Strategic Management: Formulation and Implementation

Implementing Strategies Through Joint Venture

Another method used in carrying out diversification is the join venture. Joint venture can take place between organizations within national boundaries or between private enterprises and government or non-for profit organizations. Another frequent form of joint venture takes place between organizations in different countries.

Three basic strategies have been proposed for use in joint ventures: the spiderls web, go together-split and successive integration.

The spiderls web strategy is employed in an industry with few large organizations and several smaller ones. One strategy for smaller organizations would be to enter a joint venture with one large organization and then, in order to avoid being absorbed, enter a new joint venture as quickly as possible with one or more of the remaining organizations.

Go together-split is a strategy in which two or more organizations cooperate for an extended time and then separate. It is particularly appropriate projects that have ad definite life span, such as construction projects.

Successive integration starts with a weak joint venture relationship between organizations, becomes stronger, and ultimately may result in a merger - either friendly or hostile.

Three major considerations seem to be particularly important in forming a joint venture: