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Traditionally, JVs break up mainly because of incompatibility issues or big egos. But in India, it may be more the external environment. A joint venture is a partnership between two companies, each bringing its own strengths — “local market knowledge from one and international best practices from the other,” says Bundeep Singh Rangar, chairman of Indusview, a London-based advisory specializing in business opportunities in India for multinational firms. “Like all relationships, however, one party might fail to fulfill its share of responsibilities, which leads to a breakup.” Chittoor observes that the breaking up of alliances is very common, both globally and in India. “According to various studies, almost 60% to 70% of joint ventures fail. Failure can be due to many factors. For instance, the objectives of the partnership may not have been thought through or articulated clearly; lack of planning and lack of articulation leading to misunderstandings; different leadership styles; information asymmetry leading to ideological and cultural differences [or] HR issues.” He makes a distinction between partnerships that spin out of control and those that are designed from the very beginning to break up. Pepsi started in India with the Tatas (Voltas). The moment the laws were changed, the two abandoned the venture. Procter & Gamble-Godrej and Tata-IBM came to an amicable end because the objectives set out at the beginning of the relationship were achieved.
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