GESTIÓN ALIANZAS ESTRATÉGICA.

Joint Venture

Wilson – Morota

Technologies

1. Why was this joint venture formed?

Wil-Mor Technologies, Inc. is a joint venture between two manufacturers of components for the automotive industry of various products: one was Wilson Industries Inc., a US company, and the other was Morota Manufacturing company Ltd., a Japanese company.

Wilson was a Detroit company founded in 1923 that was dedicated to manufacture of plastic and metal components for the automotive industry and household appliances. They had an Automotive Division in the North America.

Morota, founded in 1950, was a manufacturer of small electric motors for products such as sewing machines and small appliances. In addition, it produced various engine and transmission components for the automotive industry.

When companies involved in the same industry sector decide to carry out an alliance, they do it for various reasons, such as increasing market share, giving value to the brand, sharing costs, start an expansion, support, attract new customers, develop new strategies, among other. The above reasons already well served in this JV, but the most important is to stand the pressure by TOYOTA to Morota; they had to reduce imports from Japan, the rise of the yen against the dollar to invest in E.E.U.U. it was cheaper, the drawbacks in deliveries just-in-time, the possibility of entering the supplier portfolio companies transplanted and overcapacity.

Other key factors is that both the two companies could greatly increase their markets, in fact Ford and Chrysler accounted for 80% of sales of Wilson and the rest belonged to General Motors. In recent years, Wilson had taken steps toward internationalization automotive operations.

In addition, Morota was very close to Toyota, and with this JV could cover the entire market for the automotive sector.

Wilson:

Advantages:

• new opportunity to expand and reinforce the market
• low cost
• give more value to the brand
• ability to learn new type of strategy (based on quality)

Disadvantages:

• problem with the partner language and culture
• not have total control of the Joint Venture
• different financial objectives

Morota:

Advantages:

• lower the cost
• is no longer necessary transporting products
• expand its market

Disadvantages:

• they were not familiar with the basic components of the plant
• different financial goal
• lack of experience in foreign field

As you can see, the advantages are many, and can be very helpful in achieving the goal of both companies, so this Joint Venture was a good initiative.

1. Describe the nature of the contributions of the partners. Who supports the negotiating power?

International cooperation was the model of the Wil-Mor alliance, allowing Wilson to expand and grow Morota. Both companies contributed with financial and human capital. American executives focused on aspects such as material sourcing, human resources, accounting and finance. On the other hand, Japanese executives focused on product design, quality, pricing and sales.

Both companies joined resources to create a new one to give them benefits in different areas.

The president of the JV would be appointed by Morota and its CEO would appoint Wilson; the two managers would be responsible for starting the operations of the JV.

The board of directors of the JV would include three directors from each partner company. From Wilson would be Berks, vice president of the Automotive Division and CEO of the JV. Representatives of Morota, instead, include President Morota, executive vice president and president of the JV.

At the start of the joint venture were not without problems. Japanese leaders have insisted the full technical responsibility. Johnson, executive director, was not allowed to assist in the technical configuration; this created some problems, also because Japanese were unfamiliar with many basic aspects concerning the establishment of new plant, especially in the EEUU.

The Japanese insisted conduct operations on its way, also applied a Japanese approach to selecting suppliers. Johnson estimate that he could save approximately $ 300,000 per year if they had selected suppliers adopting a North American approach.

This is proof that the negotiating powers were in the hands of the Japanese, and this did not allow the American team to help and participate in the decisions. Clearly this is a very serious problem, because the lack of communication can be crucial to the objectives of the company, and the happiness of its members working together to achieve what the company wants.

After the change of leadership, the situation began to improve, but the two different attitudes caused problems between the two companies.

1. What do you think are the main problems in relationship between Wilson and Morota?

• Cultural Issues

• Language Problems

• Problems with the goal of short / long term

• Problem of miscommunication

What a good manager has to do for the Joint Venture is to develop and improve production. This depends on how cross-cultural relationships are conducted.

Among the issues, they did not consider that, at the time of forming a JV, the most crucial aspects were the different languages and countries. Both these factors were, from the beginning, problematic in the development of the alliance because they could not be anticipate or control.

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