Corning Vitro Paper
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Corning Vitro Paper



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    Corning Vitro Paper Corning Vitro Paper Document Transcript

    • Derrick Quals<br />Ryan Huelsmann<br />Dr. Will<br />Int. Business<br />Cultural Conflicts: The Corning-VITRO Joint Venture<br />According to Webster’s Online Dictionary, a joint venture is “an enterprise in which two or more companies enter into a temporary partnership”. What this means is that when two different companies decide to cooperate together in creating one new product or organization, they enter into a joint venture. Many foreign and domestic corporations have teamed together for this purpose in efforts to capitalize on an untouched market or increase the net sales and profit of both companies. This was the case of Corning Incorporated and Vitrocrisa. Corning, a U.S glass and ceramics manufacturer, teamed up with Mexican owned glass processing company Vitrocrisa. With Corning’s knowledge in ceramics combined with Vitro’s knowledge in glass manufacturing, they combined to create Corning- Vitro’s oven ready cooking pots. What was unique about this 1992 joint venture was not only the new product they produced but how it “helped double trade between the U.S and Mexico eventhough NAFTA faced strong opposition from congress over environmental and labor concerns” (Juanita Darling, Los Angeles Times). Although this joint venture between these two major companies seemed like a match made in heaven, both companies soon found out how their cultural differences would lead to their eventual split.<br />Corning Inc. is a glass and ceramics company which was originated and is stationed in the United States. Corning Inc. declares themselves as the world leaders in glass and ceramics, with over 150 years of materials science and process engineering experience. In its earlier years, Corning was widely known for their oven ready cookware and their previous success in globalization and joint ventures. Corning’s first joint venture involved a French glassmaking company named St. Gobain in the 1920’s. Together they created Pyrex cookware. At the time of their joint venture with Vitro, Corning was the innovative leader in foreign alliances for more than seventy three years. During that time period they had almost 50 joint ventures with only 9 being unsuccessful.<br />Vitrocrisa, or Vitro for short, concentrates on glass manufacturing and specializes in beverage bottling products. Vitro was started in 1909 in Monterrey, Mexico and at the time of their partnership with Corning, they were one of the world’s largest glass manufacturers. Although they specialized in drink-ware from bottles to champagne glasses, they also specialized in the manufacturing of automobile windshields, fragrance bottles, and even washing machines. Vitro was also the leader in glass manufacturing in Mexico.<br />When Corning saw an opportunity to expand their expertise in a product market they saw another chance in which they could team up with another organization of similar product specialization. Corning also felt that they would also be capitalizing on NAFTA by accessing the Mexican market. This eventually led to their $130 million joint venture with Vitro. Both companies saw this as an extremely great opportunity since they felt that both of their companies shared similarities in history, customer orientated philosophies, goals, and objectives. Their close relation in product specification led to the development of the Corning Vitro Corporation’s 5- piece casserole set along with other related cookware products. This alliance also caused a threat to other U.S companies that competed with Vitro. As Juanita Darling of the Los Angeles Times wrote, “While Corning employees may not be hurt by this particular alliance, the trade agreement could cost the jobs of workers at other U.S. companies that compete directly with Vitro”. Little did they know how short-lived this partnership would become and how a once great alliance, would deteriorate due to opposing clashes in corporate culture and beliefs.<br />Hofstede studied cultural variances among other countries and grouped their values across four dimensions: power distance, uncertainty avoidance, individualism or collectivism, and masculine or feminine. By the studying the overall values of a country and where they fall in those categories, one can almost get a feeling of how these cultural dimensions might affect Corning’s and Vitro’s overall business practices. The first one involves power distance, which examines how well the less powerful members of society accept that power is distributed unequally. The United States has a low power distance consisting of flatter and more decentralized structures. In Corning’s case since it is located in the U.S., the people of the top would let personnel from lower-levels in the organization make decisions or at the very least listen to their input on decisions. However, Mexico has a high power distance, which means that the people blindly obey orders and is very centralized. That means Vitro’s heads of the corporation make all the decisions, and the bottom follows each order to the letter. Next on Hofstede’s list is uncertainty avoidance, which reflects how likely they will take risks. America has a low uncertainty avoidance, which means more willing to accept risks of the unknown, while Mexico has high uncertainty avoidance, which means higher need for security before taking certain risks. As a result, Corning has less managerial structure and has more managerial risk taking on their part, while Vitro structures their organizational activities and takes fewer managerial risks. After that, Hofstede examined how individualistic or collectivistic a country is. For America’s Corning, they are high on the individual making them wealthier, having greater individual initiative, and taking part in a Protestant work ethic focusing on individual needs, while Mexico’s Vitro is higher on collectivist side resulting in poorer conditions, less individual initiative, and a Catholic work ethic focusing on the group or family needs. Finally, Hofstede discussed masculinity or felinity of countries. America, especially Corning, is masculine, which means they are earning more stress and more focused on obtaining wealth, recognition, or advancement. Basically, the people are always on the lookout for the next promotion or raise, which is more easily achieved in low power distance nations because movement is easier. However, Mexico and their company Vitro are more feminine, which means they are more focused on cooperation, friendly atmosphere, and employment security. It is these aspects that make the loyalty for the company to exist. Hofstede emphasized and categorized the differences in culture between these two countries, but it is how these differences affected their ability to manage and cooperate with each other that led to their imminent downfall. <br />As stated earlier, Hofstede pointed out the differences in their respective homelands, and now let’s examine those differences and how they affected their management style. Corning was decentralized, which meant that middle-level and lower-level managers were involved in the decision making process. In addition, certain decisions, depending on the type such as distribution or consumer, the higher-ups would never know about it. The reasoning behind this is that decisions could be made quickly, that it builds trust and increases productivity amongst employees, and that people on the front-line know what is best in doing their jobs better. Vitro, on the other hand, is very centralized and has all the top managers make all important decisions. In Vitro’s case, middle-level managers were seldom asked to contribute. Mr. Loose, a Corning chief executive, commented on this method of doing business by stating “My experience on the Mexican side is that someone in the organization would have a decision in mind, but then the decisions had to be kicked up a few levels.” <br />The next set of problems came from their informal and formal methods of doing business. Corning was very informal, thus making it forward in most of its business practices, forcing it to move quickly, and was very open to acknowledge problems in order to try to solve them. However, Vitro has more of a formal method of doing business. It was family oriented, very polite, believed to move slowly, bureaucratic and hierarchal, and unwilling to acknowledge problems because they thought it was rude. These differences in management styles were linked to a variety of conflicts in the joint venture.<br />Another source of trouble in this joint venture was that Corning encouraged competition amongst its employees, while Vitro encouraged cooperation. Stemming from this aspect of competition was the quick-action and aggressive sales. Also, Corning is always attempting to be better either at selling, at producing, or at anything else that would help the business thrive, and, as a result, Corning rewarded those individuals who came up with new ideas, who brought in more sales, or who found a way to improve production by issuing raises, bonuses, recognition, or promotion. Vitro encouraged cooperation amongst its people. This means that Vitro has a slower, more deliberate approach to sales. To encourage this concept, it rewarded the people more as a group. Now, since Vitro is in a closed economy in Mexico with little competition, the company did not have the mindset for competition. Its main focus and competitive advantage was product reliability. Corning has to be pushing for more sales, pushing for better production, pushing for more ways to beat out their competitors. Vitro does not have to be as cutthroat to achieve its goals in Mexico’s closed economy.<br />Their attitudes toward risk also took effect and caused some arguments for this joint venture. Corning was more open to risk because they know that in order to survive one has to change and every change requires a little bit of risk, while Vitro was very averse to risk. One issue that presented itself is that Corning wanted to distribute its products to Wal-mart and K-Mart, but Vitro disagreed. Mentioned earlier was the fact about Vitro being in a closed economy, and as a result, it was out of its element with Corning’s method of doing business. Corning knew that by selling to these department stores the joint venture’s product would be presented to a variety of consumers who would see the value of their work at an affordable price, yet Vitro still found this move too risky. <br />Another difference these two organizations had was the degree of loyalty to the company. Corning had low organizational loyalty, which meant that people identified more with their occupation than their company, while Vitro had the opposite. Now, it is not being said that Corning employees were not loyal at all, but if any of them was offered a job with better pay and better benefits with another organization, he or she would take it. Vitro, on the other hand, has very high organizational loyalty, which stems from their hierarchal and bureaucratic structure and the loyalty to the family and its patrons. It was this high organizational loyalty that Vitro was able to accomplish its method of decision-making, cooperation, and formal methods of doing business that Corning practically conflicted with. Without this fundamental key, none of those methods would be possible.<br />Finally, in 1994 the joint venture concluded, and the $130 million dollars to start the venture was returned. To this day, Corning still investigates what it could have done differently. Both Vitro and Corning continue to do business together, not as a joint venture, but as a distribution of each other’s products. This case encourages other companies to obtain a full background of culture and management practices before entering into joint ventures and to either adapt to them or find common ground in those areas. <br />