Joint Ventures And Alliances Management Essay

Joint ventures and confederations can be used as a manner of come ining a new market for the administrations. Joint venture arises when the company invests in a concern in a mark state together chiefly with a local spouse house. Doole and Lowe ( 2008 ) stated that this is largely preferred entry manner for companies because of sharing the hazard and costs amongst other spouses. On the other manus, strategic confederations cover a assortment of contractual agreements that can be good to both parties to accomplish both parties ‘ ends ( Doole and Lowe, 2008 ) . In this subdivision we will look at General Motors Joint Ventures and Strategic Alliances from 2001 to 2010. Besides, we will analyze grounds why GM has chosen Joint ventures and Alliances as a method of company scheme.

2.1 A joint venture with GM and China FAW Group ‘s in 2009

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In 2009, GM China and China auto company FAW Group Corp. , which is a major auto-car shaper in China launched a $ 293 million joint venture for fast turning Chinese light-duty truck and new wave market ( Reuters, 2009 ) . This has been created 50-50 portion of the concern.

*Automobile industry in China

Despite the planetary recession, China ‘s car industry has quickly grown while the universe biggest car company which is GM has been fighting with its original market ( Tang, 2009 ) . Recently China ‘s production volume of motor vehicle has surpassed United States ( See figure 1 ) . Furthermore, GM was the largest foreign maker in China, 2008 ( See figure 2 ) . Harmonizing to Tang ( 2009 ) since 2000, rider auto market has grown more than 65 % of its vehicle production. Based on rapid economic growing, China is non the option but indispensable market to foreign companies.

Figure 1. Entire Annual Vehicle Production

Beginnings from Tang, R ( 2009 ) , P4

Figure 2. Largest Multinational Motor Vehicle Manufactures in China, 2005-2008

Beginnings from Tang, R ( 2009 ) , P11

*Aims of this joint venture

This joint venture is non the first joint venture with China. Harmonizing to Tang, in 2009, GM has 9 joint ventures. China is a turning market for GM. Half of its gross revenues come from outside of USA ( See figure 3 ) . USA based company now faces falling gross revenues in USA. They need to seek new market to replace it. Asia-pacific state is emerging market. By making this joint Venture with China, GM purpose to increase client bringings into Asiatic market. Besides GM could acquire local cognition and entree to fabrication and distribution assets. As China is large in population and economic system is turning really fast people are able to purchase autos that they could non afford before. Besides inexpensive labor and cost sharing made possible for GM to increase their gross revenues and productions in China. The chief purpose of these joint ventures was to spread out its market to new market. GM and FAW ‘s joint venture was the first clip for GM to do light trucks in China. Joint ventures is good manner of come ining a new market for GM, non merely because of statute law such as China, but besides utilizing local fabrication can be efficient to spread out its market and as a channel of distribution. Furthermore, these joint ventures will make workss around large metropoliss so labour and distribution can be achieved much easier. Their scheme for making these workss is to assist on cut downing costs by sharing these workss together for bring forthing GM autos. Therefore, GM became the top auto maker in China ( Tang, 2009 ) . GM wants to maintain its great success in China through joint ventures.

Figure 3. GM Gross saless 2008 by Region ( % )

Beginnings from GM Europe ( 2009 ) , Facts and figures p16

2.2 A joint venture with GM and UzAvtosanoat ( Uzbekistan ) in 2007

General Motors has agreed that a joint venture with UzAvtosanoat in 2007. This is for piecing and administering Chevrolet autos to East Europe. This has been created 25 % portion of the concern.

*Automobile industry in East Europe

Europe ‘s overall auto production has late dropped ( Tang, 2009 ) . However, eastern and cardinal Europe has been lifting steadily. Besides Chevrolet has been turning its market portion from 2005 in Europe due to demand of little and compact auto in Europe. Besides, Uzbekistan itself has had a possible to turn with its 27 million population and the state ‘s economic system has grown more than 7 % over the past five old ages ( Autoobserver, 2008 ) . Therefore, set uping a joint venture with Uzbekistan could give a strong part to GM.

Figure 4. Chevrolet Market portion in Europe, 2004-2006

Beginnings from GM Europe ( 2007 ) , Facts and figures p57

*Aims of this joint venture

Followed by GM Motors ( Facts and figures 2008 ) , Chevrolet is turning trade name in Europe. In Europe, GM has joint ventures which chiefly assemble GM ‘s autos to sell all over the Europe. Russia is one of the most fast turning states in Europe. Like China, non merely because of statute law but besides utilizing local labor, workss and distribution channel have a batch of benefit to GM. It helps GM to come in its market easy and helps to take opposition from local clients as a foreign company. Furthermore these joint ventures help to present GM merchandises right clip. GM produces assortment merchandises in Europe. Besides each state has different penchants, hence having fabrication workss and assembly workss in all over the Europe aid GM to cut down its merchandise clip and bringing clip to all over the Europe. Besides holding local workss can make a good image to GM. This helps to come in Europe market and increase its gross. This is a scheme of GM to come in a new market and spread out its market portions non as a foreign company as a localized company. Figure 3 shows its gross revenues by part. Asia-pacific and Europe have entire 39.7 % of its gross. Harmonizing to GM Europe ( Facts and figures, 2008 ) , Chevrolet has been the figure one non-domestic trade name in Russia since May, 2007. After this joint venture with Uzbekistan, in 2008, the market portion of Chevrolet in Uzbekistan has grown up to 22 % ( GM facts and figures, 2009 ) . Therefore, a joint venture with Uzbekistan has a batch of benefits to GM.

2.3 Alliance with DaimlerChrysler and the BMW Group in 2005

GM made a partnership with DaimlerChrysler and the BMW Group in 2005 to develop intercrossed gasoline-electric engines together ( MSNBC, 2005 ) .

*Auto industry in 2005

In 2005, the market portion of intercrossed card was merely 1 % in USA, but it had a possible to turn ( IMT, 2005 ) .

*Aims of this confederation

Developing a new engineering needs a batch of costs. Using this confederation for GM, it has a cost good consequence on GM, besides garnering their engineerings and thoughts can do them take the market. Alliances can be used for developing new engineerings and come ining a new market without high hazards to the concern.

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