BBDM3133 International Business Management

Tutorial 8
Case Discussion
Look Before You Leap
The closing case describes Group Danone SAs joint venture arrangements with the Grameen
Group (Bangladesh), angshou !ahaha Group ("hina), and Britannia #ndustries $td% (#ndia)% #t
discusses the reasons &or, the objectives o& the ventures and identi&ies man' o& the bene&its and
problems that the' have encountered%
(e' )oints*
Group Danone is a )aris+based manu&acturer and mar,eter o& nutrition products in
three major segments* dair' products, water and in&ant &ood, and medical nutrition%
#ts product line consists o& 'ogurt, non+alcoholic beverages (water) and in&ant
nutrition products%
#t is the worlds largest seller o& &resh dair' products and the second largest
supplier o& bottled water%
Danone has a signi&icant commitment to doing business with the lesser developed
-emerging mar,ets. o& the world% /evenues in these mar,ets currentl' represent
one+third o& Danones overall sales% #& 'ou loo, at their web page, 'ou will note that
the' state, -The' invent business models that bene&it the most disadvantaged
populations%.
The case identi&ies and comments on three joint venture relationships*
Bangladesh (Grameen Group), "hina (0ing 1inghan), and #ndia (Britannia
#ndustries and the !adia &amil')%

Case Questions
1. Grameen Danone is a joint venture among two companies the non-profit Grameen
Group and the for-profit Group Danone SA. What are the benefits to each of these
companies? Wh did each choose to participate in the joint venture?
The Grameen Group is a lending s'stem that enables the disadvantaged
Bangladeshis (particularl' women) to increase their income and improve living
conditions% Danone provided the ,now+how in the technical areas (construction, plant
maintenance, 'ogurt production, etc%), while the mar,eting o& the 'ogurt is being
handled b' the women who are Grameens clients% The 'ogurt product was designed
to provide nutrients essential to the health o& the Bangladeshi population, most
speci&icall' the children%
Danone became involved in the project, as the' were among the &irst companies to
establish the concept o& integrating their business with social and environmental
issues%
!. "rom the perspective of each of these companies# are there an potentia$ pitfa$$s to
joining this venture?
2or the Grameen organi3ation, it was a win+win situation% 4n the other hand,
Danones ris,s were primaril' &inancial% 2rom a purel' corporate pro&it+driven
scenario, perhaps the return on investment might not come as 5uic, nor be as
pro&itable as an investment in the developed world%
%. &ow consider Danone's venture in (hina what are the benefits of this joint venture
to each of these companies? Wh did each choose to participate in the joint
venture?
The bene&its to each o& these companies were* ease o& mar,et entr', shared ris,,
shared ,nowledge6e7pertise, and s'nerg'6competitive advantage% Danone bene&ited
b' having a partner to help them get around competition and potential government
regulations, and also provided them with immediate access to this huge mar,et% 4n
the other hand, the "hinese partner bene&ited &rom Danones technical e7pertise in
the production o& so&t drin,s, sport drin,s, and bottled water%
). What cou$d Danone have done to avoid the prob$ems it is encountering in (hina and
*ndia?
The problems that Danone had with both the projects in "hina and #ndia had to deal
with incompatibilit' with their partners, con&licts over operations, loss o& autonom',
and changing circumstances% The ,e' in both situations was the &ailure to -+oo,
-efore .he +eaped%. The' should have been more thorough in identi&'ing and
evaluating partners, and the' should have been more diligent in &ormali3ing the
agreement% The' needed to ma,e sure that the agreement stated in a clear and
unambiguous wa' the status and responsibilities o& each partner%
Essay Questions
1. What are the basic differences between joint ventures and other tpes of strategic
a$$iances?
A strategic alliance is a business arrangement in which two or more &irms agree to cooperate &or
their mutual bene&it% A joint venture, a special t'pe o& strategic alliance, involves the creation o&
a new business entit' that is independent o& the parent companies% This separate entit' can
then be broader in purpose, scope, and duration than other t'pes o& strategic alliances% 8oint
ventures t'picall' have &ormal management s'stems, while other t'pes o& strategic alliances
ma' be more in&ormall' managed% Strategic alliances are usuall' considered less stable than
joint ventures because the' lac, &ormal organi3ational structures and have narrow missions%
!. What are the potentia$ pitfa$$s of strategic a$$iances?
The potential pit&alls o& strategic alliances include con&lict among partners (one o& the primar'
causes o& &ailure), access to in&ormation (&irms ma' pre&er to ,eep certain in&ormation secret),
distribution o& earnings (pro&its must be shared among partners), potential loss o& autonom'
(control must be shared among partners), and changing circumstances (as circumstances
change, the rationale behind the &ormation o& an alliance ma' no longer e7ist)%
%. Wh wou$d a firm decide to enter a new mar,et on its own rather than using a strategic
a$$iance?
There are numerous reasons wh' a &irm might decide to enter a new mar,et on its own rather
than using a strategic alliance% Some o& the more common reasons are protection o& proprietar'
in&ormation, distribution o& earnings, and strategic autonom'% A &irm ma' want to protect
proprietar' in&ormation and conse5uentl' might internali3e its e7pansion e&&ort rather than use a
strategic alliance% A &irm might want to capitali3e on the &ull potential o& a mar,et rather than
share pro&its with a strategic alliance partner% A &irm ma' want to maintain its strategic autonom'
and would there&ore enter a new mar,et on its own rather than in conjunction with a partner%