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Please answer ALL THE QUESTIONS AND I WILL GIVE YOU THUMBS UP if not I'll give you thumbs down
Case 9.2
CASE 9.2 Why Did They Do It? in January 2010, German automaker Volkswagen AG ww purchased 19 8 percent of Japans fourth largest auto company Suzuki for $2.9 billion. Suzuki in turn used half of the income from the purchase 1 49 percent of VW The Volkswagen-Suzuki alliance coincided with one of the industrys worst global downturns Many car companies were seeking new alliances to help bear the costs of massive investments in electric and other clean technologies and to better position themsel in emerging n the world. Three of its cars had attained the status WW was the second largest au al-time best sellers, and the companys array of global brands was considered to be one of its strengths vw was particularly interested in the growing Asian markets and the global market for small, fuel-efficient cars However, VW had little experience forming alliances with other independent auto companies 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 ind pendent company with a chairman who would not bend over backwards to cooperate. had already formed an alliance with Fiat to produce diesel engines in Asia. Suzukis equity alliance with Ge Motors (GM) lasted 27 years and encompassed joint product development and global purchasing However, when GM faced bankruptcy in 2008, the US. company sold its holdings in Suzuki back to the Japanese company in order to raise much-needed cash. The timing of the sale was particularly painful for GM since Suzuki stock had declined 50 percent in price from two years earl WWs stated goal for its venture with Suzuki was to better enter the Indian budget car market. Suzuki, via a majority-owned joint venture, held the dominant position in India. But competition was heating up. Car sales in India were increasing rapidly, and many global companies had announced plan to enter or expand in what had become one of the worlds most exciting car markets. W aspired t 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 in 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 WW also enjoyed a much stronger position in Europe a was dominant in China d only a modest presence. According to Osamu Suzuki, Suzukis chairman, the auto industry was in the 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 technology of rids and electric cars, and expansion in emerging markets At a news conference in Tokyo, execu tves from both companies pointed out that the alliance would be wide ranging including sharing car components and jointly developing hybrid and electric cars to sell under both companies brands Suzuki announced that it would hitherto buy diesel engines from WW and would be ending joint develop- ment projects with GM in the fields of hybrid cars and fuel-cell technologies At frst, groups from both companies met regularly for several months in order to identi potential areas of Each partner set up offices at the others headquarters However, one WWexecutive noted that Suzuki managers had begun to withdraw and were constantly asserting that all the Colaboration proposals forwarded by ww presented problems. 303
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