Management Principles Mittal Used a Case Study

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There are other potential challenges as well. For example, if the foreign partner does not uphold its end of the bargain. For example, Bharti takes on a foreign partner to gain managerial controls and technology transfer, but one or more of those elements fails to materialize. The result could be that the venture fails, or that Bharti is forced to take extra steps to shore up the venture.

3. With respect to culture clash, it has been found that for retail operations -- which Bharti essentially is, the learning curve is much steeper than for production-oriented joint ventures (Owens & Quinn, 2007). Therefore, management must be proactive in addressing cultural issues before they arise. This will include training for both sides of the deal so that managers know what to expect before they need to begin working together.

Strategic alignment is at the root of the problem when foreign partners look to go solo based on the knowledge transfer they have received, or if they make an unwanted takeover offer. The two parties can mitigate this risk by stating clearly their objectives at the outset of the deal. As well, Mittal should investigate the corporate history of his partners, to know if they have a propensity for this type of activity or not.

To guard against non-performance of the foreign partner, a contract that defines the specific obligations of each partner is a good start. However, this will not guarantee performance of the partner. A degree of trust is required for the partnership to work. Indeed, having a high level of trust between the partners is a significant predictor of the achievement of both financial and non-financial goals in international joint ventures (Ng, Lau & Nyaw, 2007).

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Bharti should also work to build a mutual strategic interest with the foreign countries. Although he has been successful to date, it appears that he has not adopted this strategy. However, if the strategies of both parties are aligned, this will allow for more successful integration of the two companies' competencies. Bharti has not had major issues as of yet, save for those with Vodafone, in part because his joint ventures are relatively young. Over time, however, the lack of strategic synergy will reveal itself and the partnerships will break up. In particular, care should be taken to alleviate instances of asymmetrical information between the parties. Reuer and Koza (2004) found that stock markets generally react favorably when asymmetric information exists because of the synergies that can result, but investors often have a short-term orientation. Over time if that asymmetric information results in a lack of strategic synergy, then the company will face falling stock prices as the discord reveals itself to the markets.

All told, Bharti can easily avoid the pitfalls associated with his foreign joint ventures by making clear that his organization and the partners have the same strategic orientation. On an operating level, Bharti should focus on the cultural issues, as those are most likely to arise early in the integration and can have a devastating effect on the success of the joint venture.

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