Autoliv QB: A Proposed Joint Venture

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Table of Contents

Problem statement
Problem analysis
Probable solutions for the problems
Applicability of the solutions
Impact of the solutions to the company
Possible issues arising from the solutions
Conclusion
References

Problem statement

In this case study, the General Manager of Qualibrand, Mr. Orosa is faced with a prospective joint venture proposition. A quick look at the situation reveals that Qualibrand Company is the right choice to consider in the joint business venture with Autoliv because it has good marketing capabilities in the targeted market in terms of sales of its products.

However the venture involves production and distribution of a new product which Qualibrand lacks knowledge in and thus possesses limited technological expertise to produce.

In addition to this, Mr. Orosa has not factor in the future goals and objectives of Qualibrands as related to possible profits and losses or further market expansions derived from increased demand.

Another problem that is inherent in this assessment structure is that Qualibrand does not cover all aspects required before involving itself in a joint venture.

In addition to this, the potential market (Thailand) is already saturated by other self established suppliers of the same product and this will pose a serious problem when it comes to distribution and marketing.

Problem analysis

Qualibrand Company has been dealing with the production of minor car accessories and distribution of differentiated products on a local level. This venture proposes a production capacity higher than what qualibrand can handle.

In addition to this, it is a new product to Qualibrand which means new technology, better labor and new marketing and distribution strategies in order to efficiently ensure success in this joint venture.

On the same note, there are some aspects that have been neglected during the whole process. For example there is no specific timeframe as to how long the alliance will last or how the profits and losses will be divided in the future of the venture.

To add on this, there is no clear information on how the joint venture will affect Qualibrand’s current operations. Also Mr. Orosa would be the general manager if the joint venture went through but it is clear that he and Qualibrand as a whole lacked the expertise to produce and market this new product both in terms of skills and experience.

As Schniederjans (1998) literates, poor management skills leads to poor results and without this knowledge, the venture was bound to fail. Also, Autoliv has not fully addressed the human resource aspect.

This is because SMACA as a partner is given a small portion on the overall management of the venture yet its contribution is of great significance to the whole operation. This would bring some unforeseen conflicts in the future if not addressed.

In addition to this, Qualibrand has not considered how it will handle its human resource during the transition. As suggested by Autoliv, in order to be fully compliant they require new employees who are conversant and experienced with the technology and production of the seat belts.

The other option would be to offer training to the current employees a process which would evidently take time and consume more resources in terms of finances.

This is the most important aspect to consider because the employees are core to the success of any venture. Qualibrand should instead figure out a better option through which they can maintain their worker and equip them with the necessary skills.

Another problem that may arise from this venture is the communication issue. For any joint venture to realize full potential there must be efficient communication channels between the partners (Dianne, 1995). From the provided case it is evident that there is a communication problem.

This is evident from the fact that there has not been any meeting convened between the key players of this venture. This means that Autoliv is trying to manipulate the whole deal without considering the different opinions in strategy that the other partners may have.

Probable solutions for the problems

Before signing the final papers, all the partners must ensure that they meet and discuss the whole venture. In so doing, they will be able to settle any differences that they may have and at the same time come up with ideal solutions and decisions.

In addition to this, they all must produce their financial statement and other information accompanied with their set goals as pertaining to the venture to ensure that trust prevails through out the venture. Also, a detailed SWOT analysis should be presented to all partners so that they can further understand the dynamics of the venture.

On the same note, an implementation model should also be designed to ensure that the proceedings are systematic, and all the political, economical, social and technological (PEST) aspects are covered and handled accordingly.

Additionally, a recruitment strategy should be put in place to ensure that all the employees in this venture are more than qualified for the available jobs and the process of recruiting, retraining and hiring is balanced between all the involved partners.

Gutterman acclaims that a good joint venture is one that evaluates all the strengths and weaknesses of the partners and maximizes on them irrespective of the prevailing conditions (2002).

Applicability of the solutions

In presenting the SWOT analysis of each partner, the strengths, weaknesses, opportunities and threats surrounding each individual company shall be known. The information gathered from the analysis can be used to identify which firm best suits a particular responsibility.

For example Qualibrand lacks the technology and skilled man power needed for the success of this venture but this is covered by Autoliv which has both. On the other hand, Autoliv’s lack of marketing and distribution channels in the Philippines is compensated by Qualibrand’s efficiency in the same.

The PEST analysis would help this venture in evaluating how other factors may influence the venture. For example, the impact that taxes, fiscal policies, political atmosphere, social and environmental factors have on the prices and demand of the product.

In so doing, production limits and prices can be set in relation to the demand and supply tendencies of the targeted markets.

The recruitment process is core to the survival of any business venture and by carefully selecting the most qualified candidates it ensures that the venture will survive the developing stage which is the hardest stage in a business cycle. Also, the process helps create a unified vision among the partners and employees hence motivating them to work even harder.

Impact of the solutions to the company

As a result of the PEST analysis, the company will be able to minimize the overall cost of production because an illustrative study of the market will always be available. Also the information gathered can be used to monitor demand and therefore reduce the rick of over or under production.

The SWOT analysis will help the company fully utilize the available resources from the firms efficiently thereby providing it with a competitive edge against other competitors. The recruitment strategy will have the greatest effect on marketing, production and service provision.

If the most qualified and experienced workers are employed in the various departments, then the company will run with lots of ease due to the high level of professionalism employed by the workers.

Possible issues arising from the solutions

Due to the changes in operation, some of the employees currently working in Qualibrand will have to be laid off. This is bound to cause commotions and a demonstration is likely to occur due to the drastic move.

However the managers of Qualibrand should organize a compensation package to all the employees that have dedicated themselves to the company but do not have adequate qualifications for the transition.

Due to the importation of man power from other countries, there should be some training offered to the foreigners so as to bridge the cultural diversity that would arise from the employees. This will help in reducing conflicts that may come up due to the various differences that the employees may have.

Conclusion

From the above analysis, a detailed discussion has been offered concerning the alliance of Qualibrand and the partners. The potential problems have been highlighted and solutions given.

Also the social and ethical impacts of this joint venture have been mentioned and recommendations as to how they can be resolved have been put across. If implemented, the joint venture would be as productive as expected.

References

Schniederjans, M. J. (1998). Operations Management in a Global Context. NY: Greenwood Publishing Group

Gutterman, A. (2002). A short course in international joint ventures: negotiating, forming, and operating the international joint venture. World Trade Press.

Dianne, J, C. (1995). The human resource challenge of international joint ventures. Greenwood Publishing Group.

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