1. 0 Drumhead

The competitory nature of today’s international concern universe pushes the companies to happen a common land between each other. Even market giants have considerable inclination in making collaborative agreements with their rivals in order to maintain their places in the market. The competences of rival companies differ from each other frequently. Collaborative understandings supply companies to derive varied cognition and fortes with less R & A ; D costs. Besides rivals can entree each other’s established markets with collaborative ventures. However. the achievement of an international collaborative venture depends on the harmoniousness between national and organisational civilizations of the spouses. Hence. the cultural scrutiny of the venture has a important function in the success. The spouses should province a suited integrating method sing the cultural impacts in the dialogue period.

2. 0 Introduction

2. 1Definition of the International Collaborative Venture
Collaborative ventures. sometimes called international partnerships or international strategic confederations. are basically partnerships between two or more houses. They help companies overcome together the frequently significant hazards and costs involved in accomplishing international undertakings that might transcend the capablenesss of any one house runing entirely. ( Cavusgil. et Al. 2011 )

Cavusgil. et Al. ( 2011 ) besides province that there are two basic types of collaborative ventures: equity joint ventures and undertaking based. non-equity ventures. In this essay we are traveling to analyze an equity joint venture between Sony and Ericsson. Equity joint ventures are traditional coactions of a type that has existed for decennaries. ( Cavusgil. et Al. 2011 ) . Harmonizing to Wallace ( 2004. mentioning in Ahmed and Pang 2009 ) . joint ventures are normally formed on the footing of a common aims or common ends of all the parties. This aim should function the demands of the companies in a proportionate mode otherwise the success of the joint venture will be ephemeral.

2. 2The motivations for Collaborative Ventures
Daniels. et Al. ( 2011 ) province the motivations for collaborative ventures as:
? Spreading and cut downing costs: When the volume of concern is little. or one spouse has extra capacity. it may be less expensive to join forces with another house. However. the costs of dialogue and engineering transportation must non be overlooked.
? Specializing in competences: The resource-based position of the house holds that each house has a alone combination of competences. Therefore. a house can maximise its public presentation by concentrating on those activities that best tantrum its competences and trusting on spouses to provide other merchandises. services. or support activities.
? Avoiding or countering competition: When markets are non big plenty for legion rivals. or when houses need to face a market leader. they may band together in ways to avoid viing with one another or combine resources to increase their market presence.
? Procuring perpendicular and horizontal links: If a house lacks the competency and/or resources to have and pull off all of the activities of the value-added concatenation. a collaborative agreement may give greater perpendicular entree and control. At the horizontal degree. economic systems of range in distribution. a better smoothing of gross revenues and net incomes through variegation and an ability to prosecute undertakings excessively big for any individual house can all be realized through coaction.

? Deriving cognition: Many houses pursue collaborative agreements in order to larn about their partners’ engineering. runing methods. or place markets and therefore broaden their ain competences and fight over clip.

? Deriving location-specific assets: Cultural. political. competitory. and economic differences among states create challenges for companies that operate abroad. To get the better of such barriers and derive entree to location-specific assets ( e. g. . distribution entree or competent work force ) . houses may prosecute collaborative agreements.

? Minimizing exposure in hazardous environments: The higher the hazard directors perceive with regard to a foreign operation. the greater their desire to organize a collaborative agreement.

3. 0 Information and analysis

3. 1Information about Sony Ericsson Joint Venture ( SEJV )

3. 1. 1The brief history of the SEJV
Sony Ericsson. the nomadic telephone company formed by Ericsson and Sony in 2001. was born of two. coincidental. serious crises. April 24. 2001. saw the proclamation that the Swedish telecommunications equipment company Ericsson was unifying its Mobile telephone operations with Japan’s Sony. organizing Sony Ericsson with each company having 50 % . The new. common company was headquartered in London. Originally. the two companies were compatible spouses for the joint venture. Sony was a major electronics trade name with expertness in the industry and Ericsson was a prima company in the communications sector. ( Nilsson undated ) Finally. Sony acquired Ericsson’s portion in the venture on February 16. 2012. ( Sonymobile 2012 )

3. 1. 2The chief motivations for the SEJV
? Spreading and cut downing costs: Sony was wanting to increase its market portion in the nomadic phone industry. Ericsson had major fiscal jobs due to holds in the production. Finally. Sony made less sum of investing to the industry and Ericsson continued its concern by cut downing its costs.
? Specializing in competences: One of the indispensable aims of the venture was to unify Ericsson’s know-how in the telecommunication
country to Sony’s broad experience in the electronics.
? Avoiding or countering competition: Ericsson desired to be the market leader. Besides Sony wanted to increase its market portion. So they combined their resources and cognition to have a bigger portion.

? Procuring perpendicular and horizontal links: Ericsson had serious jobs in the value added concatenation due to its provider Philips. Besides. before fall ining. Ericsson had a job of fabricating their goods cheaply. which Sony’s affiliates and makers solved for them. ( Tharp 2009 ) Furthermore. the trade name consciousness of Ericsson was an country which Sony is reputable.
? Deriving cognition: While Sony was accessing the broad cognition of Ericsson in the telecommunication. Ericsson besides gained entree to Sony’s expertness in the ocular and digital engineering.

3. 2Examination of the SEJV from Sony’s position

3. 2. 1Examination of the chief motivations from Sony’s perspective One of the chief intents of a joint venture is to portion the cost of constructing a new organisation. Sony wanted to take a opportunity of the chances that were lifting in the nomadic phone industry in the early 2000’s. Despite that. the concern environment in this industry was transporting a high hazard for the new participants. It would hold been a great cost for Sony to organize a new organisation. which can dispute with top participants like Nokia and Motorola. Consequently. Sony decided to come in the nomadic phone market on a taking company’s coattails. ( Tharp 2009 ) Ericsson was the 3rd large Mobile phone maker in the beginning of the 2000’s. Sony had hegemony in the sound. vision and bit engineering for the electronic devices nevertheless ; it had defects in the package and patenting in the nomadic engineering.

With some 33. 000 given patents. Ericsson is the largest holder of standard-essential patents for nomadic communicating. ( Ericsson 2013 ) Therefore. the specialisation of Ericsson in the nomadic phone industry provided a major advantage for Sony. Sony was non a preferred trade name in the nomadic phone industry in the beginning of 2000’s with a market portion of less than 1 % . Sony may non hold been able to counter a competition in this industry by itself. Simultaneously. Ericsson was the 3rd major participant in the industry and was seeking to acquire over its dramatic fell in the market portion.

Furthermore. Sony. which had virtually no presence in nomadic phones outside Asia. would derive a bridgehead in Europe and America. where Ericsson had distribution understandings with major operators. ( Kapner 2001 ) Therefore. Ericsson would be the ideal constituent spouse for Sony due to its state of affairs in the market. Sony had deficiency of the R & A ; D direction in the nomadic phone engineering. Despite that. Ericsson had an experienced R & A ; D squad specialized in the nomadic engineerings. This squad fulfilled the spread of R & A ; D direction in Sony. Sony accessed the long-run gained cognition of Ericsson in the nomadic engineering country with this joint venture. Sony was be aftering to incorporate this cognition into its specialised know-how in the electronic devices.

3. 2. 2Examination of the jobs in the SEJV. which Sony encountered As we examined above the chief motivations about SEJV that Sony had. we would hold expected a compatible partnership with Ericsson. Nevertheless. the execution was non so successful. Bryan Ma of IDC Asia-Pacific said “They originally came together to integrate the Ericsson engineering and the Sony trade name. but they haven’t been able to accomplish much with the combination. ” ( BBC 2011 ) Furthermore. “When the joint venture was formed. nomadic phone engineering was simple and Ericsson’s inputs in that country suited Sony’s intents. ” said Tim Charlton of Charlton Media. ( BBC 2011 ) Parallel to these ideas ; SEJV was non at the topographic point in the market where they desired to be in the beginning. Charlton besides stated that now things have changed.

Telephones are much more advanced and Sony feels it is hampered by the fact that Ericsson doesn’t bring much to the tabular array with respect to the smartphone section. ( BBC 2011 ) Analysts said the 50-50 partnership has played a function in aching the company’s merchandise development. Melissa Chau of IDC Asia-Pacific stated that whenever determinations are made at one terminal. they need blessing from the other. That has hindered their ability to convey new merchandises to the market at a fast gait. ( BBC 2011 ) Sony expected to derive more cognition and engineering from Ericsson ; nevertheless Ericsson didn’t contribute both of them plenty to the partnership. The deficiency of R & A ; D activities revealed phones. which were non stand foring an invention. Consequently. the release of the trade name new theoretical accounts of SEJV delayed and besides disappointed the market. As a consequence of this. it gave a peculiar harm to the corporate image.

Cultural separation was another job in the SEJV. As mentioned by Lane and Beamish ( 1990 ) IJV spouses from different national civilizations tend to see greater trouble in footings of communicating and coordination ( Lane and Beamish 1990 cited in Pothukuchi et Al. 2002 ) . If we look at the organisational civilization of both the spouse companies. we see that there is besides a important difference on this history. The lone similarity among them is the professional orientation towards work and unfastened system that exist within the organisation. When we make this comparing with Sony Ericsson. we find out that the civilization integrated at Sony Ericsson is rather similar to that of Ericsson. The ground may be due to both the companies are based in Europe and besides there is really less difference in their several national civilizations. Another ground for demoing similarity with Ericsson is that the ratio of Swedish employees working at Sony Ericsson is rather high. therefore giving a similar impression.

It can be assumed that the civilization incorporated at Sony Ericsson is partly based on some commonalties between the parent houses and partly influenced by the national civilization every bit good. ( Ahmed and Pang 2009 ) As a consequence of these facts. Sony acquired Ericsson’s portion in the venture on February 16. 2012. While acclaiming the past decade’s partnership with Ericsson. Sony president and main executive Howard Stringer pointed out that the market had drastically shifted since 2001 from concentrating on loss-making simple nomadic phones to extremely profitable smartphones. The separation from the Swedish company was hence a logical and strategic measure that would enable Sony to more expeditiously present devices that can link to each other and open up new amusement possibilities. By taking full control. Sony can incorporate its smartphone operation with its tablet. handheld game console and personal computing machine concerns to salvage on costs and better synchronize development of nomadic devices. ( Anon 2011 )

3. 3Examination of the SEJV from Ericsson’s position

3. 3. 1Examination of the chief motivations from Ericsson’s position As it was mentioned in the one-year study 2001 of Ericsson ( 2002 ) ; twelvemonth 2001 was a tough twelvemonth in the telecom concern. Like most of rivals. Ericsson incurred considerable losingss for the twelvemonth. Relative market place of Ericsson improved. nevertheless. and after decisive restructuring and cost control attempts. Ericsson’s aim for 2002 was to accomplish an operating border of over five per centum. Ericsson was looking for a spouse to portion the cost of this organisational restructuring in order to remain competitory in the industry. Sony was a dependable trade name for Ericsson to maintain on its concern. Wojtek Uzdelewicz. pull offing manager at Bear. Stearns & amp ; Co. ( 2001 ) mentioned Sony-Ericsson trade as a perfect brotherhood. He said “Ericsson has done a hapless occupation of edifice trade name consciousness. That’s what Sony is celebrated for. ” Furthermore. Ericsson would besides derive entree to Sony’s expertness in uniting sound. ocular and digital engineering. a accomplishment whose importance will turn with the debut of a new coevals of phones with Internet connexions and other advanced characteristics. ( Kapner 2001 )

Another advantage for Ericsson was Sony’s expertness in nomadic French telephone engineering. which was a cardinal sector Ericsson was trusting to interrupt into at the clip. ( Tharp 2009 ) The one-year study 2001 of Ericsson ( 2002 ) stated that the industry has a strong growing potency and Ericsson look frontward with optimism on Ericsson’s function as the top-class seller to top-class operators. Due to the uncertainness in the telecom market under current economic conditions. Ericsson believed a solid upturn may be a twosome of old ages off. The long-run fiscal aims of Ericsson were unchanged to turn faster than the market. which means a growing of more than 20 per centum in a few old ages. This selling aim was a important motivation for Ericsson to make a joint venture. Indeed. Sony was known as a selling mastermind worldwide. Both companies would profit from each other’s established markets. doing them fifth largest nomadic phone manufacturers in the universe. ( Tharp 2009 ) In 1998. Ericsson had begun to see proficient jobs with its telephones.

For the following three old ages the company would be forced to acknowledge to a figure of jobs and unexpected events. runing from jobs with circuits and new theoretical account holds to a fire at a subcontractor and deficiency of back-up systems. Still. the largest job was likely the deficiency of accomplishments with consumer merchandises most clearly shown in the legendary reply to the inquiry of why the Swedes did non seek to copy the extremely successful Finnish telephone design: “If you want a phone that looks like a piece of soap. then” ( Nilsson undated ) In malice of that. Sony was a reputable consumer merchandise maker due to its quality direction and design inventions.

Besides. Ericsson had a job of fabricating their goods cheaply. which Sony’s affiliates and makers solved for them. ( Tharp 2009 ) Sony was a great information beginning for Ericsson to entree. First of all. Sony was a planetary giant in the consumer electronics. The expertness of Sony in sound. ocular and digital engineering was carry throughing the spreads in Ericsson’s cognition. Besides engineering. Ericsson was besides seeking for a redress to its selling jobs. Handily. Sony was celebrated for its stigmatization. selling and commercial activities.

3. 3. 2Examination of the jobs in the SEJV. which Ericsson encountered Sony wanted to derive the market. which Ericsson already established in a long-run. Nevertheless. a trade would make little for Ericsson’s market place. Sony sold merely five million phones in 2000. Adding them to Ericsson’s 43. 3 million would increase Ericsson’s market portion merely one per centum point. to 10 per centum worldwide. go forthing it in 3rd topographic point behind Nokia of Finland ( 35 % ) and Motorola ( 14 % ) . ( Kapner 2001 ) At this point. Ericsson trusted the bran-new nomadic phones. which were developed with its new spouse. would hold boosted their gross revenues. In malice of that. their gross revenues dramatically decreased in 2002 and 2003 and they even lost their place in the market portion. Indeed. the mean selling direction of Sony besides disappointed Ericsson and caused this state of affairs.

As we mentioned before. Ericsson had a job of fabricating their goods stingily. The pricing scheme of SEJV was rather high in comparing with the market norm. This caused lower net incomes than they aimed. Furthermore. harmonizing to Hofstede ( 2001 ) research. the national civilization of Ericsson can be described as holding low power distance. low uncertainness turning away. high individuality. really low maleness and low long-run orientation. ( Ahmed and Pang 2009 ) On the other manus. Sony had a high power distance. really high uncertainness turning away. low individuality. really high maleness and high long-run orientation national civilization. ( Ahmed and Pang 2009 ) These contrasts in the national civilizations lowered the public presentation of Ericsson’s R & A ; D squads. Furthermore. due to this deficiency of public presentation. they have started lay-offs in the R & A ; D sections. Finally. this concatenation linked to out-of-date merchandises.

4. 0 Decisions
International collaborative ventures allow companies to make their common aims by accessing each other’s resources. cognition. specialisations and established markets. Nevertheless. an ICV can be successful every bit long as the spouses fulfilled each other’s spreads. The motivations for the companies may be seen flawless ; nevertheless the jobs can lift in the execution. The motivations of Sony and Ericsson were besides suiting absolutely to each other in the initial dialogues. Their involvements in distributing and cut downing cost. profiting from each other’s competences. increasing their market portion. holding a greater control and entree in perpendicular and horizontal degrees and deriving each other’s expertness cognition were fiting magnificently in the theory.

Sony was looking for a dependable spouse in the nomadic phone industry to increase its market portion. Ericsson was under force per unit area due to crisis in the industry and had inclination to cut-off its production and R & A ; D costs. Sony had competence in the electronic and digital engineering. as Ericsson had the competence in the telecommunication engineering. Ericsson had jobs in the stigmatization. selling and fabrication direction. Sony had a world-wide repute in these issues. Last. Sony and Ericsson had reputable expertness know-how in their countries. When we combine these premises. we might anticipate a new advanced trade name in the nomadic phone industry. Nevertheless. the execution of the theory failed.

The cultural differences between these two companies revealed unanticipated conditions. Ericsson could non stand for its R & A ; D department’s accomplishments sufficiently due to Sony’s low-individualist civilization. This consequence caused the fabrication of out-of-date merchandises. Outdated merchandises decreased the net incomes and the per centum in the market portion. Besides these. Sony could non successfully implement its stigmatization. selling and fabrication direction due to cultural disagreement with the Ericsson’s native forces. The new SEJV lost its third topographic point in the nomadic phone industry as a consequence of these direction failures. Finally. Sony broke this concatenation by having the JV wholly. Nowadays Sony uses the advantage of know-how which gained from Ericsson in the last decennary and applies its selling and fabrication direction to the full.

5. 0Recommendations
In the initial periods of making an IJV. the future spouses should see the cultural impacts. Therefore. cultural researches should be done and examined carefully before dialogues for following a suited direction way. Each spouse besides should recognize the other’s competences accurately and should go forth those zones for the better 1. Furthermore. spouses should avoid concealing cognition from each other because it brings merely loss to the venture. In the Sony Ericsson illustration. if Sony had left the control of R & A ; D section to Ericsson wholly. the R & A ; D failure would non hold happened. The Sony direction couldn’t able to detect the cultural differences at this point. Besides. Sony should hold been focused on the selling and stigmatization activities more intensively.

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6. 0References
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° BBC News Business ( 2011 ) Can Sony win where Sony-Ericsson partnership failed? Available at: hypertext transfer protocol: //www. bbc. co. uk /news/business-15285258 [ Accessed 12 October 2013 ] . ° Cavusgil S T. Knight G and Risenberger J R ( 2011 ) International Business: The New Realities ( 2ndedn ) . Upper Saddle River ( NJ ) : Pearson. ISBN-13: 978-0-13-245327-1 ° Daniels J D. Radebaugh L H and Sullivan D P ( 2011 ) ‘Chapter 14: Direct Investment and Collaborative Strategies’ in International Business. Available at: hypertext transfer protocol: //drgeorgefahmy. com/labteachingtips /daniels14_im. doc [ Accessed 10 October 2013 ] .

° Ericsson ( 2013 ) The Leader in Mobile Communication Patents. Available at: hypertext transfer protocol: //www. ericsson. com/the company/company_facts/patents [ Accessed 11 October 2013 ] .

° Ericsson ( 2002 ) The Annual Report 2001 Financial Statements. Available at: hypertext transfer protocol: //www. ericsson. com/res/investors/docs/annual-reports-1970-2002/annual
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° Wallace. R. ( 2004 ) Strategic Partnerships: An Entrepreneur’s Guide to Joint Ventures and Alliances. Chicago: Dearborn Trade. A Kaplan Professional Company. ISBN-13: 978-0-79-318828-4