Discus about the cross-cultural conflicts in the corning/vitro Joint Venture……

TABLE OF CONTENTS……………………………………………………………….3

INTRODUCTION………………………………………………………………………3

FAILURE OF THE CORNING-VITRO JOINT VENTURE………………………….3

THE FINANCIAL STRUCTURES……………………………………………………..3

THE GOVERNANCE OF THE COMPANIES…………………………………………4

MARKETING PRINCIPLES……………………………………………………………4

CONCLUSIONS………………………………………………………………………..5

REFERENCES …………………………………………………………………………6

CORNING-VITRO JOINT VENTURE

INTRODUCTION

As a result of North America Free Trade Agreement, many corporate companies within North America region have come up with merges and alliances with main objective of acquiring new market for their products. However most of the objectives for forming these mergers and alliances have not been fully realized by the involved firms. In most cases the mergers and alliances end up failing. The failure of these alliances is attributed to cultural differences between the North America countries (Burri, 2011). This paper is a case study of two companies, Vitro S.A. from Mexico and Corning Inc. from America. The two companies merged together in 1991 and two years later their merger was in problems with some stakeholders calling for its dissolution. The essay will therefore try to look at the reasons why the partnership did not live up to its expectations.

FAILURE OF THE CORNING-VITRO JOINT VENTURE

The merger of Corning Inc. and Vitro S.A. lasted for only two years after it was, it started to experience some difficulties in its operations and management. The companies had different management systems and they were all reluctant to give away their system of management in favor of another system. This was made worse by their different cultural belief which all of them took as a serious issue in the management of their joint venture.

THE FINANCIAL STRUCTURES

The financial structures of the two companies was very different from each other, this contributed a lot of problem for the Joint venture financial management system. There was different account management system between the two companies. Corning Inc. was using an account management system which is practiced in the USA while Vitro S.A. was using an accounting system which is being practiced in the Mexico. Financial reporting as an accounting system will always cause difficulties in mergers involving firms with different account management system (Bird, Vance, Woolstencroft, 2009). The difference in account management contributed to financial management difficulty as each company was evaluating the financial performance of the joint venture in different ways. This was causing difficulties in comparing of the sales, purchases, revenues, and profitability of the joint venture hence complicating the sharing of profits realized between the countries.

THE GOVERNANCE OF THE COMPANIES

The governance of the companies was also another factor that contributed to the failure of the merger. Vitro S.A. and Corning Inc. has two different governance structures. Most of the Mexican companies were still being run by families, and all the important decisions were made by the top managers according to Mexican culture (Bird, Vance, Woolstencroft, 2009). On the other American companies allowed employees to make some of the important decision. This resulted in delay in decision making in the joint venture. The corning mangers complained about the delays but since Vitro entrusted the Mexican culture they were reluctant to abandon their approach towards decision making.

MARKETING PRINCIPLES

Marketing principles were also significantly different from the two companies, Vitro and Corning. Corning marketing strategy was an aggressive approach as compared to Vitro approach. Vitro sales process was complicated and took a number of days before it was finally closed. The Corning Company was very swift in their sales execution. The difference in sales approach caused disagreement between these two companies. The managers of the Corning Company were complaining about the delay in the sales process caused by the Vitro Company. On the other hand Vitro Company was reluctant to abolish its policy and take the Corning approach as this was part of their culture.

CONCLUSIONS

The above differences, which were mainly due to the difference in the culture and beliefs of the Mexicans and Americans contributed to the failure of the merger between Vitro S.A of Mexico and Corning Inc. of America. Hence the failure of the Corning-Vitro Joint venture was as a result of cultural clashes between them.

REFERENCES

Bird, F, Vance, T, Woolstencroft, P (2009). Fairness in international Trade and Investment: North American Perspective. Journal of Business Ethics. 32(6), 78-92).

The authors in these articles reviews, trade among the North America since the inception of North America free trade agreement treaty. In the review the authors looked at different trade agreements between North American countries, their implications, difficulties encountered, and the views of the people within these regions concerning their trade relationship. The book also reviews on the trade policies of the specific countries in the region, attitudes of the investors regarding the trade policies and the causes for of failure of some trade agreements within the region.

Burri, M (2011). Reconciling Trade and Culture: A Global Law Perspective. Journal of Arts Management, Law and Society. World Trade Institute, University of Bern Law School. 41(2), 138-158.

The article takes a critical look at some of the cultural beliefs in different countries, and how these beliefs impact on international trade. It looks at various international trade agreements or investments, how the culture of different countries contributes to the agreements and tries to come up with an amicable solution to address the issue of cultural difference in trade relations. The book comes up with various solutions to the issue of culture and trade and highlights some of the basic steps and measures that can be taken to address the issue.

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