to the JV if that opportunity is in the venture’s scope? Are parents allowed to pursue certain types of investments within the JV’s exclusive scope either outright or if the JV turns down the opportunity?
• Technological Advances: When technological advances occur within or adjacent to the JV’s authorized scope, how will those changes be reflected in non-compete and exclusivity provisions?
• Parent Acquires a Competitor: Will the JV have the option to acquire competing assets or businesses which were acquired in a broader acquisition of a parent company? If so, what will be the ramifications be on JV terms?
• Poor Performance: If the venture performs poorly over a sustained period, will some or all of the JV’s exclusive access to certain markets be revoked? Or if the JV and parent are in an exclusive sales or supply arrangement, if one party to the agreement does not perform, does the arrangement become non-exclusive for the other party?

These six potential future events are all somewhat predictable, yet depending on the individual event, at least one-third of benchmarked JVs—and sometimes up to 80% of benchmarked JVs—have no language to address such situations (Exhibit 3).

More broadly, 73% of JVs in our data set failed to address more than three of these scenarios, and no JV included all six future-proofing provisions (though not all apply equally to every type of JV). While all the JVs we reviewed included at least one future-proofing provision, there is obvious evidence that JVs are failing to provide enough elasticity for a range of future contingencies.

Dealmakers can craft these future-proofing provisions to fit whatever their needs may be. For example, a multi-billion-dollar 50:50 aerospace and defense JV included a provision stating that a jointly-selected outside consultant would determine whether business opportunities were within or outside of the JV’s scope. This type of provision clearly defines the mechanism for pursuing business opportunities without leaving room for error.

Failing to plan for future contingencies can have serious consequences. For example, when Toys R Us and Amazon entered into an exclusive partnership in 2000 in which Amazon would exclusively sell Toys R Us toys, the parties did not build flexibility into the deal to contemplate Amazon’s fast-paced growth. At the outset, the partnership worked wonders for both parties—giving Toys R Us an online presence and Amazon a well-reputed product line. However, as Amazon’s success grew, it reportedly elected to violate the exclusive arrangement by expanding its toys department to include direct competitors of Toys R Us. Amazon argued, however, that it simply interpreted the exclusivity clause in a different way—claiming unsuccessfully that the company could allow third parties to offer toys for sale that Toys R Us elected not to sell on Amazon’s site. As a result of this act, Amazon was found in breach of contract and paid $51 million in settlement fees , while Toys R Us ultimately ended up being too far behind its competitors to have any hope at a strong online presence, contributing to its bankruptcy filing in 2018. The failure to plan for changes in partnership performance resulted in a significant cost for one partner, Amazon, and was strategically disastrous for the other, Toys R Us. Had the dealmakers for Toys R Us considered limiting exclusivity to a period of time, or pushed for a buy-out option, they might have had a better chance at catching up with and surviving the constantly evolving e-commerce world.

The Amazon and Toys R Us partnership is not the only example of exclusivity provisions that do not anticipate future change leading to the demise of partners’ relationships. Consider the case of joint venture formed between a technology leader and a traditional media firm, which committed to using the JV as its exclusive online channel in the nascent days of the internet. A decade later, it was clear to the traditional media firm that it needed a multi-pronged online strategy to be successful—necessitating a buyout of the technology partner in the hundreds of millions to sever the exclusivity clause. Had the traditional media considered provisions to address changes in technology and the market, like making exclusivity time-limited or including an option to buy-out the venture at a pre-agreed price if online news hit certain metrics, they might have been in a better position when the internet exploded in the 2000s.

However, if JV partners include thoughtful future-proofing features into JV agreements, they can build and manage long-term and successful JVs. For example, when BMW and Brilliance created BMW Brilliance, a joint venture to sell BMW cars in China, the parties clearly defined exclusivity and included several relevant future proofing provisions. The JV was limited to selling certain BMW models in China and was required to use BMW intellectual property and branding. Meanwhile, Brilliance could not manufacture or sell models in China that competed with the models the JV produced, and BMW could not compete with the JV in China. Despite these broad prohibitions, there were carve-outs to BMW’s obligations, allowing them to compete with the JV for sales in China up to 5% of JV volumes. On top of these arrangements, BMW-Brilliance included several future-proofing elements, including that BMW could meet market demand that the JV could not meet, and that neither parent could enter into any other partnership (JV or otherwise) that directly competed with the JV. These elements were highly successful, resulting in a JV that grew to 19,000 employees and €20B in revenue prior to BMW’s planned acquisition of a controlling stake for $4.2 billion after Chinese regulators loosened foreign ownership rules—the first global carmaker to do so.

Recommendations

Ultimately, developing non-competition and exclusivity terms requires JV parent companies to strike a delicate balance. On one hand, the parent companies will want to empower the JV company to be successful, which implies granting it some running room for growth, likely including a not overly-narrow authorized scope and some degree of exclusivity relative to the parents. Creating running room for growth will allow the JV to attract and motivate top talent, and avoid the need to constantly renegotiate the venture agreements.

On the other hand, individual parents will want to protect themselves against granting overly-broad and perpetual exclusivity to the venture, especially if the venture is in a highly-dynamic and fast-evolving industry, or has an uncertain performance prospects. For example, in a media industry joint venture we helped restructure in India, the international partner had agreed that the JV would be its exclusive vehicle to compete in India with a broad set of product segments. When the JV seriously underperformed over five years, the international partner was forced to negotiate an expensive exit in order to regain the rights to its brand in a critical growth market.

Individual parent companies may be able to protect themselves against such risks, of course. Well-structured exit and other legal provisions, including time-bound or conditional exclusivity, clear exit triggers, pre-agreed exit valuation methodologies, and the right to exit the venture through put or call rights, all provide potential escape hatches. For example, having a call right on the other partner’s shares, as well as the capital to exercise it, reduces the need to be anxious about exclusivity terms. Similarly, if a partner has decision rights over changes to scope, then concerns about the JV expanding to compete in the future are lessened.

Prior to drafting contractual terms, dealmakers should consider a number of strategic and practical facts and choices that may influence the choice of an exclusivity and non-competition regime. These include:

• Whether the parties are interested in creating a long-term sustainable business, versus a special purpose vehicle
• Whether either party has, or intends to have, a business adjacent to that of the JV
• Whether the JV is core to your company’s or partner’s strategy
• The pace of change and uncertainty within the JV’s product or geographic market, and underlying technology
• Whether the venture will enter into any purchase, sale, service, or licensing agreements with either parent company—and whether these agreements will have exclusivity provisions
• Whether your company is a natural buyer or natural seller of the JV in the future

The factors will each inform the breadth of exclusivity and non-compete provisions, and whether to include time-limitations or other carve-outs, and how to anticipate future events.

In particular, if there are asymmetries between the parties—such as one party having an adjacent business that it wishes to protect while the other desires for the JV to grow substantially—parties should be particularly attuned to exclusivity and non-competition provisions. In fact, dealmakers should anticipate where parties to a JV may be misaligned regarding exclusivity-related decisions and then structure solutions for how the parties will address such challenges if they arise down the road. [6]

Getting JV agreements right requires clearly defining non-competition and exclusivity limitations—potentially including carveouts—and anticipating future events. Doing so will make JVs more durable and elastic to future changes in a constantly evolving world, helping owner companies to profit from a JV like BMW Brilliance and avoid the costly consequences from a JV like Yamatake-Honeywell.

1 See Case Study “Did Honeywell Create a Competitor?” in Benjamin Gomes-Casseres, The Alliance Revolution: The New Shape of Business Rivalry, Harvard University Press, 1998 (go back)

2 As part of the buyout, the JV was renamed to Azbil. See Azbil Corporation Group History – https://www.azbil.com/corporate/company/history.html , accessed August 2020 (go back)

3 For additional discussion of joint venture non-competes, see Eduardo Gallardo, “Defining a Joint Venture’s Scope of Business: Key Issues,” Harvard Law School Forum on Corporate Governance, accessed August 2020 https://corpgov.law.harvard.edu/2012/09/24/defining-a-joint-ventures-scope-of-business-key-issues/ (go back)

4 While exclusivity and non-competition arrangements are generally memorialized in the main joint venture legal agreement (e.g., the Shareholders Agreement, Members Agreement, LLC Agreement, Joint Venture Agreement), these provisions may also be included in ancillary agreements, including licenses, services, or supply agreements—which was beyond the scope of this analysis. (go back)

5 Partners may impose limitations on each other or on the JV regarding non-solicitation of employees. This analysis does not address non-competition arrangements with respect to individual employees and instead focuses on restrictions on the JV’s or parents’ businesses more generally. (go back)

6 See Bamford, James, “How to Make a Joint Venture Succeed: Conducting a Pre-Mortem.” Water Street Insights (Feb. 29, 2016). (go back)

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Learning from Failure: A Case Study of International Joint Venture Performance

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Research output : Contribution to conference › Paper › peer-review

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T1 - Learning from Failure: A Case Study of International Joint Venture Performance

AU - Robinson, Craig V

AU - Cunliffe, James Forrest

PY - 2019/9/4

Y1 - 2019/9/4

N2 - This paper examines the causes of international joint venture (IJV) failure, focusing on the case of a failed IJV between a US industrial company and a Saudi Arabian conglomerate from the perspective of the Saudi partner. Our objective was to identify factors leading to the failure of this IJV and examine these in relation to existing research, which tends to include only the western partner’s perspective. Data were collected via semi-structured interviews with relevant senior management, supplemented by an indicative questionnaire and an examination of historical company records. Analysis facilitated by NVivo identified a number of key issues including the importance of developing, and building on, early stage trust and the apparent low emphasis placed by Saudi management on the role of cultural differences in precipitating failure. This contrasts with existing research and suggests a number of areas worthy of further study.

AB - This paper examines the causes of international joint venture (IJV) failure, focusing on the case of a failed IJV between a US industrial company and a Saudi Arabian conglomerate from the perspective of the Saudi partner. Our objective was to identify factors leading to the failure of this IJV and examine these in relation to existing research, which tends to include only the western partner’s perspective. Data were collected via semi-structured interviews with relevant senior management, supplemented by an indicative questionnaire and an examination of historical company records. Analysis facilitated by NVivo identified a number of key issues including the importance of developing, and building on, early stage trust and the apparent low emphasis placed by Saudi management on the role of cultural differences in precipitating failure. This contrasts with existing research and suggests a number of areas worthy of further study.

T2 - British Academy of Management Conference 2019

Y2 - 2 September 2020 through 4 September 2020

Avoiding blind spots in your next joint venture

Joint ventures (JVs) often seem destined for success at the outset. Two companies come together in what seems to be an ideal match. Demand for the planned product or service is strong. The parent companies have complementary skills and assets. And together they can address a strategic need that neither could fill on its own. But in spite of such advantages, revenues decline, bitter disputes erupt, and irreconcilable differences emerge—and managers call it quits before creating real value.

Not all joint ventures fall apart so spectacularly, but failure is far from a rare occurrence. When we interviewed senior JV practitioners in 30 S&P 500 companies—with combined experience evaluating or managing more than 300 JVs—they estimated that as many as 40 to 60 percent of their completed JVs have underperformed their potential; some have failed outright. Further analysis 1 1. We examined joint ventures valued at more than $250 million that were launched between 1998 and 2012 and in which one of the parent companies was in the Fortune 250. confirmed that even companies with many joint ventures struggle, even though best practices are well-known and haven’t changed for decades. In fact, most of our interviewees endorsed several that have long been the gold standard for JV planning and implementation: a consistent business rationale with strong internal alignment, careful selection of partners, clear and open communication, balanced and equitable structure, forethought regarding exit contingencies, and strong governance and decision processes. So why do so many joint ventures fall short? Our interviewees suggest that in the rush to completion, even experienced JV managers often marginalize best practices or skip steps. In many cases, the process lacks discipline, both in end-to-end continuity and in the transitions between five stages of development—designing the business case and internal alignment, developing the business model and structure, negotiating deal terms, designing the operating model and launch, and overseeing ongoing operations. Moreover, parent-executive involvement often declines in the later stages. Finally, many JVs struggle with insufficient planning to respond to eventual changes in risk. Such lapses, even in the early stages of planning, create blind spots that affect subsequent stages and eventually hinder implementation and ongoing operations. We’ll examine each of these issues, along with the approaches some companies are taking to deal with them.

Rush to completion

Many of the practitioners we interviewed noted the pressure—from investors, senior executives, and the board—to get deals done quickly, as companies strive to stay ahead of evolving trends or aim to meet fiscal deadlines. When that pressure for speed meets the complexity of the JV process, it can overwhelm even experienced practitioners—especially during the transitions between stages of development. As the head of a global pharmaceutical company lamented, “We continually fall prey to the pressure to get a deal signed and then forget to plan for operational realities.”

Many companies lack the forethought and discipline to address those operational realities at each phase in a JV’s development and spend more time on steps where less value is at risk and less time where more value is at risk (Exhibit 1). Some rush through the business-case design by skipping steps—usually thinking that it will be easy enough to return to any issues later—and end up trying to reverse engineer the business case. Others focus more on a deal’s financials, which are familiar and comfortable for those with M&A experience, than on the less quantifiable strategic and operational issues, such as what might trigger a decision to walk away from a deal, the cost of ancillary agreements, the impact of exit provisions, and the effect of decisions to delegate authority. Still others substitute boilerplate agreement language in critical terms of the agreement or in arbitration clauses rather than tailoring them to the deal at hand.

Not surprisingly, our interviews suggest that taking such shortcuts leads to many proposed JVs failing prior to implementation. In general, as the head of business development for a high-tech company commented, “The assumption that a business case will just happen leads to a great deal of pain. People underestimate the difficulties they’ll encounter.” In one pharmaceutical partnership, for example, managers defined only a cursory business case, hoping to move quickly to reap the potential financial benefits of the arrangement. When they later were forced to reconsider certain decisions given the lack of focus and detail in the business plan, they realized that the two companies had different visions for the partnership and terminated it without realizing its expected returns. In another case, two healthcare companies quickly signed an agreement, only to need to restructure two years later to address misaligned operating processes that were dragging down performance.

The solution is intuitive: companies must find ways to balance the pressure for speed with the demands of planning a healthy joint venture—especially allocating their time and resources in line with the potential for value and impact. No single approach will work for every company or in all circumstances, but the approach taken by one global industrials company is illustrative. Any business unit presenting a JV proposal to the executive committee of this company must include in its presentation a detailed business case, an investment thesis, an assessment of competitors, and detailed profiles of priority partners. It must follow an explicit checklist of expectations for each stage in the planning process—including deal structure and terms, financial analysis, launch, and operating-model design. Senior managers must also use this checklist during progress reviews, both to ensure alignment and consistency and to serve as a forcing mechanism for raising issues. Although this approach demands significant time and resources even before detailed negotiations with a JV partner, it also increases everyone’s comfort and confidence in the vision for the deal.

Lack of leadership continuity

Companies often struggle to maintain continuity of vision as they develop and execute joint ventures. Even if they start with a clear business case and explicit internal alignment, the strategic intent can get lost in the details as execution issues emerge and people move in and out of the process at different stages.

Part of the problem is that a different team member is usually responsible for each of the five phases of a JV’s life cycle. In fact, among the different groups represented by our interviewees, including business development, top management, and business-unit leadership, none has responsibility for more than two phases. They also each have different ways of defining success and are compensated accordingly. Business-development teams, for instance, are typically evaluated and compensated based on the speed of a JV’s design and execution process, which can create a bias toward haste, even among the most thoughtful team members. Moreover, in all groups, senior decision makers often step back as others get involved, feeling they’re no longer essential. And JV managers themselves aren’t appointed, or don’t assume their roles, until late in the process, frequently about halfway through the launch, at which time the JV launch team abruptly pulls out.

When leadership is this disjointed, decisions made early in the process can have a disproportionate effect later on. In the transition between developing the business case and negotiations, for example, a lack of continuity can lead to poorly defined objectives and vaguely aligned priorities—which in turn creates confusion over who should drive business-model development, settle on deal terms, or manage the business unit itself. Worse, there is often no consistent internal referee to resolve trade-offs without reaching into very senior ranks—in many cases, the CEO.

To compensate for discontinuity, we’ve seen companies assign end-to-end accountability for a joint venture to a single senior business-unit executive with clear authority to make executive decisions, supported by team members who serve overlapping terms across the core phases of its design and execution. This creates a balance of executive sponsorship and specialized authority throughout the process. As one executive observed, “Successful JV development depends on a single empowered executive who lives and breathes the JV from business-case development to launch and handover to the management team.” The ideal candidate is a business-line leader or a future leader of the JV with experience in the JV’s strategy and operations.

Declining parent involvement

If allowed to proceed organically, JV planning would naturally require executive input throughout the entire process. While it may seem self-evident, many parent companies underestimate the detrimental impact of an absence of senior decision makers toward the end of the process. Even when they appoint a single JV manager as recommended, other senior executives are usually most present at the beginning of the deal design and initial partner meeting and then disappear until the final signing of the JV agreement—whether because they naturally refocus on other projects, because their interest wanes, or because they feel less useful on an ever-expanding team. In fact, many top executives are involved only in decisions regarding deal terms at a handful of points before the ink is almost dry (Exhibit 2). This creates tension and risk for the JV as more junior executives assume responsibility for negotiating an agreement.

To ensure that the structure and operating model are aligned with the vision and strategic rationale, critical issues must be resolved when senior decision makers are in the room. The best approach requires parent-company executives to resist putting decisions off, on the one hand, and to commit to being around for late process decisions on the other. Managers of one high-tech JV, for example, set firm and clear standards for both parents’ executive teams to keep decision making on track. Those executive teams committed to a high level of participation and accountability to ensure they were aware of and able to manage any issues; their involvement helped launch a large-scale JV quickly and smoothly and set the stage for a healthy long-term relationship that remains profitable today.

Since it isn’t always possible for executives and senior leaders to maintain a high level of involvement, companies may need to forgo the usual linear flow of decision making. That means front-loading the most important decisions— about which partner will have operational control, for example, or which critical positions each will hold—rather than waiting for them to emerge organically. Determining the right questions and the sequence of decisions will jump-start partner discussions and draw attention to tough decisions, such as how much control each partner has, that should be made by the leadership teams early rather than left to the JV launch team later on.

Insufficient planning to respond to changes in risk

At the beginning of any JV relationship, parent companies naturally have different risk profiles and appetites for risk, reflecting their unique backgrounds, experiences, and portfolios of initiatives, as well as their different exposures to market risk. Parent companies often neglect this aspect of planning, preferring to avoid conflict with their prospective partners and getting to mutually agreeable terms—even if those terms aren’t best for either the JV or its parents. But left unaddressed, such asymmetries often come to light during launch, expand once operations are under way, and ultimately can undermine the long-term success of the joint venture.

Certainly, some JVs must be rigidly defined to be effective and enforce the right behavior. But when that isn’t the case, JV planners too often leave contingency planning to the lawyers, focusing on legal protection and risk mitigation without the business sense, which shows up in the legalese of the arbitration process and exit provisions. Both tend to be adversarial processes that kick in after problems arise, when in fact contingency planning should just as often focus on the collaborative processes that anticipate changes and create mechanisms or agreements that enable parent companies to adapt with less dysfunction. As the head of strategy for one insurance company noted, “If a JV is set up correctly, particularly regarding governance and restructuring, it should be able to weather most storms between the parents.” Such mechanisms might include, for example, release valves in service-level agreements, partner-performance management, go/no-go triggers, or dynamic value-sharing arrangements and can allow a joint venture to maintain balance in spite of partners’ different or evolving priorities and risks.

One industrial JV launched in the mid-1990s used just such an adaptable approach to get through the financial crisis. While the JV had benefited both parents, its future was threatened when the crisis buffeted the majority owner. Rather than dissolve the partnership, the minority partner temporarily bought a larger stake in the JV, giving the majority owner some much-needed cash. Once it was back on its feet, the majority owner was able to buy back its full share and restore the ownership balance.

Even companies that rigorously follow the common best practices for JV planning will falter if the process lacks a comprehensive view of execution both within and in between stages of development. Maintaining vigilance and balancing these four pressures is critical to the success of a JV.

Note: This article, originally published in September 2014, was updated in April 2020 to reflect expanded analysis.

John Chao is a McKinsey alumnus, Eileen Kelly Rinaudo is a senior expert in the New York office, and Robert Uhlaner is a director in the San Francisco office.

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• Starbucks Coffee (A): A joint venture with Tata Global Beverages? (Overhead case)

In January 2012, Starbucks Coffee was negotiating with Tata Global Beverages, a subsidiary of India’s flagship Tata group, to enter the Indian market through a joint venture. The two case sets the stage for a negotiation between the two parties, giving them an overall context, history and the specific issues each party is particular about. The negotiation is framed around four key issues: (1) What will be the equity distribution between partners? Currently each partner is seeking a majority role; (2) How will the product be branded and what will be the average price in India? Each partner has different visions on this. (3) What should be the pace of retail expansion strategy? Students take on the roles of respective management teams to negotiate an agreement on the key points of the proposed joint venture. Teams complete three surveys before, during, and post agreements, which are used in the debriefing.

1) To build competencies in negotiating a strategic partnership; 2) To understand the strategic logic for partnerships and cost benefit trade-offs in working with partners; 3) To recognize hurdles in deal negotiations, and the varied scenarios one should be prepared for in negotiating deals; 4) To understand the negotiation process and build a process for arriving at win-win agreements in partnership.

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Joint ventures are used in almost all major industries, but the primary objectives of the ventures vary by industry and by company. Companies may participate in joint ventures to access scale, new markets, unique technology or to share risks. The diversity of reasons for adopting a joint venture or alliance — and the variety of assets contributed to the venture — dictate that each one requires customized legal, governance and operational design. A recent EY survey shows that a majority of CEOs are contemplating forming joint ventures, strategic alliances or alternative deal structures with third parties. Yet, few corporate development departments have joint venture expertise, as they are less common than acquisitions. And, in many cases, the executives who lead a joint venture transaction often transfer to the new entity, leaving the parent company with no internal expertise to manage the next one.

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Joint Venture Example

Overview of Joint Venture Examples

Joint Venture is a collaboration of two or more parties for a common business purpose. These parties, also known as co-ventures, can be enterprises, organizations, or even individuals. In a joint venture, the involved parties agree to share the profits and incur the losses in accordance with their ownership ratio.

Joint ventures can serve various purposes, such as exploring a new market or a region, actualizing high-budget projects, innovating new products, etc. These ventures can be a partnership, a separate legal entity, or a contractual agreement. Furthermore, there is no designated governing body for overseeing joint ventures’ operations, although they may be subjected to various laws and regulations depending on the industry.

Examples of Joint Venture

The following are some examples of a joint venture project:

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#1 Verily and GlaxoSmithKline

Verily, the life sciences unit of Alphabet Inc. (Google’s parent company), entered into a joint venture agreement with the British pharmaceutical company, GlaxoSmithKline (GSK), to develop bioelectric medicines. The project aimed to create miniature electronic implants that treat various conditions, including asthma and diabetes. The estimated cost of the venture was $715 million.

Under the agreement, GSK will have a majority ownership of 55% in the joint venture, while Alphabet will hold a minority ownership of 45%. This partnership aimed to combine GSK’s pharmaceutical expertise with Alphabet’s advanced technologies to develop innovative treatments for various health conditions that can improve the quality of life for patients worldwide.

#2 Uber and Volvo

Taxi giant Uber and heavy vehicle manufacturer Volvo announced a joint venture agreement to develop self-driving cars. The two companies planned to jointly invest $300 million in the project, each contributing $150 million. Hence, the ownership ratio between the two companies was 50%-50%.

The joint venture aimed to develop autonomous vehicles that could be used for ride-hailing services. Uber provided its ride-hailing services and autonomous technology expertise, while Volvo contributed its experience in automotive design and manufacturing.

#3 Sony and Ericsson

Sony Ericsson was a joint venture between Japanese electronics conglomerate Sony Corporation and Swedish telecommunications firm Ericsson, established in 2001. The collaboration aimed to manufacture mobile phones and other gadgets under the brand name “Sony Ericsson.”

The joint venture combined Sony’s expertise in consumer electronics with Ericsson’s expertise in mobile telephony. It became one of the largest mobile phone manufacturers in the world, known for producing some of the most innovative devices, such as the Walkman. In 2012, Sony acquired Ericsson’s share in the joint venture and renamed it Sony Mobile Communications.

#4 NBC and Disney

NBC Universal Television Group (a subsidiary of Comcast) and Disney ABC Television Group (a subsidiary of The Walt Disney Company) entered into a joint venture in 2008 to create a new online video streaming platform “Hulu.”

The aim was to provide a high-quality streaming service allowing viewers to watch TV shows, movies, and other content on computers, laptops, and mobile devices. In 2022, Hulu had over 48 million subscribers valued at over $25 billion .

#5 Kellogg’s and Wilmar

Another joint venture formation example is between Kellogg’s and Wilmar International Limited. The former wanted to expand its cereals and other snack foods business in the Chinese market.

The partnership allowed Kellogg’s to benefit from Wilmar’s extensive distribution and supply chain network in China. In contrast, Wilmar was able to expand its business and streams of revenue. The joint venture was a successful partnership that helped both companies attain their business objectives.

#6 Microsoft and Cruise

Microsoft and Cruise formed a strategic partnership in January 2021 to speed up the commercialization of driverless vehicles. Microsoft will invest $2 billion in Cruise as part of the joint venture, and Cruise will use Microsoft’s cloud computing and AI technology to create and deploy self-driving vehicles.

The partnership between Microsoft and Cruise also includes GM (or General Motors), the parent organization of Cruise. GM acquired Cruise in 2016 and has since been heavily investing in the development of self-driving technology.

#7 Apple and Unicom

Apple and China Unicom entered into a joint venture in 2009 to bring the iPhone to China’s huge growing market. As per the agreement, China Unicom became the exclusive carrier for the iPhone in China and agreed to purchase a certain number of iPhones from Apple over three years.

This was Apple’s official breakthrough into China’s telecommunications sector. However, Apple encountered substantial obstacles in China, such as fierce competition from local smartphone manufacturers and government rules that hampered the company’s ability to completely penetrate the Chinese market.

#8 Mercedes-Benz and Volvo

In 2020, Daimler (now Mercedes-Benz) and Volvo Group signed a joint venture to design and deploy recharge stations for heavy-duty trucks and coaches. The firms agreed to invest 1.2 billion Euros over the next few years, with Daimler and Volvo Group holding a 50% stake in the initiative. The collaboration was viewed as a significant step in developing sustainable transportation systems.

#9 ExxonMobil and Indian Oil Corporation

ExxonMobil and Indian Oil Corporation, alongside Chart Industries, have agreed upon a joint venture to build a virtual pipeline project in India. The objective is to transport liquefied natural gas (LNG) via road, rail, and water to areas of the country that currently lack pipelines.

Both ExxonMobil and Indian Oil Corporation are working on innovative supply-chain methods to facilitate gas access across the nation.

More Recent Joint Venture Examples

Reasons for Joint Venture

Here are some reasons for initiating a joint venture project:

Joint ventures are becoming increasingly significant in business as a form of strategic alliance. The trend is expected to continue, with more companies exploring joint ventures to leverage their resources, expertise, and market reach to achieve common business goals.

Additionally, a joint venture can be terminated or liquidated once a specific business objective has been achieved, allowing partners to reap their share of the profits.

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• > Journals
• > Management and Organization Review
• > Volume 3 Issue 2
• > Success Factors for Managing International Joint Ventures:...

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Success factors for managing international joint ventures: a review and an integrative framework.

Published online by Cambridge University Press:  02 February 2015

International joint ventures (IJV) are an important organizational mode for expanding and sustaining global business and have been of special relevance for the emerging Chinese market for decades. While IJVs offer specific economic advantages they also present serious management problems that lead to high failure rates, especially in developing countries. Because of the strategic relevance of IJVs and corresponding management challenges, research on success factors for managing IJVs in China has received broad attention, resulting in a variety of studies. However, there are no conceptual syntheses of the literature to date and further development in the field is hampered by both a lack of consolidation of what is known and identification of viable avenues for future research. We address this gap by building on existing concepts in the field, developing them further and synthesizing them into an integrative, theory-based framework of IJV success factors. We use this framework to systematically depict the results of both empirical studies related to Sino-foreign IJVs and to IJVs in general. Finally, we draw important implications from the research and propose potential paths for future study.

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• Volume 3, Issue 2
• Michael Nippa (a1) , Schon Beechler (a2) and Andreas Klossek (a1)
• DOI: https://doi.org/10.1111/j.1740-8784.2007.00067.x

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Nummi: What Toyota Learned and GM Didn’t

• Benjamin Gomes-Casseres

Last week, Toyota announced it will close the plant of New United Motor Manufacturing Incorporated (Nummi), its one-time joint venture with GM to make cars in California. (GM had pulled out of the JV in July.) It was third-page news in the financial section, but the passing of an era nonetheless. Nummi represented the first […]

• Benjamin Gomes-Casseres is an expert in alliance strategy and the Peter A. Petri Professor of Business and Society at Brandeis University. He has been studying, teaching, and consulting on the strategy of business combinations for thirty years, and is the author of three books including Remix Strategy: The Three Laws of Business Combinations (HBR Press, 2015). To learn more about the ideas and tools he has developed, visit remixstrategy.com .

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