Global education at local cost, context and ethos

A Project Report
On
JOINT VENTURE of Max New York life Insurance and Tata DoCoMo

In partial fulfillment of the requirement for the award of the

Under Graduate Diploma In
Finance Management

Submitted To:H.L.CENTRE FOR PROFESSIONAL EXCELLENCE

AHMEDABAD- September-2015
Submitted by:DEEPALI DHINGRA
UGDBMF
Roll No-04

SYNOPSIS

I declare that the project entitled JOINT VENTURE submitted by me as a part of my

curriculum for the award of
Diploma in Business Finance at H.L. Centre of Professional Excellence,
is the original work done by me and has not been submitted previously anywhere.

CONTENTS

Sr. No.

Description

Page no.

Synopsis

Meaning of joint venture

History of joint venture

Types of joint venture

Advantages and Disadvantages of joint venture

Steps in formation of joint venture

Max new york life Insurance company ltd.

Tata DoCoMo

Conclusion

JOINT VENTURE

Meaning of Joint Venture:

Joint Ventures and Alliances can deliver more shareholder value than Mergers and
Acquisitions can, but getting them off the ground can trip you up in unpredictable ways
--- Harvard Business Review

A joint venture takes place when two parties come together to take on one project. In a joint venture,
both parties are equally invested in the project in terms of money, time, and effort to build on the
original concept. While joint ventures are generally small projects, major corporations also use this
method in order to diversify. A joint venture can ensure the success of smaller projects for those that
are just starting in the business world or for established corporations. Since the cost of starting new
projects is generally high, a joint venture allows both parties to share the burden of the project, as
well as the resulting profits.
Since money is involved in a joint venture, it is necessary to have a strategic plan in place. In short,
both parties must be committed to focusing on the future of the partnership, rather than just the
immediate returns. Ultimately, short term and long term successes are both important. In order to
achieve this success, honesty, integrity, and communication within the joint venture are necessary.

A contractual agreement joining together two or more parties for the purpose of executing a
particular business undertaking. All parties agree to share in the profits and losses of
the enterprise.

Shared contribution of equity

Shared authority, control and responsibilities

Shared Revenues & Losses

Shared Assets

History of Joint Ventures

A study published in Harvard Business Review in 2002 reveled that a
whopping 47% of joint ventures fail!!
Reason cited are:

Wrong Strategies
Incompatible Partners

Weak Management
Unrealistic or inequitable Deals

The Real Reason

Mistakes done at the Launch Phase!!
Companies fail to commit sufficient resources during the launch phase
Lack of attention during the Launch Phase
I

Strategic Conflicts between partners

Governance gridlocks

Missed operational Synergies

Launch Phase : between signing memorandum of understanding to first 100 days

of operation

Joint Venture Challenges

Building and maintaining a strategic alignment between partners
Creating a joint governance system
Managing the economic interdependencies between the parent firm and the
joint venture
Building the organization of the JV

Putting together a good management team

Deciding on all potential issues prior to operational launch

Strategic Alignment
Each firm will have its own goals, market pressures, share holders
expectations etc.
These issues must be analyzed and discussed in detail before the launch of JV
I

Which Market Segment?

Cash Flow Management Reinvest or Pay Dividends?

The Goals for the JV must then be set such that it is in line with the goals,
expectations of the parent Companies

E.g : Apple-Motorola-IBM PowerPC venture

Verizon-Vodafone venture to Create Verizon Wireless

Why Joint Venture?

Reduce Competition
Obtain or retain a Strategic Resource
Profitably utilize Byproducts
Overcome Market Entry Barriers
Prevent Entry of New Competitors
Share Investment Cost and Risk

Types of Joint Ventures

Consolidation Joint Venture

Value comes from combining existing businesses

Skills Transfer JV

Value comes from transfer of some critical skills to other partner

Coordination JV

Value comes from Leveraging the complementary Capabilities

New Business Jv

Value comes from creating new growth by combining existing business

Capabilities

Advantages of a JV
Participating in joint ventures has the following advantages:

1. Helps an organization to enter in to new markets or new product lines

2. Access to increased resources and improved expertise & technology
3. Helps to build credibility with a particular target market by choosing a well
established and credible partner in that market
4. Reduces risk involved in business due to sharing of losses and expenses.
5. Exiting from the business in case of failure is easier as compared to solely
owned businesses.
6. Partners in Joint Ventures get preference in buying out the shares of other
partners and take over the company.

Disadvantages of a JV
Entering into Joint Venture agreements may pose certain threats or disadvantages
to the participating organizations:
1. It is time consuming and difficult to set up a Joint Venture and poses many
challenges.
2. The objectives of the JV may not be clear and understood by all if the
partnering organizations do not state and communicate them clearly.
3. Differences in the cultures and management styles of the organizations may
lead to a lack of cooperation and coordination.
4. Lack of thorough research and feasibility studies in the beginning of the JV
may lead to failure of the JV.
5. The individual partners may not treat the JV as an integral part of their
business and may lead to lack of attention being given to the JV
6. There can be an imbalance in levels of expertise, investment or assets
brought into the venture by the partners

Steps in formation of Joint Venture

Planning
Partner Search
Feasibility Study
Incorporation

Planning a JV
The Planning Stage involves decision making on the following issues:
1. Specify the Goals and Objectives
2. Determination of the product and market
3. Market Analysis
4. Technology Decisions
5. Financial Requirements
6. Foreign Exchange analysis
7. Human resource and skill requirements
8. Revenue Predictions
9. Cost benefit Analysis
10.Personal SWOT Analysis

Partner Search
The following considerations have to be made while selection partners for JV
1. Financial resources of the prospective partners
2. Technological know how and capabilities
3. Presence in the target market
4. Organizational culture and management style
5. Type of organizational structure adopted
6. Credibility study
7. Ranking of the prospective partners based on above mentioned criteria

8. Selection of partners for the feasibility study

Feasibility Study
Predication of the culture and structure of the Joint Venture

Analysis of partners comfort with and adaptability to the new technology and
culture of the JV

Analysis of the authority, responsibility and financial gains and loss sharing
among the prtners

Market analysis and viability of the JV

Analysis of the sustainability of the JV in times of uncertainty

Cost Benefit Analysis

Environmental Analysis of the JV in the market

Growth Predictions

Incorporation
A JV can be brought about in the following major ways:

Foreign investor buying an interest in a local company

Local firm acquiring an interest in an existing foreign firm

Both the foreign and local entrepreneurs jointly forming a new enterprise

Critical Success Factors in a Joint Venture

1. Good communication, cooperation and coordination among partners
2. Common goals and shared vision among partners
3. Dedication towards the success and long term sustainability of the JV
4. Proper sharing of profits and benefits among partners

5. JV should work towards the benefit of all the partners

6. Proper planning and research prior to the incorporation of the JV

Factors hindering the success of a JV

1. Lack of understanding between the partners
2. Lack of patience and motivation among partners
3. Entry of a wholly owned subsidiary of a partner in the same business and
market (E.g.. Hero Honda)
4. Benefits lower than the expectations
5. Operational Difficulties due to geographical location of the partners
6. Differences and conflicts between partners on various issues.
7. Incompatibility of the culture and management styles of the partner
organizations.

MAX NEW YORK LIFE

INSURANCE COMPANY LTD.
A JOINT VENTURE BETWEEN
NEW YORK LIFE
AND
MAX INDIA LIMITED.

Max New York Life

Insurance
Max New York Life Insurance Company Ltd. is a joint venture between New York Life; a
Fortune 100 company and Max India Limited; one of India's leading multi-business corporations.
The company has positioned itself on the quality platform. In line with its vision to be the Most
Admired Life Insurance Company in India, it has developed a strong corporate governance
model based on the core values of excellence, honesty, knowledge, caring, integrity and
teamwork. The strategy is to establish itself as a Trusted Life Insurance Specialist through a
quality

approach

to

business.

Incorporated in 2000, Max New York Life started commercial operation in 2001. In line with its
values of financial responsibility, Max New York Life has adopted prudent financial practices to
ensure safety of policyholder's funds. The Company's paid up is Rs. 1,432 core.
Having set a Best in Class Agency Distribution Model in place, the company is spearheading a
major thrust into additional distribution channels to further grow its business. The company has
multi-channel distribution that includes the agency distribution, partnership distribution, banc
assurance, distribution focused on emerging markets and alliance marketing through employed
sales force. The company currently has 33 banc assurance relationships, 14 corporate agency
tie-ups and direct sales force at 14 locations. Max New York Life has put in place a unique hub
and spoke model of distribution to deepen rural penetration. The company has 39 (9 hub office
30 spoke offices) offices dedicated to emerging markets in Punjab and Haryana. Max New York
Life offers a suite of flexible products. It now has 35 products covering both life and health
insurance and 8 riders that can be customized to over 800 combinations enabling customers to
choose the policy that best fits their need. Besides this, the company offers 6 products and 4
riders

in

group

The company currently has more than 13,295 employees.

insurance

business.

COMPANY PROFILE

Max New York Life Insurance

Max New York Life wants people to view
insurance

as

financial

protection

and

wealth creation instrument and not just a

tax-saving tool.
Max New York Life Insurance Company Ltd. is a joint venture between New York Life, a
Fortune 100 company and Max India Limited, one of India's leading multi-business corporations.
The company has positioned itself on the quality platform. In line with its vision to be the most
admired life insurance company in India, it has developed a strong corporate governance model
based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The
strategy is to establish itself as a trusted life insurance specialist through a quality approach to
business.

New York Life is a Fortune 100 company that has over 160 years of experience in the life
insurance business. Max India Limited is a multi-business corporate dealing in Clinical
Research, IT and Telecom Services, and Specialty Plastic Products businesses.

Max New York Life Insurance started its operations in India in 2000. It is the first life insurance
company in India to be awarded the IS0 9001:2000 certifications. Max New York offers
customized products tailored to suit individual's needs. With its various Products and Riders,

there are more than 400 product combinations to choose from. Today, Max New York Life
Insurance has a network of 57 offices spread over 37 cities all over India.
In line with its values of financial responsibility, Max New York Life has adopted prudent
financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs.
657 crore, which is more than the norm laid down by IRDA.
Max New York Life has identified individual agents as its primary channel of distribution. The
Company places a lot of emphasis on its selection process, which comprises four stages screening, psychometric test, career seminar and final interview. The agent advisors are trained
in-house to ensure optimal control on quality of training.
Max New York Life, one of Indias leading life insurance companies, expanded its presence in
the southern region by opening its first general office in the city of Mysore. Max New York Life
now has established a countrywide network of 172 offices and representatives across 120 cities
in India. The company has over 25,300 agent advisors, who are widely considered the best in the
business. Max New York Life aspires to be the "life insurance brand of first choice" amongst
Indian consumers.
Max New York Life wants people to view insurance as a financial protection and wealth
creation instrument and not just a tax-saving tool. Since the launch of our operations, our focus
has always been on providing risk protection and long-term wealth creation solutions to our
customers. With a diverse product portfolio to meet customer requirements, it is evident that we
are setting benchmarks in the marketplace and are well on course of realizing our vision to
become Indias most admired Life Insurance Company.

VISION:
Vision statement is Most Admired Life Insurance Company in India".

MISSION:

Become one of the top quartile life insurance companies in India

Be a national player

Be the brand of first choice

Be the employer of choice

Become principal of choice for agents.

VALUES

Caring

Honesty

Excellence

Knowledge

Integrity

Teamwork

SEGMENTING
TARGETING
POSITIONING

SEGMENTING

Demographic: It is basically on the basis age of people, there family

background and they do there financial analysis.

Psychographic: They also check the interest of people i.e which kind of
insurance they want.

They are never preplanned that they will go and definitely sell the insurance

TARGETING
They follow the NOPP:

N=who has the need for insurance

O=opportunity

P=the person is physically fit

P=the person has the paying capacity i.e financially good

POSITIONING

They believe in retaining there customers i.e. always take care of old
customers.

They believe in after sales which help them in positioning and remembering
of there product or service.

Mouth to mouth publicity is the best for them.

SWOT Analysis

Strengths:

Strong corporate governance model

Quality products

Adaptability to changes

Strong Brand name

Large networks

Leading company in insurance sector

Diversification of funds

Well Efficient Management

Weakness:

Less awareness about all products of life insurance in market

Low advertising
Focus only on URBAN areas

Opportunities:

Fast growing economy

Scope for opening of new branches in state/country

High growth of ULIP industry

Increasing population will increase in insurance business

Increasing per capita income in India

Catering to the untapped Rural and Semi-Urban market

Threats:

Market uncertainty (Recession)

Consumers do not invest easily

Arrival of new entrants in the insurance industry.

Cut throat competition within the industry

TATA DOCOMO
A JOINT VENTURE BETWEEN
TATA
AND
DOCOMO.

COMPANY PROFILE

Indias mobile market is fastest growing market in world.

TATA DOCOMO marks a significant milestone in Indian telecom landspace.
Tata DoCoMo is the third largest telecom network in the world.
TATA telecom Incorporated in 1996.
TATA DOCOMO is Tata Teleservices Limited's (TTSL) telecom service provider
with the joint venture of the Tata Group's and NTT DOCOMO which came into
existence on November 2008.
First mobile service provider to have second pulse tariff and 3G in India.
It is the global leader in value added services.
The name DoCoMo is officially an abbreviation of the phrase, "do
communications over the mobile network", and is also from a compound
word dokomo, meaning "everywhere" in Japanese.
On 20 October 2011, Tata teleservices brought its services under the name Tata
Docomo.
A Star Enterprises is the authorised distributor of Tata Docomo in Jalandhar.
A Star enterprises, Leading distributor out of 7 distributors in Jalandhar area has
595 outlets to manage and distribute the services and products of Tata
Docomo.
Out of 595, 335 outlets are Transacting and 260 non transacting.

Companies most popular amongst dealers

60
50
40
30
20
10
0

48

44

40

44

48

50

45

Most sold Product/Service by Docomo

50
40
30 26
20
10
0

41
18

41

19

39
15

Current Achievements

Had the largest number of demand of SIM Cards allover the state where an customer
statistics were taken as 10persons / min.
Cheapest network cost ever.
Best coverage & network
Short time famous firm.
Cheapest VAS

Why TATA group is selling TATA DOCOMO

According to recent numbers published by the Department of Telecom, Tata Tele has net
worth of minus 5,346.65 crore, which makes them a possible target for acquisitions. If Vodafone
buys Tata Tele, it will be Indias leading player in terms of subscribers, overtaking Airtel.
According to the ET report both Tata and Vodafone denied to confirm anything.

SOWT Analysis of Tata Docomo

STRENGTHS

Flexible plans and Recharge offers,

Good advertising,

Good internet speed,

Good distribution services,

Good brand image of Tata Docomo,

Affordable plans by common person,

Youth appeal,

First to launch per second tarrif plan,

Ability to attract customers with various plans,

Prices less than Almost all the brands,

One of the best networks providing 3G services,

Fast activating process.

Weakness:

Service centre issues.

Similar and monotonous plans schemes

Network issues

Lack of post-paid services.

Customer services are not satisfactory.

Comparatively less Incentives and commission offered to retailers

Untapped market of Ludhiana, Amritsar and other rural areas.

Opportunity:

Fast expanding cellular market.

Latest and low cost technology.

Untapped other areas of Punjab- Amritsar and Ludhiana.

Value added services.

Introduce new plans for internet users.

Introduce 3G in more regions.

Activation process up gradation.

Threats:

Brand name of Airtel is inducing customers to choose it.

Price competition with Videocon, Reliance and BSNL

Mobile Number Portability to other brands due to weak signal strength.

Competitors:

Airtel

Vodafone

Idea

Videocon

Reliance

BSNL

Successful Joint Ventures

VOLVO EICHER JV
TATA DOCOMO

Failed Joint Ventures

Chrysler Diamler AG
Yamaha Escorts

JVs Leading to Takeover by one partner

Hero Honda (Takeover by Hero Group)
Virgin TATA ( Takeover by TATA)

CONCLUSION

Launching and running a world class JV is a complex and demanding task. If done right
JV promises a better ROI than mergers and acquisitions.
It is necessary for all executives involved to understand the unique demands of JV and
invest in early planning
Right investments during launch phase will reap big rewards
If you get the launch right, the rest will take care of itself