Subcontinental Telecommunications Solutions (1995), Case Ib-13

Topics: Board of directors, Joint venture, India Pages: 4 (1321 words) Published: October 10, 2010
I.Problem Identification
World Wide Telecommunications (WWT) entered into a joint venture with an Indian company, Subcontinental Solutions, Pvt. Ltd. (SSS), to form Subcontinental Telecommunications Solutions, Pvt. Ltd. (the JV). The issues that have surfaced since the JV was finalized, such as equipment problems and sexual harassment, are results of a dysfunctional partnership. The main problem for WWT is that the joint venture agreement is structured inefficiently with inadequate due diligence. This has led to a lack of communication and poor decision-making by the JV. The structure of the JV agreement needs to be clear and detailed in order to create a functional environment for the partnership to take advantage of the opportunities presented by the JV. II.Situation Analysis

WWT embarked in a joint venture with an Indian company, SSS, in order to develop software and fulfill its obligations under its contract with International Corporate Communications (ICC). WWT considered two other alternatives to develop the software for ICC: double the current capacity of its software division to develop the software in-house or contract out the development of the software. The decision to enter a software joint venture with SSS created much potential for gain and risk. The strengths highlighted include lower labor cost, recent relaxation of government regulation and SSS’s experience writing telecommunications software. Labor costs are significantly lower in India than in the United States and the quality of the work is comparable. Lower labor costs can help increase WWT’s profit margin. The Indian government remains interested in software, which has made it easier for foreign firms to get government approval required to invest in a joint venture and to obtain favorable import tariffs for equipment. WWT speculates it will be able to import software equipment at a 15% tariff, which is 45% lower than other industries. In addition to these benefits, there are some...
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