THESIS Tom LANGIE 2014.Pdf
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Preface This final paper marks the end of my study of Applied Economic Sciences, option Innovation and Entrepreneurship at Hasselt University. Although the subject of this paper was very interesting and instructive, it was not an easy one to write and several challenges had to be overcome in the process. These challenges could never have been overcome without the help of some key individuals, which I would like to thank in this foreword. First and foremost I would like to thank my promoter, Prof. Dr. Wim Vanhaverbeke, and my co- promoter, Prof. Dr. Nadine Roijakkers, for their guidance, counselling and input. I would also like to thank Dr. Matthias Berger for his views and for enabling me to research PLI by providing me with the indispensable contacts within the joint venture. I would also like to thank Nuno Pena for his views and for providing me with the contacts at BPW. Naturally, I would also like to thank all of the interviewees, whose views have enabled me to build a vast amount of expertise on the subject at hand. Without all of the above, this paper would never have been possible. I thank you. "If you really want to do something, you'll find a way. If you don't, you'll find an excuse" - Jim Rohn Summary Joint ventures are a very popular type of alliance and can offer a lot of advantages. Yet they can be a hand full to manage and many joint ventures fail to properly achieve their objectives. Since Unilever and PepsiCo agreed to help me on this final paper, I was in a unique position to thoroughly scrutinize their joint venture, called PLI, which manufactures and sells Lipton Ice Tea. The reason why this was such an instructive experience is because there is another almost identical joint venture, called BPW, which started out very similarly but has known a lot more difficulties than PLI. BPW manufactures and sells Nestea and is a joint venture of Nestlé and The Coca-Cola Company. By doing a comparative case study on these two joint ventures I was able to uncover which factors are truly important for joint ventures to succeed. The research question of this thesis is as follows: "What are the critical factors driving the success of the Unilever and PepsiCo joint venture, PLI, and what are the main reasons behind the collapse of the Nestlé and The Coca-Cola Company joint venture, BPW?" In the first part of this final paper I present the problem definition of my research. Based on this problem definition I deduce the central research question and the sub research questions. The second part of this final paper consists of a literature review. In the first chapter of the literature review I provide a clear definition of what joint ventures exactly entail and position them in their framework of strategic alliances. I also elucidate the different types and advantages of joint ventures in this chapter. In the second chapter I provide an overview of the factors that the literature deems critical to alliance success. I have split these up along the different stages of the alliance life cycle. In the third part of this paper I explain the methodology I have used in my research and provide an overview of the people I have interviewed. For the fourth part of this final paper I have done a comparative case study. I have conducted several interviews with PLI and BPW managers. I have also interviewed a Mintel industry analyst. In the first two chapters I give an answer to the central research question of this paper. In the first chapter of this part I have summarized the factors that are considered to drive the success of PLI. In the second chapter I have summarized the main drivers of the BPW downscaling. In the final chapter of this part I add my findings to the existing literature and make recommendations for future research. Based on the consolidation of the existing literature and the interview findings I also provide a checklist and guidelines on how to best set up and manage a joint venture to maximize the chances of success. I finalise the paper with a general conclusion containing several interesting findings based on the literature review and the interviews. In the last part, the personal review, I look back on this final paper and some of the difficulties I have encountered while writing it. Table of contents Preface ................................................................................................................................... 2 Summary .............................................................................................................................. 6 Table of contents ............................................................................................................ 10 List of figures, graphs and tables ............................................................................... 14 Part 1. Problem definition and establishing research questions .................. 17 Chapter 1. Problem definition ............................................................................................. 19 Introduction .............................................................................................................................................. 19 Nestea .......................................................................................................................................................... 21 Lipton Ice Tea ........................................................................................................................................... 22 Problem definition ................................................................................................................................. 23 Chapter 2. Research Questions ............................................................................................ 25 Central research question .................................................................................................................. 25 Sub research questions ........................................................................................................................ 26 Part 2. Literature review ............................................................................................. 31 Chapter 1. What exactly is a joint venture, and what are the advantages it has to offer within a company's strategic objectives? .............................................................. 33 Joint Venture Definition ...................................................................................................................... 33 Positioning within framework of alliances ................................................................................. 34 Different types of Joint ventures ...................................................................................................... 37 Advantages ................................................................................................................................................ 38 Chapter 2. Which factors are crucial to the success of a joint venture? ................ 41 Introduction .............................................................................................................................................. 41 Alliance performance ........................................................................................................................... 41 Success factors ......................................................................................................................................... 43 A. Formation phase ................................................................................................................................ 44 B. Design phase ....................................................................................................................................... 49 C. Postformation phase ........................................................................................................................ 54 D. Overlapping success factors ......................................................................................................... 58 Part 3. Methodology ....................................................................................................... 63 Methodology .............................................................................................................................. 65 Case study design ................................................................................................................................... 65 Research design ...................................................................................................................................... 65 Interview account .................................................................................................................................. 67 Part 4. Case study ............................................................................................................ 73 Chapter 1. What are the critical factors driving the success of the Unilever and PepsiCo joint venture, PLI? ................................................................................................... 75 PLI Conclusion ......................................................................................................................................... 82 Chapter 2. What are the main reasons behind the collapse of the Nestlé and The Coca-Cola Company joint venture, BPW? ......................................................................... 83 BPW Conclusion .....................................................................................................................................