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Question: chapter 9 global market entry strategies case 92 i give...

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Chapter 9. Global market entry strategies
Case 9.2

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CASE 9.2 Why Did They Do It? In January 2010, German automaker Volkswagen AG (www purchased 19.8 percent of Japans fourt largest auto company Suzuki for s29 billion suzuki in turn used half of the ncome from the sale to purchase 1 49 percent of VW The Volkswagen-Suzuki alliance coincided with one of the industrys wors companies were seeking new alliances to help bear the costs of massve Many car investments in electric and other clean technologies and to better position themselves in emergi w was the second largest automaker in the world Three of its cars had attained the status of al-time best sellers, and the companys array of global brands was considered to be one of its strengths. w wasparticularly interested in the growing Asian markets and the global market for small, fuel efficent cars However, VW had little experience forming alliances with other independent auto compan Suzuki was the tenth largest automaker in the world. Suzuki had significant experience with inter- national alliances despite the fact that one industry expert opined that Suzuki was a notoriously inde- pendent company with a chairman who would not bend over backwards to cooperate. Suzuki had already formed an alliance with Fiat to produce diesel engines in Asia. Suzukis equity alliance with Ger tors (GM) lasted 27 years and encompassed joint product development and global purchasing Howeve when GM faced bankruptcy in 2008, the Us. company sold its holdings in Suzuki back to the Japanese was particularly painful for GM company in order to raise much-needed cash. The timing of the sale since Suzuki stock had declined 50 percent in price from two years e WWs stated goal for its venture with Suzuki was to better enter the Indian budget car market a majority-owned joint venture, held the dominant position in India. But competition was via heating up. Car sales in India were increasing rapidly, and many global companies had announced plans to enter or expand in what had become one of the worlds most exciting car markets. WW aspired to become the largest car company in the world, surpassing GM and Toyota Motors by 2018. and looked to India as a source of substantial growth. However, in 2010 the company had only sold 53.300 cars i India, far short of the 1.13 million cars sold by Suzuki in the Indian market. From Suzukis point of view, VW offered technologies including diesel technology and its electronics capability W also enjoyed a much stronger position in Europe and was dominant in China where Suzuki had only a presence. According to osamu Suzuki, Suzukis chairman, the auto industry was in the est midst of significant changes and it would be difficult for Suzuki to adapt to these changes on its own. The two companies declared that they would now cooperate on technology. including of hybrids and electric cars, and expansion in emerging markets. At a news conference in Tokyo, execu thes from both companies pointed out that the alliance would be wide. including sharing car and jointly developing hybrid and electric cars to sell under both companies brands. Suzuki announced that it would hitherto buy diesel engines from VW and would be ending joint dewelop projects wrth GM in the fields of hybrid cars and fuel cell t from both companies met regularly for several months in order to identify potenti At frst, groups areas of collaboration. Each partner set up offices at the others headquarters However, one Wwexecutive ted that Suzuki managers had begun to withdraw and were constantly asserting that all the proposals forwarded by VW presented problems. 303
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