Western Regions Gas Pipeline Company: The Joint Ventures
(5 pages of text)
In August 2015, the general manager of Western Regions Gas Pipeline Company was gazing at a natural gas pipeline map in his Beijing office. The multinational natural gas pipeline (MNGP) would deliver natural gas from the Republic of Timur to China through the Republic of Frespirit. The construction of the pipeline was at the planning stage. To construct and operate the MNGP, Western Regions Gas Pipeline Company was legally required to set up a joint venture with a local company in each of the transit countries. However, the construction period for the MNGP was extremely tight, and the relationships between the stakeholders were quite complicated. How to exercise control in the joint ventures to ensure the smooth construction and operation of the MNGP had become a difficult issue.
This case can be used in international management and strategy courses at both the undergraduate and graduate levels, to discuss the means of control in joint ventures (JVs). The case considers the different characteristics of project JVs and traditional JVs in terms of scope of activity, time frame, preferred form of management control, performance measures, importance of cultural fit, staffing, equity structure, total investment, the importance of the construction stage, and financing model. Working through the case will give students the opportunity to do the following:
- Explore the factors that influence a parent company’s control of an international JV.
- Consider how multinationals design the mechanisms and organizational structures of JVs in different environments.
- Understand how control may evolve in a company that integrates both a construction stage and an operating stage.
- Recognize some of the differences between project JVs and traditional JVs.
China; West Asia, Large, 2015
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