Brief Integrative Case 1 Cross-Cultural Conflicts in the Corning–Vitro Joint Venture Vitro is a Mexican glass manufacturer located in Monterrey, Mexico. Vitro’s product line concentrates on drinkware but includes dozens of products, from automobile windshields to washing machines. Vitro has a long history of successful joint ventures and is globally oriented. Corning Inc. is most famous for its oven-ready glassware; however, Corning has diversified into fiber optics, environmental products, and laboratory services. Like Vitro, Corning has a long history of successful joint ventures and globalization.
Vitro and Corning share similar corporate cultures and customer-oriented philosophies. After realizing such similarities and looking to capitalize on NAFTA by accessing the Mexican market, Corning Inc. entered into a joint venture with Vitro in the fall of 1992. The similarities in history, philosophy, culture, goals, and objectives of both companies would lead to the logical conclusion that this alliance should be an instant success. However, as Francisco Chevez, an analyst with Smith Barney Shearson in New York, said, “The cultures did not match . . it was a marriage made in hell. ” As history reveals, Corning and Vitro dissolved the joint venture 25 months after the agreement. Both companies still have an interest in maintaining the relationship and continue to distribute each other’s products. A further look at the strategic history of Corning and the joint venture between Corning and Vitro will lead to a better understanding of the difficulties that are involved in creating and maintaining foreign alliances. A more in-depth investigation also will reveal the impact of culture on business transactions.
The Strategic History of Corning Corning Inc. has been an innovative leader in foreign alliances for over 73 years. One of the company’s first successes was an alliance with St. Gobain, a French glassmaker, to produce Pyrex cookware in Europe during the 1920s. Corning has formed approximately 50 ventures over the years. Only 9 have failed, which is a phenomenal number considering one recent study found that over one-half of foreign and national alliances do not succeed. Over the last five years, Corning’s sales from joint ventures were ver $3 billion, which contributed more than $500 million to its net income. Corning enters into joint ventures for two primary reasons, which are best explained through examples of its past ventures. The first is to gain access to markets that it cannot penetrate quickly enough to obtain a competitive advantage. Corning currently has multiple ventures that exemplify market penetration. Samsung–Corning is an alliance in which Corning provided its distinctive competency of television tube production while Samsung provided expansion into the television market.
Corning was able to achieve a strong market share in the Asian market, with sales in excess of $500 million. The second reason is to bring its technology to market. For example, the strategic alliance of Corning with Mitsubishi led to the creation of Cometec Inc. Corning produces the ceramic substrates in automotive catalytic converters. The venture employs coating technology developed by Mitsubishi that extends Corning’s business into stationary pollution control. Corning reports that the venture is quite successful. Corning’s CEO, James R. Houghton, summarizes the ajor criteria for deciding whether an equity venture is likely to succeed as follows: 1. You need a solid business opportunity. 2. The two partners should make comparable contributions to the new enterprise. 3. The new enterprise should have a well-defined scope and no major conflicts with either parent company. 4. The management of each parent firm should have the vision and confidence to support the venture through its inevitable rough spots. 5. An autonomous operating team should be formed. 6. Responsibility cannot be delegated. Houghton also emphasizes that the most important imension of a successful joint venture is trust between the partners. Corning’s track record indicates that it has been able to establish and run a large number of joint ventures successfully. What went wrong with the recent Vitro venture? Vitro and Corning seemed to have similar operating procedures, and Vitro’s product line complemented Corning’s consumer business. Therefore, how could a seemingly perfect alliance fail so miserably? Probing deeper into the Corning–Vitro joint venture reveals the important role that culture may play in international alliances.