Developing a Joint-Venture-Based Growth Strategy
BCG helped develop a joint-venture-based growth strategy and supported the entire process to establish the joint venture.
AsimetalCo was a large Asian business group that operated a well-established global business in metalworking. The client wanted to expand its business portfolio and participate in other high-growth industries. The expansion was also expected to reduce the client's dependence on businesses that suffer from cyclicality.
BCG was asked to support the development of a portfolio growth strategy, the creation of a growth strategy for a new business unit, and the business build for that unit.
Specifically, within the business build, the key challenge was setting up a joint venture (JV)—preferably with a major multinational corporation—covering the entire spectrum from strategy development to conducting negotiations to transaction management to implementation.
BCG supported the client in all phases of the project, from strategy development and partner selection to transaction management and final implementation.
BCG's structured approach to strategy definition and partner selection primarily included
developing an overall business strategy and identifying growth opportunities
defining the strategic rationale for the joint venture
defining the ideal partner profile and evaluating potential candidates
selecting partners and defining the overall transaction structure
Our stringent process and transaction management included
developing the negotiation strategy, providing support during negotiations, and interfacing with legal teams
defining the investment requirements and production concept for the proposed greenfield manufacturing facilities
developing the JV business plan and appropriate governance structure
developing the overall organization structure and an appropriate ramp-up plan
managing the implementation through a project-management office
The client is well on its way to operating in a high-growth sector:
JVs are expected to be completed shortly:
Negotiations with the JV partner are on track for completion: the memorandum of understanding and shareholder agreement are complete.
Key implementation phases are well under way, including a decision on land selection and the sourcing of equipment.
Base case business plan has been created, and the process for bidding for upcoming business opportunities is in place:
Required JV investments have been optimized, and technology charges have been negotiated downward
The path to profitable operations has been laid out through rapid product indigenization.
BCG was able to help secure favorable outcomes even before the JV was formed:
A reduction in technology transfer charges was realized through a robust and comprehensive negotiation strategy prepared for the client.
A reduction in investment was achieved through optimization and a systematic review by all investment heads in the planning stage.
The client has achieved long-term business viability through a robust business plan and the identification of focus areas for both JV partners, leveraging their respective capabilities.
A significant operating role has been ensured for the client, with a vote in all critical business decisions, despite being the minority partner in one of the JVs.