Photo: indi.ca via flickr
As India and China grow more developed and educated they have become attractive places to expand, especially as the recovery in developed countries remains sluggish.A new piece at the Harvard Business Review from Laurence Capron and Will Mitchell outlines the biggest mistake companies make; picking the wrong partner under pressure.
They use the example of a struggling joint venture between between Norwegian telecom Telenor and Indian property developer Unitech.
The venture was a marriage of convenience, not a proper fit. Unitech allowed Telenor to comply with local Indian regulations that limit foreign holdings, and obtain a local telecom licence they needed.
However, Unitech had no practical experience in telecom, disagreed on what part of the venture it was responsible for, and fought Telenor on issues of strategy. There were certainly problems in implementation, but the fundamental error was one of fit.
As Mitchell and Capron write in their piece:
The most successful foreign players will be those either with enough experience in India to be able to take the lead in creating the business there, creating a partnership that requires only focused involvement by their local partner, or those who ally with experienced Indian firms, requiring only focused involvement by the foreign firm. The Uninor type case — one firm with limited experience in India and the other with limited experience in telecom, requiring both partners to attempt to cover too much ground, too quickly — is a recipe for failure.
An attractive market and a convenient partner don’t automatically add up a successful venture.
Read the full piece at the Harvard Business Review
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