Joint Venture Essay

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A Decade of Organizational Change at Unilever: The large British manufacture of construction equipment JCB entered into a joint venture with Escorts, an Indian engineering conglomerate in 1979 to go around the complex high tariff barriers that India had on imports. India government regulations at the time required at the time that foreign investors created joint ventures with local companies. JCB saw the potential of growth in the Indian construction market and believed that they needed to establish before their global competitors and the market growth potential was realized to gain an advantage. Twenty years later the joint venture had 80 percent share of the Indian market. Moreover the Indian economy was booming as a result of years of deregulation however JCB felt that the joint venture limited its ability to expand. JCB did not want that their valuable technologies leaked out of the joint venture into Escorts which was one of the largest manufacturers of tractors in India and could become a direct competitor. JCB continue taking advantage of the changes in the government regulations on foreign investment until it purchased all of Escorts’ equity and transformed the joint venture into a wholly owned subsidiary. JCB also invested in wholly owned factories in the United States and Brazil. In early 2005 JCB increased its investment in India, and started to build a second factory that would serve the growing Indian market. At the same time it announced that it would set up another wholly owned factory in China to serve that market. By 2008 JCB foreign investment was giving results since the product line expanded, JCB number of dealers and outlets increased, it claimed 53 percent of India market share, its sales approached £1.8 billions, earnings were a record £187 million, and the company moved up to number four in the industry with almost 10 percent

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