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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:
SOME EXAMPLES OF INTERNATIONAL JOINT VENTURE
• Japanese consumer electronics company Sony Corporation
• Swedish telecommunications company Ericsson
Sony-Ericsson
• Tata Tele service, an Indian broadband and telecommunications
• Richard Branson's Service Group, a British multinational branded venture capital conglomerate company
Virgin Mobile India Limited
• Bharti Enterprises, one of India's leading business groups
• Walmart, the world’s leading retailer
Bharti Walmart Private Limited
• Japanese automobile and motorcycle manufacturer Suzuki
• Maruti, company of Government of India
Maruti Suzuki India
Limited
• Brazilian company (local partner), Algar
• a French company Bull
ALGAR – BULL
• HERO group of India• Honda of Japan
HERO HONDA
• Indian Motorcycle company Bajaj• German Insurance Giant Allianz
Insurance.
Bajaj Allianz Life Insurance
Co., Ltd.
CULTURES IN IJVHofstede 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. National culture2. Organizational culture
Company profile of Bharti EnterprisesBharti Enterprises
Type Private
Industry Conglomerate
Founded 1980
Headquarters New Delhi, India
Key people
Sunil Bharti Mittal(Chairman & Group CEO)Rakesh Bharti Mittal(Vice Chairman)Rajan Bharti Mittal
ProductsTelecommunications, Retail, Insurance, Digital TV, Real estate
Subsidiaries
Bharti AirtelBharti AXA General InsuranceBharti AXA Life InsuranceBharti InfratelBharti RetailBharti Softbank HoldingsBharti WalmartFieldFresh FoodsIndus Towers
Website www.bharti.com
Company profile of Wal-MartWal-Mart Stores, Inc.
Type Public
Industry Retail
Founded 1962 - Rogers, Arkansas, United States
Founder(s) Sam Walton
Headquarters Bentonville, Arkansas, United States
Area served Worldwide
Key peopleS. Robson Walton, ChairmanMike Duke, President/CEO
Products
Apparel/footwear specialty, cash & carry/warehouse club, discount store, hypermarket/supercenter/superstore, supermarket
Owner(s) Walton family
Employees 2.2 million (2013)
Subsidiaries Asda, Sam's Club, Seiyu Group, Walmex
WebsiteCorporate.Walmart.comWalmart.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 Wal-Mart 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. Power Distance India scores high on this dimension, 77
The United States score low on this dimension, 40
2. Uncertainty Avoidance India scores 40 on this dimension
The US scores 46 on this dimension
3. Individualism and
Collectivism
India, with a score of 48 is a society with clear collectivistic traits.
The United States, with a score of 91 is a highly individualistic culture.
4. Masculinity and
Femininity
India scores 56 on this dimension and is thus considered a masculine society.
The United States score 62 on this dimension and is considered a “masculine” society.
5. Long vs. Short Term
Orientation
The Indians score 61, making it a long term, pragmatic culture.
The United States scores 29 on this dimension and is a short-term oriented culture.
Organizational Culture in Bharti Enterprise & Wal-Mart
Dimensions of Organizational Culture Bharti Enterprises Wal-Mart
1. Process vs. Result Orientation Result Oriented Result Oriented
2. Employee vs. Job Orientation Employee oriented Employee oriented
3. Parochial vs. Professional
Orientation
Parochial Orientation Professional Orientation
4. Open vs. Closed System
Orientation
Open System Orientation Open System Orientation
5. Loose vs. Tight Control
Orientation
Loose Control Orientation Tight Control Orientation
6. Normative vs. Pragmatic
Orientation
Pragmatic Orientation Pragmatic Orientation
National Culture of Bharti Wal-Mart
Dimensions India US
Power Distance Index (PDI) 77 40
Uncertainty Avoidance Index (UAI) 40 46
Individual Index Value (IDV) 48 91
Masculinity Index Value (MAS) 56 62
Long-term orientation Index Value
(LTO)
61 29
Corporate Culture at Bharti Wal-Mart
Result oriented.
Customer oriented.
It’s 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