Subject category:
Strategy and General Management
Originally published in:
2016
Version: 27-Sep-2016
Length: 19 pages
Data source: Published sources
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Abstract
Business development through joint ventures in the Automobile Industry in global scenarios have small lives typically and not all have a lengthy drained win story. This case examines the major causes of joint venture failure between the Nissan and Ashok Leyland. The relationship between Japan automotive major Nissan and India’s Ashok Leyland to tap the Indian market started with a vehicle manufacturing, powertrain manufacturing and technology development alliance in October 2007. The joint venture faced the problem after 2014. The Japanese firm had issued a termination notice for the technology joint venture after the Indian partner dragged Renault Nissan Automotive India Pvt Ltd (RNAIPL) to court over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations. The reason is Ashok Leyland’s failure to pay royalty to Nissan for using its technology in developing power train products and other allied products. The royalty to Nissan would be more than INR200 crores. The relationship between Ashok Leyland and Nissan turned ugly after both the parties went to the court and started blaming each since the JV was not doing well. Ashok Leyland was planning to sell its stake to Nissan, however that did not happen. This case discusses the growth of the companies, JV failure, reasons for failure, and the challenges ahead of both the companies.
Location:
Industry:
Size:
Entire Indian Market
Other setting(s):
February 2016
About
Abstract
Business development through joint ventures in the Automobile Industry in global scenarios have small lives typically and not all have a lengthy drained win story. This case examines the major causes of joint venture failure between the Nissan and Ashok Leyland. The relationship between Japan automotive major Nissan and India’s Ashok Leyland to tap the Indian market started with a vehicle manufacturing, powertrain manufacturing and technology development alliance in October 2007. The joint venture faced the problem after 2014. The Japanese firm had issued a termination notice for the technology joint venture after the Indian partner dragged Renault Nissan Automotive India Pvt Ltd (RNAIPL) to court over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations. The reason is Ashok Leyland’s failure to pay royalty to Nissan for using its technology in developing power train products and other allied products. The royalty to Nissan would be more than INR200 crores. The relationship between Ashok Leyland and Nissan turned ugly after both the parties went to the court and started blaming each since the JV was not doing well. Ashok Leyland was planning to sell its stake to Nissan, however that did not happen. This case discusses the growth of the companies, JV failure, reasons for failure, and the challenges ahead of both the companies.
Settings
Location:
Industry:
Size:
Entire Indian Market
Other setting(s):
February 2016