Launching a World-Class Joint Venture

James  Bamford; David  Ernst; David G. Fubini

Article | Harvard Business Review | February 2004

Launching a World-Class Joint Venture

by James Bamford, David Ernst and David G. Fubini

Abstract

More than 5,000 joint ventures, and many more contractual alliances, have been launched worldwide in the past five years. Companies are realizing that JVs and alliances can be lucrative vehicles for developing new products, moving into new markets, and increasing revenues. The problem is, the success rate for JVs and alliances is on a par with that for mergers and acquisitions--not very good. The authors, all McKinsey consultants, argue that JV success remains elusive for most companies because they don't pay enough attention to launch planning and execution. The launch phase begins with the parent companies' signing of a memorandum of understanding and continues through the first 100 days of the JV or alliance's operation. During this period, it's critical for the parents to convene a team dedicated to exposing inherent tensions early. Specifically, the launch team must tackle four basic challenges. First, build and maintain strategic alignment across the separate corporate entities, each of which has its own goals, market pressures, and shareholders. Second, create a shared governance system for the two parent companies. Third, manage the economic interdependencies between the corporate parents and the JV. And fourth, build a cohesive, high-performing organization (the JV or alliance). Using real-world examples, the authors offer their suggestions for meeting these challenges.

Keywords: joint ventures; Mergers ＆ Acquisitions; organizational structure; Strategic alliances; Joint Ventures; Alliances; Organizational Structure; Alignment; Mergers and Acquisitions;

Format: Print

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Citation:

Bamford, James, David Ernst, and David G. Fubini. "Launching a World-Class Joint Venture." Harvard Business Review 82, no. 2 (February 2004): 90–100.

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Launching a World-Class Joint Venture

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