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Forging International Partnerships

Going global doesn’t have to mean going it alone. Partnerships are a great way to unlock growth and allow a company to tap into another organization’s expertise, infrastructure, or customer base without shouldering all of the risk or committing all of the resources.

Joint ventures and alliances are becoming the preferred way to gain new capabilities, enter new markets successfully, and gain critical mass. But challenges exist across all phases of business partnerships and can limit the value that partners can unlock. These challenges are often heightened when dealing with the complexities of emerging markets.

  • Predeal: Potential partners need good cultural chemistry and common goals.
  • Postdeal: Creating a sustainable organization structure and being flexible can mean the difference between success and failure.
  • Breakup: A clear exit plan is a must and should be in place long before a breakup occurs.

Challenges in all three phases of the deal can be overcome with careful planning and strong management. To better understand what successful ventures do differently from those that fail, BCG surveyed executives from more than 70 companies across ten industries. The research found eight best practices that set the leaders apart from the pack.

Eight Lessons From Successful Joint Ventures

  1. Create clear, strategic objectives. Transparency is essential for a successful joint venture. Before signing on the dotted line, outline everything up front. Identify and communicate strategic objectives, expected contributions, and any other concerns.
  2. Customize your partnership strategy. Standard joint venture templates don’t always work. There are many factors at play for both partners, so create a strategy that takes those into account.
  3. Consider unconventional partners. There is value to be had in “coopetition.” .
  4. Leverage your partners’ expertise. Consider their resources: customers, suppliers, distributors, processes, employees, production facilities, technical expertise, government relations, and so on. Are there ways in which your organization could use these resources more effectively?
  5. Tailor the operating model to the partners’ capabilities. Don’t try to control every aspect of the partnership. Instead, create a governance structure that benefits all the partners by taking full advantage of the strengths and synergies that occur along the entire value chain.
  6. Assign a strong and dedicated team. Joint ventures require a different mind- and skill set than mergers and acquisitions. Having the right people on board to manage the partnership and focus on driving value at every stage of the venture’s life cycle can make all the difference.
  7. Manage the joint venture’s external ecosystem. For added value, foster relationships with outside players, such as governments, industry groups, educational institutions, suppliers, distributors, and customers.
  8. Plan your exit in advance. Every partnership has a shelf life, yet only 19% of joint ventures reported having an exit strategy in place before breakup. Using a third party to negotiate the exit strategy before you sign the deal can ensure each partner’s best interests are considered.


The Secrets of Success in Joint-Venture Management

Joint ventures remain a key driver for go-to-market strategies in emerging markets. BCG’s Nikolaus Lang explores the factors differentiating successful and unsuccessful joint ventures.

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