This document provides an interim report on a strategic leadership group project studying factors that lead to the termination of Indo-Foreign joint ventures. It introduces the topic of recent high-profile joint venture terminations in India. The report is divided into sections on the introduction, joint ventures in India, and the project approach. It provides historical context on joint ventures in India before and after economic liberalization in 1991. It then outlines the questions the project aims to answer and lists sample industries and academic articles that will be used to study selected joint venture case studies.

1. Foreign Joint Ventures – Made (&
Broken) in India
STRATEGIC LEADERSHIP COURSE
GROUP PROJECT – INTERIM REPORT
Submitted to: Prof. J Ramachandran
Submitted by:
Joel Johnson 2009019
Subhra Jyoti Saha 2009066
Venkat Ramachandran 2008064
Vishnu Bhavaraju 2009080
Indian Institute of Management Bangalore

2. CERTIFICATE
The report represents our original work and does not contain any
material that has been taken from any source, except as
acknowledged
2

3. TABLE OF CONTENTS
SERIAL NO. TITLE
1. INTRODUCTION
2. JOINT VENTURES IN INDIA
3. APPROACH FOR THE PROJECT
3

4. 1. INTRODUCTION
Typically “splitsville” sensations are confined to popular sections (read entertainment
and sports) of Newspapers – where the splits in relationships involving celebrity
sportspersons and film stars are highly sensationalized. A recent such high profile
“splitsville” caught attention of business world and popular media alike – “Hero –
Honda”. This is not the first instance of termination of an Indo-Foreign joint venture
(JV) – but what made this termination a sensation was that it was one of the most
successful JV and it was still continuing to be the leader in the Industry that it
operates in.
Several JVs in the same (Auto) industry and other industries were also terminated in
recent times and the erstwhile partners are now fighting each other in the market. That
brings us to the question – what leads to termination of JVs and what are the
implications of such JV terminations to the erstwhile partners and the industry?
This project aims to study various factors that may give an answer to the above
questions.
Since the focus of this project is on changing dynamics of “Indo-Foreign” joint
ventures, unless otherwise specified, the term “JV” or “Joint Venture” in this report
refers to a joint venture between an Indian partner and a foreign MNC.
4

5. 2. JOINT VENTURES IN INDIA
Worldwide, JVs are typically formed to take advantages of resource
complementarities that each partner brings to the table for addressing a set of specific
business objectives. One partner may bring technical expertise and other partner may
bring the market intelligence. The other major motivation for a JV is regulatory
environment.
In India, the regulatory environment can be seen in two different eras – pre-
liberalization and post-liberalization. The liberalization of business environment in
India started in 1991.
In pre-liberalization era, due to regulatory restrictions on Foreign Direct Investments
(FDI) in India, foreign MNCs formed JVs with local partners. Honda, Yamaha,
Cummins etc formed JVs with local companies like Hero, Escorts, Tata etc. Electrical
equipments, transportation and telecommunications saw larger number of JVs since
the regulatory environment allowed higher FDIs in these industries.
After liberalization, as the restrictions on FDIs in other industries such as Insurance,
Media, consumer products etc started reducing FDIs and JVs in those sectors also
started increasing. As the economy grew, more opportunities opened up in sectors like
telecommunications which saw further increase in JVs.
But with liberalization, there came an opportunity for foreign companies to invest
100% and so the JVs started falling apart where the foreign companies started
operating on their own in India instead of working along with a local partner.
So the post-liberalization period saw an initial surge and then a dip in formation and
sustenance of JVs.
5

6. 3. APPROACH FOR THE PROJECT
In this project we are seeking answers to the following questions –
 What was the nature of relationship between the JV partners in pre-
liberalization period?
 What could be the strategic objectives and potential benefits for the JV
partners in pre-liberalization period?
 Beyond regulatory restrictions what other factors motivated the formation of
JV?
 How did this relation change post-liberalization?
 Beyond the regulatory changes, what other factors played as triggers for
termination of JV?
 How the changes in leadership or vision of the partners firms impacted the
JV? How did the termination impact the shareholders?
 After the JV termination, did the advantage shift towards the local partner or
the foreign company and why?
 How did the competitive landscape in the industry (in which JV was
operating) change after the termination?
 How have and how should the erstwhile partners respond to the new
competitive scenario?
We are going to select specific terminated JV cases and study each of this case from
the perspective of answering above questions. Based on the availability of large
number of cases, we have chosen following industries from which we will pick
appropriate cases for the study –
 Automotive
 Telecommunications
 Consumer Products
6

7. Our project will be based on “desk research”. We will draw insights and frameworks
from various journal articles related to Joint Venture management and Strategic
Leadership and apply those to the data gathered about the selected JV cases.
Following are some of the articles and books that we have identified till now, for our
study –
 AGENCY COSTS AND THE PERFORMANCE IMPLICATIONS OF
INTERNATIONAL JOINT VENTURE INTERNALIZATION - JEFFREY J.
REUER and KENT D. MILLER - Strategic Management Journal, Vol. 18:6,
25-438 (1997)
 FROM HYBRIDS TO HIERARCHIES SHAREHOLDER WEALTH
EFFECTS OF JOINT VENTURE PARTNER BUYOUT - JEFFREY J.
REUER - Strategic Management Journal - Strat. Mgmt. J., 22: 27-44 (2001)
 When Competition Eclipses Cooperation: An Event History Analysis of Joint
Venture Failure - Seung Ho Park and Michael V. Russo - Management
Science, Vol. 42, No. 6 (Jun., 1996), pp. 875-890
 Factors in the Instability of International Joint Ventures: An Event History
Analysis - Linda Longfellow Blodgett - Strategic Management Journal, Vol.
13, No. 6 (Sep., 1992), pp. 475-481
 The Decline of Emerging Economy Joint Ventures: THE CASE OF INDIA -
Prashant Kale & Jaideep Anand - CALIFORNIA MANAGEMENT REVIEW
VOL48 NO.3 SPRING 2006
 Managing for joint ventures success - HARRIGAN, KR
7