forbes marshall.pptx

8/10/2019 Forbes Marshall.pptx

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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!

forbes marshall.pptx

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