The largest 100 JVs currently represent more than $350 billion in combined annual revenues. ![]() More than 5,000 joint ventures, and many more contractual alliances, have been launched worldwide in the past five years. Using real-world examples, the authors offer their suggestions for meeting these challenges. And fourth, build a cohesive, high-performing organization (the JV or alliance)-not a simple task, since most managers come from, will want to return to, and may even hold simultaneous positions in the parent companies. Third, manage the economic interdependencies between the corporate parents and the JV. Second, create a shared governance system for the two parent companies. First, build and maintain strategic alignment across the separate corporate entities, each of which has its own goals, market pressures, and shareholders. Specifically, the launch team must tackle four basic challenges. During this period, it’s critical for the parents to convene a team dedicated to exposing inherent tensions early. The launch phase begins with the parent companies’ signing of a memorandum of understanding and continues through the first 100 days of the JV or alliance’s operation. As a result, the parent companies experience strategic conflicts, governance gridlock, and missed operational synergies. Most companies are highly disciplined about integrating the companies they target through M&A, but they rarely commit sufficient resources to launching similarly sized joint ventures or alliances. The authors, all McKinsey consultants, argue that JV success remains elusive for most companies because they don’t pay enough attention to launch planning and execution. ![]() The problem is, the success rate for JVs and alliances is on a par with that for mergers and acquisitions-which is to say not very good. Companies are realizing that JVs and alliances can be lucrative vehicles for developing new products, moving into new markets, and increasing revenues.
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