Joint ventures and strategic alliances

Joint ventures are a useful strategy for entering new markets, particularly in countries where it would be difficult for companies to get permission to start up operations. For example, ICI opened a KLEA (HFA 134a) plant with Teijin in Japan where it was easier to set up operations with a Japanese partner, rather than if they had tried to set up on their own. 

Chemical companies are seeking to expand their operations into emerging overseas markets, particularly in the Pacific Rim countries. While joint ventures are proving to be the most popular method of securing entry, there are a number of drawbacks. A company can lose control of its technology and it can be difficult to maintain quality processes if the host country demands a majority shareholding, usually based on a 51 49 split. Nonetheless, these types of business ventures can be cost effective and less risky, particularly in an unstable political and economic environment. Chemical companies will continue to make use of joint ventures and other forms of strategic alliances to enter new markets. How these enterprises will fit into 

R D intensive and produce customer-specific products, whereas industrial chemicals are large-volume and capital-intensive businesses with a heavy emphasis on process technology. Given the two distinct cultures, it became impossible to establish sustainable competitive advantage and many chemical companies who could not realize the true potential have shed these businesses. 

and Jones, G. R. (1995), Strategic Management, Houghton MifUen. 

Wilson, D. C. and Rosenfleld, R. H. (1990), Managing Organisations Text, Readings and Cases, McGraw-Hill. 

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