Culture adaptation in case of international joint venture A case study of Bharti Walmart

Concept of International Joint Venture

According to Culpan, the process of IJV involves two or more firms from different countries to collaborate in creating an independent business unit by contributing their resources. Wallace defines joint venture as the working together of two or more firms for achieving a specific outcome that would not have been possible by any of the firm working alone.

we look at both of the definitions, we could easily recognize the following three variables:

1. Multiple independent companies

2. A well defined purpose 3. The level of interdependence

Process of International Joint Venture

The decision whether to establish a joint venture involves four different stages:
Initial Formation Operation Outcome

Sony-Ericsson Virgin Mobile India Limited Bharti Walmart Private Limited

Japanese consumer electronics company Sony Corporation Swedish telecommunications company Ericsson Tata Tele service, an Indian broadband and telecommunications Richard Branson's Service Group, a British multinational branded venture capital conglomerate company Bharti Enterprises, one of India's leading business groups Walmart, the worlds leading retailer

Maruti Suzuki India Limited

Japanese

automobile and motorcycle manufacturer Suzuki Maruti, company of Government of India

Brazilian company (local Algar a French company Bull partner),

ALGAR BULL HERO HONDA

Bajaj Allianz Life Insurance Co., Ltd.

HERO group of India Honda of Japan

Indian Motorcycle company Bajaj German Insurance Giant Allianz Insurance.

Hofstede defines culture as the collective programming of mind that distinguishes the members of one group or category from another.
There are two types of cultures that directly affect the joint venture:
1. 2.

National culture Organizational culture

Company profile of Bharti Enterprises

Bharti Enterprises Type Industry Founded Headquarters Private Conglomerate 1980 New Delhi, India Sunil Bharti Mittal (Chairman & Group CEO) Rakesh Bharti Mittal (Vice Chairman) Rajan Bharti Mittal

Key people

Products

Subsidiaries

Website

Telecommunications, Retail, Insurance, Digital TV, Real estate Bharti Airtel Bharti AXA General Insurance Bharti AXA Life Insurance Bharti Infratel Bharti Retail Bharti Softbank Holdings Bharti Walmart FieldFresh Foods Indus Towers www.bharti.com

Company profile of Wal-Mart

Wal-Mart Stores, Inc.

Type Industry Founded

Public Retail 1962 - Rogers, Arkansas, United States

Founder(s) Headquarters Area served

Sam Walton Bentonville, Arkansas, United States Worldwide

Key people

S. Robson Walton, Chairman Mike Duke, President/CEO

Products

Owner(s)
Employees

Apparel/footwear specialty, cash & carry/warehouse club, discount store, hypermarket/supercenter/superstore, supermarket Walton family
2.2 million (2013)

Subsidiaries
Website

Asda, Sam's Club, Seiyu Group, Walmex

Corporate.Walmart.com Walmart.com

The Joint Venture Formation of Bharti Wal-Mart

The world's largest retailer, Wal-Mart, announced a 50:50 joint venture with Bharti Enterprises for wholesale cash-and-carry business in India to roll out 10-15 such outlets over seven years. This also covers a supply chain and back-end logistics. The joint venture has been christened Bharti WalMart Pvt Ltd and the first outlet was opened by end-2008.

National Culture in Bharti Enterprise & Wal-Mart

Dimensions of National Culture Bharti Enterprises (INDIA) Wal-Mart
(UNITED STATES)

1. 2. 3. 4.

Power Distance Uncertainty Avoidance Individualism Collectivism

India scores high on this dimension, The United States score low on this 77 dimension, 40 India scores 40 on this dimension The US scores 46 on this dimension and India, with a score of 48 is a society The United States, with a score of 91 with clear collectivistic traits. is a highly individualistic culture. India scores 56 on this dimension The United States score 62 on this and is thus considered a masculine dimension and is considered a society. masculine society.

Masculinity and Femininity

5.

Long

vs.

Short

Orientation

Term The Indians score 61, making it a The United States scores 29 on this long term, pragmatic culture. dimension and is a short-term oriented culture.

Organizational Culture in Bharti Enterprise & Wal-Mart

Dimensions of Organizational Culture Bharti Enterprises Wal-Mart

1. 2. 3.

Process vs. Result Orientation Employee vs. Job Orientation Parochial Orientation vs. Professional

Result Oriented Employee oriented Parochial Orientation

Result Oriented Employee oriented Professional Orientation

4. 5. 6.

Open Loose

vs. vs.

Closed Tight vs.

System Control Pragmatic

Open System Orientation Loose Control Orientation Pragmatic Orientation

Open System Orientation Tight Control Orientation Pragmatic Orientation

Orientation Orientation Normative Orientation

National Culture of Bharti Wal-Mart

Dimensions Power Distance Index (PDI) Uncertainty Avoidance Index (UAI) Individual Index Value (IDV) Masculinity Index Value (MAS) Long-term orientation Index Value (LTO) India 77 40 48 56 61 US 40 46 91 62 29

Corporate Culture at Bharti Wal-Mart

Result oriented.
Customer oriented. Its about running their operations in a way that help and support people, sustains the environment and builds their business.

Engaging, inclusive and supports their vision of saving people money so they can live better.

Employee oriented rather than job oriented.

They believe each and every associate is important and contributes to

their journey to success. Calling each other associates is symbolic to this belief.

Encourages sharing of thoughts, ideas and feedback. They listen to their

associates. This indicates that they are having open system.

There is less power distance which is implies by the way that the offer positions at the store management as well as team member levels.

Conclusion
we find out that the culture integrated at Bharti Wal-Mart is quite similar to that of Bharti enterprise. The reason may be due to both the companies are based in India and also there is very less difference in their respective national cultures. Another reason for showing similarity with Bharti is that the ratio of Indian employees working at Bharti Wal-

Mart is quite high, thus giving a similar notion. It can be assumed that
the culture incorporated at Bharti Wal-Mart is partially based on some commonalities between the parent firms and partially influenced by the national culture as well.

Recommendations
Evaluation of differences in terms of vision, strategy, goals should be done before entering into joint venture. Following key issues should be considered: (a) the nature of the top management team (b) the corporate culture in the local organization (c) good coordination between the parent company and the subsidiary