Huiping Li, Anisfield School of Business, Ramapo College of New Jersey, USA
Suli Zheng, China Jiliang University, China
Xiaobo Wu, School of Management, Zhejiang University, Hangzhou, China
ABSTRACT
The case describes the role of Xizi Group (Group) in building core competence by forming a joint venture with Otis (the “JV”), one of the largest elevator companies in the world. Initially Chinese partner was the majority owner of the JV. Five years after the establishment of the joint venture, the Otis Elevator Co. the foreign party bought 50% of the equity from its Chinese partner, giving it an 80% ownership interest in the joint venture. In order to fully utilize such competitive advantage, Group also negotiated with Otis, to become its supplier to the joint ventures. Fuxi, one of the Group’s subsidiary filled this role.
The Chinese parent, the foreign parent, and the JV claim that the relationship among them has been cooperative. Such partnership allows the Group to have access of Otis to the most updated technology and first class business management systems. Such learning process did not end at the joint ventures. The best business practices were introduced to the Group and other subsidiaries, as well. However, the JV believes that the Fuxin has not been able to lower the price enough to satisfy the competitive the pressure of the JV. Fuxin realized that by prioritizing the JV, Fuxin has lost some of other viable business. Group feels that it is important for Fuxin to have a sense of urgency to satisfy the JV’sdemand, continue to serve the JV. How can this business evolve to all parties satisfaction is the center issue of the case. It will be good to guide students to understand the benefit of the JV, and appreciate the complexity of the customer supplier relationship and come up with some viable recommendations.
