Who would lead in a marriage of equals?

Who would lead in a marriage of equals?
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First Published: Mon, Aug 18 2008. 10 48 PM IST

Updated: Mon, Aug 18 2008. 10 48 PM IST
Does teamwork really work when it comes to big business? Bertelsmann AG and BP Plc. have reason to think not. Both have seen their big joint ventures (JVs) unravel in a rather public manner.
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A clash of cultures plagued German media firm Bertelsmann’s 50:50 tie-up with the Japanese Sony Corp.The two partners in Sony BMG Music Entertainment fought almost from the start over who would run the group and the JV soon began to lose market share. Now, Bertelsmann has backed away from the music business altogether.
For BP, the problem is one of ambition. The oil firm’s Russian partners want to grow OAO TNK-BP Holding outside of Russia and the Ukraine. But that might bring it into competition with BP. The atmosphere is now so tense that chief executive Robert Dudley has fled Russia.
Such failures haven’t deterred Tesco Plc., the UK supermarket giant, to team up with the Tata group in a franchise agreement. But this marriage looks designed to get around India’s restrictive rules on foreign retailers. Relax the rules, and it’s likely they will want to go their separate ways.
Tie-ups aren’t always a recipe for discord. Mining and oil companies have long histories of JVs. Even when the partners are competitors, ventures can work—so long as it’s clear which side is in charge. BHP Billiton Ltd and Rio Tinto run a successful copper venture in Chile despite being locked in a bitter bid battle in London, because BHP unambiguously runs the mine.
Sony BMG and TNK-BP might have had fewer problems if either side had owned a simple majority of the venture. Tesco shareholders might appreciate a little more clarity too. The thing about supposed marriages of equals is that one side usually comes out on top.
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First Published: Mon, Aug 18 2008. 10 48 PM IST