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Cult Diff Corning & Vitro Case IB410 3/10/13

Cross-Cultural Conflicts in the Corning-Vitro Joint Venture This case presents the 1992 joint venture of Corning Inc. and Vitro; two companies with shared corporate cultures, customer-oriented philosophies, and a long history of successful joint ventures and globalization. The abundance of parallels between the two companies led to the rational assumption that the joint venture would be of great success. Unfortunately, after only 25 months, the alliance was dismantled and was noted as being, a marriage made in hell by analyst, Francisco Chevez. (Okleshen) The demise of the joint venture was due to cultural differences; differences that had not been considered before the venture began and ultimately, differences that could have been avoided if proper analysis and consideration of the culture had taken place. This case study identifies and explains Cornings strategic predisposition of the joint venture, the importance of understanding culture prior to an alliance, how to overcome differences to foster success, and the impact of public statements on a joint venture failure. Corning Inc. has formed nearly 50 ventures with only nine failures, proving the companys success in joint venture alliances; so what went wrong, what was Cornings strategic predisposition toward a joint venture with Vitro? A failure to understand the Mexican culture by the American Corning firm was the main downfall to the joint venture; therefore the predisposition Corning displayed is ethnocentric. To better understand this predisposition, it is important to understand the definition of culture. Culture, as defined in the textbook, is the acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior. (Luthans & Doh, 2012)

Within the Corning and Vitro joint venture it was soon discovered the two companies did not share the same decision-making styles and their marketing work arenas were from different planets. Cornings decision making style could be described as low power distance from Hofstedes Cultural Dimensions; the American firms structure is flatter and decentralized while Mexicos Vitro company exercised a high power distance structure, in which high emphasis was placed on bureaucratic and hierarchical structure. Corning soon noted that these differences in management and decision making styles deprived both companies of the flexibility to make fast management decisions, decisions that were necessary in the business climate of both countries. (Okleshen) In the face of marketing the two companys products, it was discovered that Vitro used a slower, less aggressive approach that was perceived by Corning to be too polite and wasted time. Corning practiced a quick-action and aggressive approach, one that had been adapted to from decades of competition. (Okleshen) Understanding cultural differences before deciding on an alliance could mean the difference between absolute success and utter failure. Through the Corning and Vitro failed alliance, Corning now understands the importance of cultural knowledge. Analyzing and understanding the cultural differences from Hofstedes Cultural Dimensions, Corning could have prevented the failed alliance with Vitro. With little investigation it is clear that Vitro values a high power distance structure with high uncertainty avoidance, Vitros structure follows high collectivist, feminine, centralized, cooperation, safety, and high organizational loyalty. Corning, an American based firm is essentially the opposite, however it has been realized that fully understanding the culture of a potential partner before deciding on an alliance can lead to great alliances that can be significantly beneficial to the operations of a company if they are done carefully and selectively. (Okleshen) Corning and other MNCs must acknowledge and know

the connections in philosophy, goals, history, and objectives of both firms in order to formulate successful alliances. Prior to the dismantling of the Corning and Vitro alliance, Corning could have made negotiations and adjustments with Vitro to overcome the differences. Corning should have noticed the management issues and marketing differences, the companies then could have agreed on changes to marketing, management styles, and accounting systems that better align with both firms practices. By doing these negotiations and making adjustments, the Corning and Vitro joint venture would have been more successful. It would have also been a good idea to use an interpreter or mediator to help the two companies overcome their cultural differences and any misunderstandings that could have occurred during negotiations. The two companies decided to maintain a relationship and agreed to mutually distribute each others products. This decision was made because Corning and Vitro both realized an opportunity to continue working closely with one another, possibly in hopes of one day renewing the joint venture. The companies recognized their cultural differences and Corning ultimately gave Vitro back its $130 million initial investment after the downfall of the alliance. Cornings public statements over the failure of the joint venture revolved around the timeliness in the decision making process of Vitro; it simply was too long and slow for the American Corning company. Vitros president Eduardo Martens acknowledged, Business in Mexico is done on a consensus basis, very genteel and sometimes slow by U.S. standards. (Okleshen) His statement made it quite clear why the joint venture was a flop after only 25 months. Harsh public statements by either company about the failure of the alliance could result in removing opportunities for the future or result in hard feelings from the companies and a loss of distribution for each others products.

This case presents a learning opportunity for companies wanting to expand into a global market through joint venture. It exemplifies the importance of understanding the culture and management practices of both companies within the joint venture prior to entering. Corning also learned its lesson from this failed alliance and has noted that both foreign and domestic alliances require additional skills and more management time. (Okleshen) With additional research into the failure, Corning hopes to identify why the cultural differences with Vitro were too strong to overcome. (Okleshen) Which only makes one wonder, is there hope for a renewed joint venture for the two companies?

Works Cited

Okleshen, C. (n.d.). Cross-cultural conflicts in the corning-vitro joint venture. Retrieved from http://mssu.blackboard.com/bbcswebdav/pid-1380589-dt-content-rid1994759_1/courses/1779_201310/Corning_Vitro Case.pdf

Luthans, F., & Doh, J. P. (2012). International management culture, strategy, and behavior. (8th ed., p. 108). New York: McGraw-Hill.