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ethics case presentation.ppt

  1. Cross-Cultural clashes : A Road to Disaster Study of The Corning-Vitro Joint Venture
  2. BACKGROUND OF VITRO  100 yr. old Mexican Glass manufacturing company  Global orientation  History of successful joint ventures  $3.5 billion in sales and 40,000 employees
  3. Background of Vitro  Primarily into Drinkwares including dozens of other products like windshield to washing m/c
  4. BACKGROUND OF CORNING  150 yr. old American Glass manufacturing company.Famous for oven ready glass ware  Diversified into fiber optics , Environmental Products , Laboratory services etc  Corning was historically successful in international joint ventures (Ex- St. Gobain,Samusung,mitsubishi etc)  Only 9 out of 50 JVs dissolved over a 73 yr. period  Sales from jvs to the tune of $3b in last 5 years and profit $500m.
  5. Vitro & Corning JV  Vitro, S.A. and Corning Inc. signed $800 million joint venture in Fall 1992  Each parent company  took equity stake in newly created firms  agreed to marketing, sales and distribution relationships to support each other.  After 25 months JV was dissolved.
  6. REASONS FOR JV -CORNING  Gain access to the markets that it cannot penetrate quickly to have competitive advantage .  To bring its technologies to the market
  7. REASONS FOR JV - VITRO  Penetrate into emerging North American Market after NAFTA  To avoid losing identities to the giants like Corning.
  8. JV- AN ECONOMICALLY INTEGRATED UNIT  Similarity of History,Goal and Objective  Corning specialized in cookware and Vitro in tableware.  Corning was accomplished at melting glass, while Vitro was expert in molding it.  The companies intended to combine product lines based on where each company had technical leadership, and they began to swap technology to enhance their respective capabilities. 
  9. Cont…..  In marketing, Corning-Vitro intended to add Vitro’s products to the existing Corning line. This would allow Corning to expand sales of its tableware glass to Mexico and throughout Latin America through the Vitro-Corning marketing group.  By combining their technical know-how, the two firms would be in a better position to deal with competitors in the combined North and South American markets  Where production lines or marketing efforts overlapped, they planned to rationalize operations and adjust facilities and capabilities accordingly.
  10. Marriage made in Hell  Cultural and other conflicts undermine the vision shared by the companies at the beginning of the joint-venture  Different approaches to work  Complications with relatively strong peso.  Increased overseas competition  Different administrative and accounting practices  Different Mexican/U.S. consumer demands  Corporate control: Family-business styled Mexican firms were reluctant to share control  Cornice –Vitro-$700M and Vitro-Cornice $200m
  11. Values in Culture U.S. culture How the Americans see the Mexicans: Collectivism, High power distance, High uncertainty avoidance Femininity Particularism Ascription Synchronous (Flexible) Diffuse High Context Implicit High Non-Task Time How the Mexicans see the Americans: Mexican culture Individualism Low power distance Low uncertainty avoidance Masculinity Universalism Achievement Sequential Specific Low Context Explicit Low Non- Task Time
  12. POWER DISTANCE Extent to which less powerful members of institutions and organizations accept that power is distributed unequally Vitro was bureaucratic & hierachical. Centralised organisation. Cornings was flat & decentralised.
  13. MASCULANITY VS FEMININITY Masculinity: a culture in which the dominant social values are success, money and things Femininity: a culture in which the dominate social values are caring for others and the quality of life Vitro employees are loyal to family & the organisation.Members are not empowered to take decision.Sales approach less aggressive,slow & delibarate. Cornings employees are quick,action oriented & aggressive .Highly competitive
  14. INDIVIDUALISM VS COLLECTIVISM Individualism: Tendency of people to look after themselves and their immediate family only Collectivism: Tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty Vitro employees believe in group decision making and individual decisions are rarely communicated to the top management. Cornings employees look after themselves and take individual decisions .
  15. UNCERTAINTY AVOIDANCE Extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid such situations  VITRO employees were risk averse ,docile and dependent on the decisions of the Sr. management/Experts  CORNING employees aggressive, risk taking and ambitious .
  16. SPECIFIC VS DIFFUSE  Specific culture: individuals have a large public space shared with others and a small private space they guard closely and share only with close friends and associates  Diffuse culture: public and private space are similar in size, individuals guard public space carefully because it is shared with private space  American have high public space and small private space.Strong separation of work & private life.  Mexican have similar public & private space. They guard their public space as it allows one into their private space also. Ex- Open acceptance by CORNING about the cultural differences.
  17. UNIVERALISM VS PARTICULARISM  Universalism: belief that ideas and practices can be applied everywhere in the world without modification  Particularism: belief that circumstances dictate how ideas and practices should be applied and something cannot be done the same everywhere  Vitro being an Mexican firm is high on particularism where employees believe in relationships and trust whereas Corning being an American firm where employees believe formal rules and regulations and concepts like “deal is a deal “ and to be fullfilled
  18. ACHIEVEMENT VS ASCRIPTION  Achievement culture: status is accorded based on how well people perform their functions  Ascription culture: status is based on who or what a person is  CORNING believes in success and achievement .  Vitro believes in giving more importance to age , rank and social connection.
  19. TIME MANAGEMENT  CORNING believes in sequential approach and fast & time bound completion of the tasks.  Where as Vitro philosophy was synchronous in approach and slow .
  20. TAKE AWAY  Similarities in history,philosophy,goal and objective does not guarantee a successful JV.  One of the most important dimension of a successful JV is also TRUST.  Additional skill w.r.t understanding cultural dimensions and more time to spend by management to inculcate an accepted compatible culture