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    Session 1

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    Sreekanth Sattiraju
    Strategic alliances have become more critical for organizations today due to factors like globalization, decreasing product lifecycles, the need to scale operations, and the mandate to innovate. Alliances provide benefits like economies of scale, improved strategic positioning, access to larger markets, and learning opportunities with relatively lower financial risks compared to other forms of cooperation. For Indian firms, the key motives to form alliances include learning and adopting new technologies, scaling up operations, cutting costs, and expanding globally with minimal financial risks, R&D costs, and capital requirements - which would otherwise limit growth. Volkswagen entered India in 2001 but has struggled to gain market share due to high costs and

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    Session 1

    Uploaded by

    Sreekanth Sattiraju
    30 views1 page
    Strategic alliances have become more critical for organizations today due to factors like globalization, decreasing product lifecycles, the need to scale operations, and the mandate to innovate. Alliances provide benefits like economies of scale, improved strategic positioning, access to larger markets, and learning opportunities with relatively lower financial risks compared to other forms of cooperation. For Indian firms, the key motives to form alliances include learning and adopting new technologies, scaling up operations, cutting costs, and expanding globally with minimal financial risks, R&D costs, and capital requirements - which would otherwise limit growth. Volkswagen entered India in 2001 but has struggled to gain market share due to high costs and

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    Strategic alliances have become more critical for organizations today due to factors like globalization, decreasing product lifecycles, the need to scale operations, and the mandate to innovate. Alliances provide benefits like economies of scale, improved strategic positioning, access to larger markets, and learning opportunities with relatively lower financial risks compared to other forms of cooperation. For Indian firms, the key motives to form alliances include learning and adopting new technologies, scaling up operations, cutting costs, and expanding globally with minimal financial risks, R&D costs, and capital requirements - which would otherwise limit growth. Volkswagen entered India in 2001 but has struggled to gain market share due to high costs and

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views1 page

    Session 1

    Uploaded by

    Sreekanth Sattiraju
    Strategic alliances have become more critical for organizations today due to factors like globalization, decreasing product lifecycles, the need to scale operations, and the mandate to innovate. Alliances provide benefits like economies of scale, improved strategic positioning, access to larger markets, and learning opportunities with relatively lower financial risks compared to other forms of cooperation. For Indian firms, the key motives to form alliances include learning and adopting new technologies, scaling up operations, cutting costs, and expanding globally with minimal financial risks, R&D costs, and capital requirements - which would otherwise limit growth. Volkswagen entered India in 2001 but has struggled to gain market share due to high costs and

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    of 1

    1) Why are strategic alliances more critical today than in earlier times?

    Ever-changing market dynamics due to globalization, decrease in product lifecycle, need to scale-
    up operations and mandate to innovate for sustenance are few factors urging organizations to seek
    strategic alliances. Economies of scale, improved strategic position & access to larger markets and
    learning opportunities are some of the explicit advantages gained by forming an alliance, with
    relatively lower financial risks as compared other forms of co-operation between companies.

    2) With reference to both readings, what might be the most important motives for Indian firms to
    form alliances?

    When compared to organizations that originate from mature markets like Americas and Europe,
    Indian firms have arguably farther lengths to travel in the innovation race, especially in automobile
    and aligned industries where cutting production costs, learning and innovation at faster pace are
    game changers. Current economic conditions catalyze earning capacity amongst Indian middle
    class, creating space & opportunity and igniting hunger for growth within Indian firms.

    These environmental conditions lure Indian firms to form alliances with motive to learn and adopt
    new technologies, scale up operations, cut-down costs and in some cases expand global presence
    with minimal financial risks, R&D costs and demanding establishment / capital requirements,
    which otherwise turnout to be limiting parameters.

    3) What is Volkswagen’s (VW)’s current situation in India (at the time of the case)? What is the
    business opportunity in India for VW? Does VW need a partner? Why or why not?

    VW entered India in 2001 and has gained market share close to 1% as of 2016. Though it has
    world class production facility, high manufacturing costs and waning customer confidence has
    caused VW to be non-competitive in Indian Market.

    Passenger vehicle segment, growing at CAGR of 10.09% provides huge market potential for
    automobile manufactures in the country. The focus areas of VW like sports utility segment
    witnessed tremendous growth rate of 29.91% during fiscal year 2016-17, promising growth
    opportunities.

    VW might consider partnership to gain deeper understanding of Indian market, scale up production
    capacities and achieve economy of scale, to seize the growth opportunities in India, thereby
    increasing market share, with relatively less capital and risks.

    4) Do you think VW and Tata make for good partners? Assess the business case for an alliance.

    The alliance between Tata Motors and VW would give both the companies an opportunity to
    leverage each other’s strengths and helps in cutting-down production costs, achieving economies
    of scale and exposure to advanced technologies in providing better transportation solutions.
    However, the conflicting interests of both the players – maximizing the market share in India and
    globally might result in misleading goals in the long term and increases the risk of failure.
    Alternatively, Tata and VW might consider a complex alliance with clear cut terms to ensure
    focused engagement of partners for achieving desired outcomes for both the companies.

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