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Alliance management at
Forbes Marshall
Group 9
Oshin Vijay Kumar PGP/17/028
Rathod Jignesh Divyenbhai PGP/17/037
Tarang Shrikant Doifode PGP/17/38
Sama Shaily Kujur PGP/17/040Sushant Kumar PGP/17/053
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Brief introduction of Forbes Marshall
1926J.N. Marshall started supplies Textile
accessories textile mills in Ahmedabad
1946Started alliance with Spirax Sarco to
market Spirax Sarcosproducts in India. Thanks to
extraordinarily success of Durius Forbes, J.N.
Marshalls nephew, FM was able to sell much
more than what Spirax initially estimated whichpaved the way for the oldest alliance of Forbes
Marshallwith Spirax Sparco
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Spirax Marshall One of the oldest alliance of Forbes Marshall
Due to many environmental changes, form of Alliance also changed
accordingly Product category : Steam Engineering solutions
Phase 1 :Initial Joint Venture from 1946-1957
Initially, Spirax will produce products and products were exported to India
Forbes Marshall will be responsible for sale of Spirax Sarcosproducts During the course, Forbes Marshall developed stronger capabilities in Sales
and Distribution in India
Phase 2 : 1958-1980s
Changes in economic environment and Government policy lead to change in
the nature of the JV. Spirax Marshall starts manufacturing facility in India, Spirax acquires 51%
stake in JV
Due to closed nature of Indian Economy, alliance becomes a lull in terms ofexchange and interaction
In 1980s, another change in the regulation(FERA), JV form changes againJVconverted into 40:60 between Forbes Marshall and Spirax Sarco
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Spirax Marshall (Cont.)
Phase 3Post liberalization eraafter 1990s:
Post liberalization, the profits of the JV increased
However a roadblock occurred since Spirax Sarco felt it did notreceive adequate share of the Joint Venture
Successful negotiations lead to agreementFM retains operationalcontrol, JV becomes a 50:50 venture from 40:50 Venture
Important aspects affecting the Joint Venture:
Environmental changes
LeadershipNaushad Forbes made conscious efforts to strengthenthe alliance in 1980s
Realization of synergy through JV for both the parties
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Tie up with Cochran Boilers
Product : Steam boilers
Cochran Boilers, which was a leader in boiler
industry, was introduced by Spirax Sarco to FM
Cochrans agents in India were nationalized
and hence Cochran was looking for partners in
India for its product sells in India
Here environment factor becoming catalyst for
the alliance
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Alliance with Vyncke
Product : Specialty boiler for waste fuels
1999Initial contact
2006/2007Formal decision on alliance with Vyncke
FMs strengths in technical sales was utilized by Vyncke,FM adds another product in its portfolio
Factors leading to alliance
Strong leadership interaction
Possible synergy effects due to core competency ofeach other were complementary
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JV with Cambridge Instruments
Product : Measuring Instruments
1960sLocal JV was established for manufacturing ofCambridge Instruments products
Eventually JV was dissolved due to repeated
acquisitions of Cambridge instruments whichultimately was acquired ABBcompetitor of ForbesMarshall.
Another JV with Polymentron for the same product
category eventually leading to JV with Hach ultraAnalytics due to Polymentrons acquisition by Hach
Both the JVs were Responsible for making differentmeasuring products
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Alliance with Krohne Messetechnik
Product : flow meters
1970sFM makes its own magnetic flow meter
1982Krohne was identified as a potential partner to keepFM at cutting edge technology
1984After regulatory delays, Krohne Marshall jointventure established
JV produced vortex flow meter for India as well as for theworld market
Environmental factors(regulation) in this case became a
hurdle for the joint venture As intended, FM benefited from the superior R&D
processes of Krohne Messetechnik
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JV with Arca Regler
Product : Specialty control valves
Another candidate for the alliance for this product categorywas Samson, was however not pursued since Samson was acompetition for Spiraxoldest alliance of Forbes Marshall
1985Arca Regler JV formalized Initially , technology from Arca Regler were transferred
however, further transfer did not occur during several yearsfrom Arca Regler to JV
Despite that, Forbes Marshall continued to maintain
dialogue with JV partner and developed its products on itsown
2008However, looking at the growth of JV, Arca signedMoU and increased stake in JV from 33.35% to 50%
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Case of Codel
Product :Emission Monitoring equipment
Earlier, Ametek and Maihak were alliance and both failed
1997-98rapport based informal partnership with Codel
2007Formal JV with Codel
Unique Features about this alliance
Codel itself approached Forbes Marshall for alliance partnership
Codel was significantly smaller company than the other
companies with which FM had alliances FM chose to go for acquisition with equity arrangement due to
its cultural fit, size and value addition in FMs product portfolio
instead of just keeping it as an alliance
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Value Creation
Value
Creation
AddingVolume
Decreasingcost
Differentiation
ImprovingInd.
attractiveness
Normalizingrisk
Gainingknowledge
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Benefits of Alliances in Nutshell for FM
Timeline 1946 1980 1985 2007 2007 2009
Company
Spirax Krohne Arca Reglar Codel VynckeVyncke
Energieteciek
Steam
Engg.
Flow
meter
Control
valves
Emission
&
emission
monitoring
BoilerBiomass
energy
Marketing/Sales Y
Logistics Y
R&D Y Y
Management andcontrol
Y
Market Entry Y Y Y Y Y Y
Manufacturing Y Y
New Technology Y Y Y Y Y Y
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Alliance vs. AcquisitionsLook before you Leap - alliance provides
less riskier option in new markets
Riskier compared to Alliance
Easier to form an alliance based on
capabilities
Requires capital requirements for
acquisitions
Difficult to manage partnerscost of
managing alliances
Control is acquired and hence no issue of
managing partners, however, cost of merger
still exists
Cultural fit sometimes may not be required Cultural fit is extremely important for a
merger to be successful
Less control and risk of break up, also
movement of Human Resources becomes
and issue dues to different priorities of
alliance and parent companies
Control is with the acquiring firm
In case of Forbes Marshall, due to its size(and hence its ability
to generate capital) , its capabilities, risks involved with
uncertain environmental factors, etc. were the reasons why
Alliance was more attractive option than acquisitions
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JV Management Model
Forbes MarshallFinanceMIS
HR
JV
MfgEngineering
Marketing
JV3
MfgEngineering
Marketing
JV2
Mfg
Engineering
Marketing
JV1
Mfg
Engineering
Marketing
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How Alliances Managed by Forbes Marshall
Aspects Steps Taken by FM
Managing Alliance Partners - Several meetings in a year to maintain
relationship
- Avoiding conflicting partners for
alliance
- Having patience with JV to become
successful(Arca Regler)
Managing Culture across Alliances - Employees at various levels in thewere sent to partner site for Training
New alliances - Role of leadership in finding out
alliance partner
- Learning from prior experiences,
Alliance formation became more
systematic and strategic
Apart from this, leadership of Forbes Marshall and their interpersonal skills become
important while managing alliances and with in house grooming program for
management positions, leadership skills required for managing alliance stemmed
from the practices of FM
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Thank You!