Problems in Joint Ventures. The client, Arcellor-Mittal wants to start a joint venture with an international firm Bharti Steels of India. As a business consultant, I have to show the possible ways of overcoming the cultural constraints in the deal.

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Problems in Joint Ventures

1. Executive Summary

Due to the globalization, the joint ventures are the best ways to expand the business to different geographical locations across the globe. All the resources of two or more organizations will be shared among them so that they will collectively contribute to the overall output of the joint venture. The culture of joint venture is not of this age but the same is existent from the start of the industrialization. The companies have tied up with other companies to expand their business portfolio and the expertise in the earlier stages but the different work cultures that are followed in these companies have hindered the progress of the ventured companies. The ventures may be in the domestic level or international level and hence the ventures will consider the cultural differences among the people and the work to reduce the impact of these variations on the overall business performance of the venture companies.

This document will highlight the problems that are faced by the organizations in making the joint ventures. Due to the different approaches that are followed in the operations, work cultures and the human resources, the joint ventures will always face a problem in integrating the operations of the companies. The Trompenaars and Hampden-Turner cultural theory was used to analyze the problems that are faced by the companies in making joint ventures. The PESTAL analysis is used to find out the strengths and the weaknesses that describe the company’s nature. Upon the inputs from the cultural theory and the PESTAL analysis, the outputs and the recommendations are drawn so as to provide better solutions to overcome the problems of the company. The client, Arcellor-Mittal wants to start a joint venture with an international firm Bharti Steels of India. As a business consultant, I have to show the possible ways of overcoming the cultural constraints in the deal.

2. Terms of Reference

As a business consultant, my duty is to identify the problems that are faced by my client Arcellor Mittal in starting a joint venture with Bharti Steels of India. Arcellor Mittal is the world’s largest steel manufacturer and the company wants to acquire or make a joint venture with the medium scale steel companies to increase their business and the productivity. As Arcellor Mittal had not worked with any business in India, the company is unaware of the steel business situation in India. And hence, I have to figure out the possible ways to recommend the client about the different ways of handling the operations, cultures and thus the business. Even Bharti Steels is willing to have a joint venture with Arcellor Mittal but the constraint is that the company will have to face problems in the initial stages due to the different cultured people and environment.

3. Overview of the Situation

Arcellor Mittal, being the world’s largest steel manufacturer, wants to expand the business to the potential markets across the world. In the process, the company had recently made a proposal for a joint venture with Bharti Steels so that the company will work together in manufacturing steel. The work culture in Arcellor Mittal is completely different from that of Bharti. Hence, the company wants to integrate the processes and the operations of both the companies and thus build a single work culture which will enable the employees to work with cooperation. There are some problems which are identified for the joint venture. They are:

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  1. Different cultures

Both the companies are operating in their respective geographical locations and hence they had different work cultures. Integrating these cultures is really a big task which will reduce the chances of effective utilization of the resources. Implementing one company’s culture in the other will make the employees of the other company insecure about their potentiality. Hence, the effective integration requires the combination of the best processes from both the companies.

  1. Different management styles

The management styles are different in both the companies. Arcellor Mittal is having an aggressive style which will prompt the managers to take ...

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