Globalisation: A Joint Venture Case Study of Vodafone and Telefonica

Desklib offers past papers and solved assignments. This report analyzes Vodafone and Telefonica's joint venture.

Globalisation- Research Report
1

TABLE OF CONTENTS
Chapter 1- Introduction....................................................................................................................3
Chapter 2- Literature Review..........................................................................................................5
Chapter 3- Methodology..................................................................................................................8
Chapter 4- Results..........................................................................................................................11
Chapter 5- Conclusions and Recommendations............................................................................19
Chapter 6- Reflections...................................................................................................................21
References......................................................................................................................................23
Appendix........................................................................................................................................25
2

LIST OF FIGURES
Figure 1: Objectives of the company at the time of forming the joint venture......................12
Figure 2: external funding will be needed for the companies to enter into Joint Venture...13
Figure 3: Joint venture is an effective way to enter into the international market...............14
Figure 4: joint venture has brought favourable results for both the companies...................15
Figure 5: Key risks associated with joint venture.....................................................................16
Figure 6: Benefits associated with the joint venture.................................................................17
Figure 7: Joint venture will have a positive impact on the growth and success of the firms18
3

LIST OF TABLES
Table 1: Objectives of the company at the time of forming the joint venture.......................13
Table 2: external funding will be needed for the companies to enter into Joint Venture.....14
Table 3: Joint venture is an effective way to enter into the international market.................15
Table 4: joint venture has brought favourable results for both the companies.....................16
Table 5: Key risks associated with joint venture......................................................................16
Table 6: Benefits associated with the joint venture..................................................................18
Table 7: Joint venture will have a positive impact on the growth and success of the firms. 19
4

Chapter 1- Introduction
In the present international market, companies are expanding their practices in the global market
by indulging in setting up own business or strategic partnership with the key aim to enhance their
market presence. Along with attaining the client base in the specific time period, it supports the
business in gaining a competitive advantage from its competitors (Razzaq et al. 2018). However,
it is required by managers to demonstrate and exhibit their practices by determining the certain
potential risks and challenges at the time of entering the new marketplace. Through which they
can easily gain opportunity associated with entering the international markets. It has been further
stated that in order to obtain a high competitive edge in the market managers are inclining
towards indulging in the joint venture practices as it supports the company in increasing their
market presence. Despite the benefits of a joint venture, it has been further identified that it lacks
and restrict flexibility. In the joint venture practices, two different companies engage in working
together (Pisani et al. 2017). Thus, with collaborative working, there is an abundant discrepancy
of expertise, assets as well as investment. Therefore, it has been assessed that engaging in
partnership can also have a negative impact on the overall effectiveness of the joint venture.
The present report is on Vodafone and partner firm Telefonica that engages in forming a
strategic alliance to accomplish the goal of increasing their presence in the market. In regard to
this, a literature review on the selected topic will be taken into consideration along with
addressing the research methodology that the researcher uses to gain primary and secondary data
on the topic.
The rationale of the study
The rationale of present research focuses on defining the certain risks and benefits related to a
joint venture that businesses face at the time of entering into the international marketplace. This
research assists the business owners to recognize all the associated risk factors that Vodafone
Company face at the time of venturing with the Spain telecommunication firm i.e. Telefonica.
Scope of study
The overall scope of the research project is that it is beneficial and significant for the managers
as it assists in identifying certain benefits as well as limitations towards engaging in the joint
venture activities. However, the research will help companies in determining the key benefits
and risks associated with the joint venture activities that support in taking an effective decision
for attaining future success.
5

Chapter 2- Literature Review
Concept of Joint venture
Joint Venture (JV) is a form of business arrangement where two or more parties decide or reach
an agreement to pool their possessions along with the resources to achieve a particular task
(Chiambaretto et al. 2016). However, the task can be in the form of a new project or any other
business activity that the company would take to enhance its position in the international
marketplace. As per the view of Burritt and Christ (2018), a joint venture is also defined as the
own permitted entity that residues dispersed from the parties’ and other business interests. With
the constant up gradation in the technology, supports the firm in the telecommunication industry
to engage in the short term or long term alliance with the leading telecommunication company so
that they may easily attain the position in the international market. On the other hand, Kemp and
Owen (2015) have stated that JV is an alternative to merger or acquisition and also act as a
common base for the business strategy that is often used by companies to get succeed in attaining
the common goal of reaching a specific market.
Risks associated with joint ventures
In order to enter into the international market, it is required by the telecom companies to
emphasis on undertaking alliances or engage in partnership with the existing firm through which
they can deliver the quality of internet and other services to the customers. As per the view of
Taylor and Harman (2016), to successfully engage in the joint venture company is required to
face certain risks that are associated with poor integration and co-operation, improper leadership
style, clash of culture, restriction of flexibility, etc. The foremost risks or challenges associated
with joint venture are that it leads to a conflict of culture. According to Datta et al.(2015), it has
been stated that venturing of a giant firm with the small company often results in arising the
cultural differences as it ensures collaboration of people with different beliefs and preferences
that ultimately impact the business activities. Therefore, prior to a joint venture, it is required by
businesses to have information regarding the diverse culture and beliefs of people in the other
organization (Bouncken et al. 2016).
On the other hand, Yan and Luo (2016) have also stated that partnering with another business
might be regarded as a complex process because it often engages in taking time as well as effort
to build the right business relationship. In the situation, if they are unable to build the right
business relationship, then it may lead to having different objectives by partners that overall
6

hamper the practices of the organization operating in the telecommunication industry (Ma et al.
2015). For instance, to collaborate with Spain’s company, i.e. Telefonica, Vodafone will be
required to build an effective relationship with the partner firm so that they may engage in
delivering quality and services needed to the new customers. With the ineffective relationship, it
might lead to hampering the business practices that result in poor integration and co-operation of
the venture. Several risks are associated with the joint venture but in case if corrective actions are
taken well in advance then in such case it leads to a high level of success of the firm. Sometimes
the selection of wrong management and leadership practice acts as a hurdle and in turn, the
practice of JV cannot be carried out efficiently by the businesses in the market. Hence, this also
acts as a key challenge in case of JV practice.
Benefits of joint ventures
Despite the certain risks factor, it has been identified that there are certain benefits associated
with the joint venture activities. As per the view of Dhir (2017), one of the significant advantages
of the joint venture is that it can assist the businesses to grow at the faster rate, with increasing
the level of productivity and generating higher profits so that they may succeed in the global
environment. On the other hand, Hwang et al. (2016) have also stated that benefit of JV practices
in the telecommunication industry also plays a significant role as it ensures companies to access
to the new markets and distribution networks that results in enhancing their networking services.
In addition to this, engaging in a joint venture also results in providing opportunities for the
companies to gain insights knowledge and expertise of the different marketplace. With this
practice it allows the company to have information about the market and services that are
imparted to the customers so that with undertaking the partnership they would deliver the quality
of networking and broadband services to the customers. According to Cuypers et al. (2017), it
has also been stated that forming a joint venture in the telecommunication industry allow the
organization to access effective and better resources, such as specialized staff and technology.
Therefore, it will support the company in inventing new mobile data services through which
network or broadband can be enhanced. Moreover, the benefit of the joint venture also states that
with parties to the undertaking share both risks as well as costs because they are united and
volunteered to share all the expenses incurred by the firm.
Along with this, Monios and Bergqvist (2015) have also stated that companies those who are
entering into the joint venture practices are not required to construct a new business unit for the
7

completion of tasks or project. Thus, indulging in JV practices allow the degree of flexibility to
the business where the company can easily perform their individual activities and practices. On
the other hand, contributing company to the JV is also not requires to give up authority and
control of their businesses to another. Therefore, each company is capable of maintaining its own
identity and return to their normal operations if the joint venture agreement is terminated.
Impact of joint ventures on a firm's market growth and success
A joint venture (JV) is termed as the rapid and effective mechanism that support in gaining
strategic growth. Such unification of the companies positively enable the telecommunication
companies to quickly access to the new skills as well as technologies. In regard with this, Liu et
al. (2017) have stated that JVs supports in securing the production capacity with lowering the
cost production so that they can offer effective services to the local and distant markets. The
impact of the joint venture is on the firm is that they offer effective services that result in creating
economies of scale and market power in the industry.
On the other hand, Bouncken et al. (2016) have stated that JV also positively impact the firm's
growth by allowing them to enter into the international market and access to the new
products/service lines. With increasing the products/services line, the company can easily attain
success in the industry as it would attract the mass of audiences towards their services that
further result in raising their profitability.
8

Chapter 3- Methodology
Another chapter in the research project is associated with the methodology it mainly comprises
of different techniques and methods that researcher uses to conduct the study and acquire reliable
information associated with the topic i.e. determining certain risks and benefits associated with
Joint Venture.
Research Approach
The research approach is measured as an effective plan or procedure that specifies certain steps
that support the researcher to engage in formulating the broad assumption to the selected topic.
There are two types of research approaches that are used in the research, i.e. inductive and
deductive approach (Quinlan et al. 2019). For the present research inductive approach has been
selected as a result gained move from specific and applied to the general, i.e. overall industry.
The research is based on addressing the risks and benefits of a joint venture in the telecom
industry, and it would be applied explicitly to the Vodafone.
Research Philosophy
On the other hand, research philosophy is viewed as the notion or belief regarding the practices
that individual undertakes to gather, analyse and use the data (Koro-Ljungberg, 2015).
Interpretive and positivism are two types of philosophy that are used in the research. In the
present study main focus is on determining risks and benefits associated with the joint venture to
enter into the new market, i.e. Spain. Therefore, interpretive philosophy has been taken into
consideration where results have been inferred properly to understand them in a better manner.
Research Design
It is the key research strategy where the researcher makes the blueprint of study that contains a
set of methods and techniques used in accumulating and examining measures of the variables
that are indicated in the problem research. There are different forms of research design
techniques that are used by the researcher such as descriptive, exploratory, causal, case study, etc
(McConville, 2017). For the present report, the selected design technique is descriptive where in-
depth analysis has been done for addressing the key risks and benefits associated with indulging
in a joint venture that support Vodafone to enter to the international market, i.e. Spain.
Data Collection
One of the most important sections in the study is data collection that clearly identifies the
different sources through which reliable and accurate information is collected in the research.
9

There are two different sources through which data are collected and presented that involves
primary and secondary. The main sources used for attaining the primary and first-handed
information and data is through engaging in a primary source, i.e. drafting questionnaire, survey,
etc. With the help of undertaking a questionnaire and survey first-hand information is composed
that is measured as one of the most reliable and accurate information.
On the other hand, secondary sources are another form of collecting the data. Secondary
information is easily acquired through reviewing the published books, journals as well as online
articles associated with the topic (Vannini, 2015). Through considering the present research, both
primary and secondary sources of data collection have been used in the study. Secondary data
has supported in gathering a mass of information on the topic based on which literature review
has been done where the viewpoint of different authors has been taken into consideration.
However, for the primary data questionnaire has been formulated where different questions have
been outlined considering the nature of the study and information has been obtained from the
employees of both Vodafone UK and Telefonica Spain.
Sampling
For acquiring the accurate information in the research it is essential for the researcher to select
the appropriate sample size. Selecting the required sample results in obtaining reliable
information that is productive for the entire research study (Lebow, 2018). Sampling is a
technique of selecting a group or unit of respondents from the whole population. The selected
group acts as the representative of the overall population in the research and provides
information on behalf of the entire population. There are different forms of sampling techniques
present in the research that mainly involves random, systematic, stratified, convenience,
purposive, etc (Dickerson et al. 2018).
Considering the nature of the study, data has been acquired from 10-10 managers of both the
telecommunication organizations, i.e. Vodafone and Telefonica. This means total respondents
were 20 managers of both the companies. The respondents or employees are selected with the
help of undertaking purposive sampling where the information has been attained keeping in view
of the main purpose behind conducting the study, i.e. determining risks and benefits associated
with the Joint Venture.
Data Analysis
10

Analysis and presentation of the data are regarded as one of the most important tasks in the
overall study as it mainly highlights the inclusive results that have been derived after conducting
the primary and secondary research. However, there are two different techniques for analysing
the data that are qualitative and quantitative (Walsham, 2018). Through using the quantitative
technique, the researcher presents the information in the form of numeric and the information has
been analysed with the help of considering different statistical tools such as mean, mode,
median, etc. On the other hand, qualitative data analysis technique focuses on presenting the
non-numeric data and information through forming themes that support the responses of
respondents (Higginbottomand Liamputtong, 2015). With the help of considering the nature of
research, qualitative data analysis technique has been undertaken where information will be
presented through drafting themes and graphs so that analysed information can be easily
represented.
Ethical consideration
Ethical practices directly influence the entire research as it is one of the most important aspects
of research that supports promoting overall aims and objectives of the study. In order to continue
the ethics in research, numerous corrective actions have been undertaken by the researcher such
as maintain a high level of secrecy and confidentiality form where the primary information
attained from the respondents (Christ, 2017). Through maintaining confidentiality, the researcher
ensures that a third party is not in the condition to access data as it might adversely affect the
entire research.
11

Chapter 4- Results
Theme 1: Objectives of the company at the time of forming the joint venture
Table 1: Objectives of the company at the time of forming the joint venture
What were the objectives of your company in forming the joint
venture?
Number of
respondents
To grow the business faster 2
Increase the level of productivity 3
Generate greater profits 2
To enter in the international marketplace 5
All of the above 8
To grow business faster
Increase level of productivity
Generate greater profits
To enter in international
marketplace
All of the above
0 1 2 3 4 5 6 7 8
Objectives of company at the time of forming the joint
venture
Series1
Figure 1: Objectives of the company at the time of forming the joint venture
Interpretation- From the above figure, it has been stated that the company has distinctive
objectives that needed to be achieved with the help of implementing Joint Venture. From the 20
12