Danone’s Wrangle with Wahaha

Essay 1:

Wahaha Group and Danone corporation entered a joint venture where they alleged that Wahaha had formed various businesses outside the joint venture, infringing its rights. Therefore, these unlawful and non-compete agreements use of the Wahaha brand were alleged to violate the agreements made. Hence, it is significant for multinational corporations to show their commitment to working together and respect the management styles and local cultures when entering a foreign partnership. Following the issues by Wahaha corporation, any multinational corporation willing to engage in a joint venture in the kingdom of Saudi Arabia needs to show its commitment styles to settle similar challenges after thinking on the same matter (Fred & Jonathan, 2018). Besides, a foreign corporation entering into a joint venture with a domestic company in Saudi Arabia should demonstrate its commitment to successfully working together by respecting the cultures and management styles in Saudi Arabia (McFarlin & Sweeney, 2014). Therefore, such corporations must employ efficient and effective communication styles to solve such issues easily. The corporation needs to show commitment and respect for local management and cultural styles to have open lines of communication before the contract establishment. Corporations need to understand their potential partners’ cultural differences and management styles before the joint venture to have clear procedures for dealing with challenges. Finally, understanding the cultures and management styles in Saudi Arabia helps international corporations to operate while avoiding disputes successfully.

Consequently, various decisions must be made when entering a joint venture. For example, strategic and routine decisions, programmed and non-programmed decisions, and policy and operational decisions. The parties must be responsible for each other, particularly when meeting the set responsibilities. Each corporation must focus on what it can do best while delegating some of its obligations to other corporations. Firstly, it is to determine whether or not to sign into a joint venture agreement giving way for a plethora of decisions. That is to determine the rate of influence Danone and Wahaha corporations will have over other organizations and stipulate the responsibilities of each party on when they will meet the set responsibilities. Besides, one will also need to pick the business sectors that the joint venture will focus on (Shankar et al., 2012). For example, if either corporation will be active or one will focus on sales and the other on production. Hence each corporation needs to focus on its best and become more efficient by delegating some of the obligations to other corporations. When one plans to sell items using both names, it is important to figure out how branding will work. Since Danone corporation had a joint venture with Wahaha, it is clear that Danone will seek to safeguard its requirements and interests within the context of the established relationship and that corporate structure. Hence if not safeguarded, they may bring conflicts in managing their relationship.

 

Essay 2

Case Study on Cultural Decision Making: The Danone’s Wrangle with Wahaha

Cultural differences refer to practices, languages, behaviors, beliefs, and expressions deliberated to be distinctive to affiliates of a particular race, ethnicity, or national origin. They determine the success or failure of new ventures into different markets and cultures (Luthans & Doh, 2018). A Joint venture is a contract between two enterprises, typically one domestic and one foreign, to labor together to achieve specific goals with the proprietorship proportions quantified in an abiding agreement. This discussion highlights how an international company might come into a joint venture with a domestic company in Saudi Arabia and the vow to work jointly, respecting the Saudi Arabian management style and culture.

Joint Venture between International Company and Domestic Company in Saudi Arabia

First, in Saudi Arabia, a constitution governs joint venture entities. An international company should solely commit to working with a domestic company by adhering to the body that bids agreements between parties involved in joint ventures. The authority in Saudi Arabia discards articles that differ significantly from the accepted articles usually used without legal frameworks (Fulton, 2020). Furthermore, the authorities have always mandated that the facilities of a business’s article take superiority above the ones in a joint venture contract if the facilities of both agreements conflict. Second, the joint venture contract includes described necessities regarding the transfer of shares. Saudi Arabia is governed by Islamic law, and the transfer of shares will only be allowed when the joint venture is declared insolvent or when the company attains certain milestones (Tlaiss & Waqfi, 2022). An international company committing to these regulations shows respect for cultural values and systems. Conversely, the Saudi Arabian government allocates a more considerable value to equity concerns compared to authorities in the western courts; hence where they feel one party is unduly underprivileged on how the cost of shares is calculated, Saudi Arabian government amends the value of shares to be computed using contract agreements to pull out the uneven treatment to the companies involved.

Third, an international company entering a joint venture with a Saudi Arabian domestic company should note that Saudi Arabia puts restrictions on employing expatriates to lower the country’s reliance on the workforce from foreigners by making it more strenuous to get work licenses and residency (Elsharnously & Elbanna, 2021). Furthermore, Saudi Arabia runs a program aimed at increasing the employment rate of its citizens through the private sector called the Saudanisation program. This program sets thresholds whereby the private sector enterprises are ranked by the percentages of people employed. Businesses ranked low are discriminated against receiving government tenders and services, while those rated highest in hiring Saudi Arabian nationals are provided government benefits.

Types of Decisions I Would Need to Make

I would need to make strategic decisions. They are decisions that govern policies within a company or firm. Strategic decisions are taken by mid-level and top management. Strategic decisions enable the learning process within a company improving the company’s outcomes and performance hence reducing strategic failure (Biygautane et al., 2018). There would be no bias in the decision-making process in the joint venture between international and domestic companies in Saudi Arabia. For example, we have the representative bias whereby one making a decision equates two conditions wrongly because of the similarities perceived. Ensuring there is no bias encourages openness for both parties, that is, partner businesses and their leaders. My decision is informed by the big five personality theory, which has been tested across cultures and proven true (Botone & Grama, 2018).

Conclusion

In conclusion, management style dictates how businesses should be operated within a given country. Companies entering a joint venture should strictly adhere to the cultural expectation of a certain country and the regulations that abide terms and agreements of running the business. Doing this will ensure that the company is culturally acceptable and thrive in a merger or new operating environment away from its known location.

 

Essay 3

Danone’s Wrangle with Wahaha

            One of the issues that led to a conflict between the two companies was the lack of understanding companies. This resulted from indirect investment in other organizations instead of directly investing in the companies. The two corporations bore the thought of being misled and misunderstood in the merger due to the unjust allocation of the shares. Secondly, the issue resulted from the move by Wahaha Company to move its brand to form a merger with Danone Company (Caputo et al., 2018). Wahaha Company was not aware of the legal ramifications of the propositions of the company. When the organization used its brand as a company-owned personal possession, it brought about a lot of conflicts.

Familiarizing with each organization’s roles in the partnership was a great challenge since the Wahaha Company emphasized the personal utilization of its brand rather than the general results. There was also a hardship when it came to familiarizing myself with the responsibilities associated with making joint investment plans for revenue increment. Wahaha failed to observe the legal difficulties surrounding the union’s awareness (Luthans & Doh,2018). The other party of the merger was repeatedly blamed and chastised, making Dahone Company’s performance depreciate.

The organizational and national cultures have a huge impact on the perspectives of the venture since the two companies were formed from different corporate cultures before they eventually merged. Wahaha and Danone were located in different nations, whereas the former was based in the United States and the Latter was based in China. This led to the development of a religious schism between the cultural beliefs of the companies, given that they were located in different nations where each had its own set of beliefs (Luthans & Doh,2018). Therefore, either organization would have assumed that its culture supersedes the other.

As a leader, the most effective method of handling a conflict is the diagnosis, which starts with assessing the situation. Leaders ought to ensure that they do not sidestep the problem at hand. They, therefore, ought to ensure that they eliminate the conflict. There is a need for a leader to ensure that they do not compete for popularity and that not all individuals will agree. Before the implementation of the action, there is a need for a leader to ensure that proof of wrongdoing is presented (Luthans & Doh,2018). It’s crucial to keep off unnecessary conflicts and act instantly before a situation gets out of hand.

               

 

 

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