What is it?

 A joint venture (JV, sometimes 'J-V') is a legal entity

formed between two or more parties to undertake an
economic activity together. It is a term more restricted to
the US and the 'new' countries on the world map such as
India and China.

 The JV parties agree to create, for a finite time, a new

entity and new assets by contributing equity. They then
share in the revenues, expenses, and assets and "control"
of the enterprise.
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 HORIZONTAL MERGERS
2 Merger of two or more companies producing similar goods or offering similar
services.
2 This type of merger occurs frequently as a result of larger companies
attempting to create more efficient economies of scale.
2 This type of merger best defines the Sony Ericsson company. Each
company has products which perform in the same segment ± mobile
communications.

 VERTICAL MERGERS
2 A merger between two companies producing different goods or services for
one specific finished product. Merger of a vendor and a customer.
2 By directly merging with suppliers, a company can decrease reliance and
increase profitability. An example of a vertical merger is a car manufacturer
purchasing a tire company.
2 One such merger occurred between Time Warner Incorporated, a major
cable operation, and the Turner Corporation, which produces CNN, TBS,
and other programming.
 Characteristics of joint ventures
2 Limited scope and duration
2 Generally involve only two firms
2 Involve only small fraction of participants' total
activities
2 Each participant offers something of value
2 Joint production of single products
2 No sharing of assets/information beyond venture
2 Need not affect competitive relationships
Continued͙
2 Joint property interest in subject matter of venture
2 Right of mutual control or management of enterprise
2 Right to share in cash flows of the enterprise
2 Limited risk
Joint Ventures in Business Strategy

 Goals/objectives of joint ventures

2 Risk sharing
º Each participant diversifies risk
º Reduces investment cost of entering risky new area
º Realizes benefits of economies of scale, critical mass,
learning curve effects sooner
2 £nowledge acquisition Ͷ learning experience for
both partners
º Shared technology
º Shared managerial skills in organization, planning,
and control
º Successive integration Ͷ joint venturing as a way to
learn about prospective merger partners
2 Entry into new, expanded, foreign markets
º Augments financial or technical capabilities
º Reduces risk
º Foreign country may require joint venture with local
partner
2 Financing Ͷ to raise capital
º Share investment expense
º Small company has product idea but no cash
º Joint venture with large company that has cash to
develop product
2 4istribution/marketing
º To obtain distribution channels
º To obtain raw materials supply
 A4VANTAGES : JOINT VENTURE
Pr vi c a i s it t rt ity t gai ca acity a x rtis
 All c a i st t r r lat si ss s r g gra ic ark ts r gai
t c l gical k l g

Acc ss t gr at r r s rc s, i cl i gs cializ staff a t c l gy


S ari g f risks it a v t r art r

J i t v t r s ca fl xi l . F r xa l , a j i t v t r ca av a li it lif
s a a ly c v r art f at y , t s li iti g t y rc it ta
t si ss' x s r .

a i s ca gra ally s arat a si ss fr t r st f t rga isati , a

v t ally, s ll it t t t r ar t c a y. R g ly 80% f all j i t v t r s
i a sal y art r t t t r.
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 The foundation of Sony dates back to 1946. On May 7,

Masaru Ibuka together with Akio Morita set the roots
of Sony Corporation.

 At first the name of the company was "Tokyo

Telecommunications Engineering Corporation".

 In 195 the company changed its name to "Sony͟

 ABOUT SONY
 "Sony" comes from a combination of two words: "SONUS", which in
Latin means "sound" and "SONNY", which denotes a small size.

 The company first started producing recording tapes in 195 which

followed with the production of television.

 Sony was listed in New York Stock Exchange in 197 .

 Sony Corporation is a leading manufacturer of audio, video, game,

communications and information technology products for the
consumer and professional markets. With its music, pictures, computer
entertainment and on-line businesses, Sony is uniquely positioned to
be a leading personal broadband entertainment company in the world.
 ABOUT ERICSSON
 Founded in 1 76 as a telegraph equipment repair shop by Lars Magnus
Ericsson, it was incorporated on August 1 , 191 .

 In 1 7 Ericsson began making and selling his own telephone equipment.

 At the start of the 199 ͛s, Ericsson became a leader in the area of mobile
telephony.

 Ericsson is shaping the future of Mobile and Broadband Internet

communications through its continuous technology leadership. roviding
innovative solutions in more than 14 countries, Ericsson is helping to
create the most powerful communication companies in the world.
 Sony Ericsson

 The mobile telecommunications market is an arena of

intense competition. The merger between Sony and
Ericsson was an attempt to combine the strength of both
companies to form a more effective global competitor,
especially against rivals Nokia and Motorola. The
horizontal merger has allowed the two companies to
perform more effectively in the world market.
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 =By combining the complementary strengths of Ericsson

and Sony, the new company was uniquely positioned to
become a world leader in telecommunications, as the
industry moves rapidly toward Mobile Internet.

 Sony brings vast experience in consumer electronics and

entertainment - music, pictures and games - and Ericsson
contributes with our mobile technology lead and the
world's largest customer base among mobile operators.
This was the ideal partnership for the growing market of
3G and Mobile Internet.
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 The mobile phone industry was fast moving toward multi-

media broadband and poised to grow significantly in the
years to come.

 Millions of customers would require mobile handsets that

can handle rich content such as movies, pictures and
games smoothly and effortlessly, regardless of their location.

 Sony¶s collaboration with Ericsson, the undisputed leader in

the global telecommunications industry, holds significance
for creating an ubiquitous value network that is always
connected, on demand and interactive.
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 =The alliance was been seen as an attempt to resuscitate the

companies' languishing mobile phone units and a serious bid to
rival market leaders Nokia and Motorola.=

 =According to the International Data Corp (IDC), Nokia lead with a

30.8 percent market share globally, with Motorola a distant
second at14.6 percent. Ericsson was in third spot with 10
percent.=

 In year 2000, 70 million cellular units were sold in the Asia

Pacific (excluding Japan). Nokia also lead the region with a 30.6
percent market share and close to 21 million handsets sold. Sony,
on the other hand, was not one of the top five while Ericsson's
market share dipped 7.4 percent in 2000 compared with the
previous year, according to IDC.=
 

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 = Sony Ericsson Mobile Communications was established in 2001 by

telecommunications leader Ericsson and consumer electronics
powerhouse Sony Corporation. The company is equally owned by
Ericsson and Sony.

 The company =offers mobile multimedia consumer products for people

who appreciate the possibilities of powerful technology. By creating an
enticing brand and taking the lead in bringing new ways of using
multimedia communications while mobile, Sony Ericsson can create
compelling business opportunities for its operator customers.

 On September 11 2001, Sony Ericsson disclosed its new brand name

and logo. The new brand name was Sony Ericsson and was
accompanied by a symbol in a warm, organic green color. Together
they represent the companyµs vision and ambition and what ˜

Ericsson does for its customers.
 

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 Sony Ericsson Mobile Communications began operations on October 1

with a capitalization of US$250 million each.

 The joint venture will kicked off with 3,500 employees in product,
marketing and sales.

 Sony Ericsson announced its first joint products in March 2002 and
now has a full product portfolio covering all target groups. Through the
combined strengths of Sony and Ericsson and by its strong consumer-
focused and applications-led strategy, the company is a leading player
in the mobile communications industry.
 Sony Ericsson ʹ A Case Study
r According to the Company ress Release (April 24, 2 1): The Motivation for the Merger was
͞Global Competition͟.

U According to the International 4ata Corp (I4C), Nokia lead with a 3 . percent market
share globally, with Motorola a distant second at 14.6 percent. Ericsson in third
spot with 1 percent.

U Sony, on the other hand, was not one of the top five while Ericsson's market share
dipped 7.4 percent in 2 compared with the previous year, according to I4C
Continued͙
r In October 2 1, telecommunications leader Ericsson [Sweden] and consumer electronics
powerhouse Sony Corporation [Japan] merged into Sony Ericsson Mobile Communications
with a capitalization of US$25 million each.

r Sony Ericsson merger was ͞Horizontal merger͟ - Merger of two or more companies with
similar product lines. Each company has products which performed in the same segment ʹ
mobile communications.

r The joint venture kicked off with 3,5 employees in product, marketing and sales.

r Mission to establish Sony Ericsson as the most attractive and innovative global brand in the
mobile handset industry through combining Ericsson͛s strong position within mobile
technologies and Sony͛s expertise in consumer electronics.

r The vision resulted in a concrete aim for producing the best possible mobile solutions.

r The joint venture was not considered hostile, considering the 50:50 dichotomy, instead
it was task oriented and equal.
Continued͙
r By utilizing each other͛s assets, knowledge and possibilities, they focused on creating
new technological solutions for a global market, and developing products combined by
͞fun͟ and ͞function͟.

r Sony Ericsson Mobile Communications is a global provider of mobile multimedia 4evices.

r The products combine powerful technology with innovative applications for mobile imaging,
communications and entertainment.

r The net result is that Sony Ericsson is an enticing brand that creates compelling
business opportunities for mobile operators and desirable, fun products for end users.

r Ericsson and Sony equally own Sony Ericsson, who announced its first joint products in
March 2 2.

r Economically, it is a paying corporation since 2 3 when they managed to

turn the company͛s deficits into profit.
Further͙

r The year of 2 4 showed to be extraordinary profitable and further raised the

market-shares of the company.

r In early 2 5, Sony Ericsson announced a large number of new phones, networking products
and accessories moving the product portfolio significantly forward.

r Today, Sony Ericsson is established as one of world͛s leaders in design and innovation
within its sphere of activities, and considered the fourth-greatest telecom company in the
world.

r Sony Ericsson, now has a full product portfolio covering all target groups. Through the
combined strengths of Sony and Ericsson and by its strong consumer-focused and applications-
led strategy, the company is a leading player in the mobile communications industry.
Conclusion
r On analyzing their success, it is important to consider the importance of the strong
competition within the telecom industry.

r Without its primary competitor Nokia, Sony Ericsson presumably had not reached such high
standards.

r Today, the company employs approximately 5, employees worldwide. It undertakes

product research, design and development, marketing, sales, distribution and customer
services. Global management is in London, and Research and 4evelopment is in
Sweden, Japan, China, the US and the U£.