GESTIÓN ALIANZAS ESTRATÉGICA.

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This problem was very serious; not only because two different groups, one American and one Japanese were formed in the alliance, but also because work was very difficult. The lack of communication in making decisions, establishing and organizing a good strategy and cooperating in a highly competitive industry (where losing a customer can determine a failure and where the goals are very important) could depend to these factors.

None of the directors had previous international experience, and for the Japanese, except for the director of marketing, knowledge of English was a bit limited.

Another major problem is that the goals are a little different. In the operations, for the Japanese was more important the quality offered to customers, without much regard for the price; doing so they could gain much more market-share and consolidate existing customers.

On the other hand were very low income (30 million dollars), but with a loss of 1.9 million dollars per month.

This loss was not very grateful to the Americans, who also noted that the production capacity was about to end, and so began to think of a possible expansion, which can be done only if the company gets revenue.

The expansion may determine an advantage and a good chance to sell more and to increase business and market share, but can be very difficult for a matter of cost and benefit.

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- If you were Ron Berks, what options would you think that? What actions would undertake? Justify your answer.

Companies that decide to internationalize should opt for international strategies or for internationalising what they already have.

Cost reduction have to be present in these strategies, without compromising quality, and maintain the largest customer. To have a trained and skilled staff must be the priority, because although this is important, it is necessary that both companies agree to make efforts to achieve the goals.

In addition, they have had to take in consideration operating conditions, financial policy and common standards for administration. Ability to work with another company that has differences is essential for the good development of the Joint Venture; it will help to have coexistence that is more lasting in the three aspects of human, commercial and financial resources. What is certain is that you must have very clearly the strategies to implement after taking the decisions.

For me Ron Berks have to continue in this Joint Venture. It is true that they have not gained so much by now (respect of what they think), but the position on the market and over competitor seems very favourable; the biggest problem is that to follow this way of management, Wil-Mor has to invest some more to expand, and get even more market.

In this sense the risk is high, and I do not think the board will accept this type of risk. An acceptable solution is to reduce to a 15-20% of ownership of the JV, so you can reduce the risk; but, at the same time, when the JV start to be profitable the benefit will be a little lower. To continue in this direction, Berks have to do a very detailed plan with all the aspects, both positive and negative, that this decision can generate.

The positive aspects are:

- Lower risk

- Lower investment

- Possibility to leave the JV at any time

- With a plan well done if you can continue to expand market

- The managers worry less

On the other hand the negative aspects include:

- Possibility to earn less money if you start earning

- Less relevant in decisions

- Low visibility

One of the fundamental aspects of this decision is surely the relationship with the Japanese. It is very important to be able to maintain relations, because it is better for the market and all aspects of the Wilson Company.

A "bad publicity" may cause problems in future relationships, and can be very bad for the survival of the company in this market.

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- How do you think Morota, the Japanese partner, will respond to your decision?

The decision we have taken is to reduce by 15-20% the ownership of the Joint Venture.

I think Morota will be a little surprised at this, and I think he will begin to think that the Joint Venture is going to finish early.

Is necessary to have a meeting to explain to the Japanese all the reasons that move Wilson, to make him understand the reasons and show that in this moment is a risk to high for Wilson to continue as before.

You can also change a little bit the contract; so Wilson could, in the future, regain the position he had before this change; now the goal is to spend less money as possible, maintaining as much as possible a good relationship with Morota.

I think if everything is done in the right way, it is possible to maintain and fortify relationships, to learn how to achieve the quality standards required by the market and how to manage all aspects of production.

Another risk for Wilson is the possibility that Morota, if he gets angry, can ally with other competitor companies, and this can determine a significant disadvantage for Wilson to think of doing nothing.

The Japanese, for culture, are very attached to their traditions and relationships; therefore, begin to learn more about the culture and thinking of the Japanese can be very useful and can help keep this alliance going well.