Gm & Daewoo: Married, Divorced & Marriage Again

1. Among Many form of Strategic Alliances, why did GM & Daewoo choose the JV form both times?

A joint venture represents the optimism of two firms that they can unite to achieve marketplace goals that neither could achieve alone. Some joint ventures work, some do not. Sikander Shaukat, Managing Partner of Resource Dynamics and alumnus of London Business School, describes the steps that will maximise the chance of success.

Joint ventures (JVs) can be a rapid and very effective mechanism for strategic growth. Such unions can enable fast access to new skills and technologies. Beyond that, JVs can secure production capacity and lower cost production; offer access to both local and distant markets; and offer ways of creating economies of scale and market power.

Yet, such corporate linkages, regrettably, often come down to agreements on the duration of the JV and how costs and profits will be handled. That is, the JV becomes limited and limiting. There are other important strategic factors that should be considered in a JV, such as the term of arrangement, its workability, protection of know-how, benefits and progress towards strategic goals. These represent a more relevant perspective of partnerships, even though it needs more than common sense and financial modelling to deliver a working union of interests.

In my opinion, I think this question must be approach from the industry- based view, which would be the five forces. The automobile industry is very advanced industry which have very high entry barrier for the late movers because of special characteristics of automobile industry. First, automobile industry is connected with many other relative industries. In addition, it is a labor intensive industry which needs a lot of fixed cost and the capital for further investment. These characteristics also evoke many alliances between the relative firms in order to reduce the costs. Second, rivalry among existing firms has become very fierce in this industry since the...