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Sonata Software Ltd, an Indian software company, was seeking its growth in Western Europe when it entered into a joint venture (JV) with TUI AG. The latter was well-known in the industry of travel and tourism in Germany. This case study analysis shows how a company's choice of a JV as a means of entering the foreign market. It also discusses the history of Sonata from its inception up to the conceptualization of the JV until its implementation.
Stephanie Hurt; Vijaya Narapareddy
Harvard Business Review (NA0331-PDF-ENG)
March 05, 2015
Case questions answered:
- Write a memo to the Manager Director Ramaswamy. Assess the JV in terms of the goals that Sonata Software Ltd. set for itself. Recommend the continuance or discontinuance of the JV.
- Provide the following analysis to aid your decision making: A PEST analysis of India, A SWOT analysis of the Sonata Software Ltd., Porter’s Five Forces analysis of the IT services industry that Sonata operates in. What overall conclusions do you draw from these data and analysis?
- Use Hofstede analysis to evaluate cultural differences that could affect differences between the German and Indian managers and engineers. What strategies were employed to address and anticipated differences? How well do you think the JV has done in the area of addressing issues related to cultural differences? Use a star diagram to display the differences in cultural attributes from the Hofstede analysis. What other factors have the JV faced that are typical of international JVs and how have they responded to these challenges?
- Use the financial data of Exhibit 2 to evaluate the financial performance of Sonata since its JV with TUI. What impact did TUI Infotec have on performance? Also, evaluate the number of employees that Sonata has. Be sure to use information design concepts in your answer.
- How likely is the Sonata-TUI Infotec JV to be successful in the future? Provide the pros and cons of your choice. Identify the key factors of success in your evaluation.
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Case answers for Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture
Subject: Assessment of Sonata Software Ltd.-TUI AG joint venture
Sonata Software Ltd. has tremendously grown from its initiation by offering software management services and technological support. Over a period of time, the firm has adopted the joint venture strategy to enter into the different markets and to gain easy access to the international markets. Such a strategy has been beneficial for the company as it allowed Sonata Software to enter into the realms of the international markets, acquiring additional expertise, market knowledge, clientele, and above that an easy access and sustainability in the foreign market.
Though the two joint ventures in the foreign market have not been successful due to the impedance of the external factors (financial crisis, and inadequate market research) however, the joint venture with the TUI AG is beneficial for the company. It is due to the cross-benefit platform present between the two companies.
Since the TUI AG is looking for low-cost labor and cost-effective operations with high teach adaption and resources, the Sonata Software Ltd. is the right choice. On the other hand, since TUI AG is a large traveling firm with its operations expanded in the European market and the Middle East, the joint venture with the company will allow Sonata Software Ltd. to enter easily into the European markets, mitigating the risk and resistance from the existing players and the government. Such a joint venture, on the one hand, will allow the company to expand its operational ease. On the other hand, it will allow to take the first-mover advantage and capture major market share in the European market, along with improved brand building and reputation in the European market.
Hence, analyzing the overall benefits of the JV, It is recommended that Sonata Software Ltd. should pursue the joint venture strategy to enter into different markets which will offer easy access to the markets, while continually improving its market share, expertise, knowledge base and, thus, participate in an overall competitive position in Indian as well in European or western markets.
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