The benefits of the Grameen Group

Grameen Group

In entering into this joint venture, one of the primary benefits to the Grameen Group is overall improved nutrition in the country. According to Griffin and Pustay (2015), Grameen Group targeted to utilize the knowledge, expertise, and products of the Danone Company to help improve the eating habits and nutrition in the broad Bangladesh population. Bangladesh has a significant portion of its population involving in dairy farming (Datta, 2019). Consequently, a second benefit for the Grameen Group in this partnership is that the joint venture will help reduce poverty in Bangladesh by offering a reliable ready market for the local farmers. Also, the Grameen Group benefits in this joint venture by allowing for an opportunity for job creation in the country by the Danone company. In carrying out its operations and as a part of the deal with the Grameen Group, Danone uses minimal automation to maximize job creation in the country (Griffin & Pustay, 2015).

Like the Grameen Group, Danone company, being a for-profit organization, has several benefits to reap from this joint venture. One of these benefits will be having better information about the local consumers which is essential for the foreign company to understand the consumer needs and tastes and preferences, and consequently tune its business operations to align with these consumer needs and preferences. Grameen Group has a detailed understanding of the consumers in Bangladesh and will help Danone to understand the local market as the former is well aware of the consumerism behaviours of the local customers. The second benefit for Danone in this joint venture is an informed understanding of the legal system in Bangladesh. In its many years of operation within the Bangladesh environment, the Grameen Group has gained an in-depth knowledge of the legal and the political environment of the country. The Grameen Group will help the French company in this joint venture to master all the necessary aspects of the political and legal environment in Bangladesh for good business operations (Griffin & Pustay, 2015). These benefits are the primary reason Danone chose to participate in the joint venture.

Critical Managerial Considerations when Preparing to Enter a Joint Venture

In preparing to enter into a joint venture, the management of an organization has to make several critical considerations. One of these considerations is the government policies and the overall stability of the political and legal systems in the environment (). The success of the joint venture significantly depends on the stability of the local business environment, and all these elements are essential in determining the stability of a nation’s business environment. Besides the wide national considerations mentioned, firm planning to enter into a joint venture should also consider the compatibility of the local firm, its products, and the potential for learning from the joint venture (Griffin & Pustay, 2017). From the perspective of the product, a firm should choose a partner whose products are complementary but not competitors of its products. The complementary nature of the local firm ensures that the foreign firm is not having challenges trying to cooperate with the local firm in one market while competing with it on another market. To understand the relative safety of the partner, a firm must ensure to have detailed information about the potential partner. A firm should, for example, study the history of success or failure of previous joint ventures of the potential partner (Griffin & Pustay, 2017). The potential for learning from a joint venture must also be an essential consideration when planning to enter into a joint venture owing to the competitive nature of the modern business environment. A local firm that can offer the potential for learning new ways to improve marketing or employee productivity among other areas can be considered suitable than partners who may not provide this potential to learn and improve the performance of each of the parties in the joint venture (Griffin & Pustay, 2017).

Pitfalls of Joint Ventures

From the perspective of each o the parties in this joint venture, there are potential pitfalls of the joint venture. For Danone, a possible pitfall could be that the Grameen Group chooses to change the terms of the agreement. As a considerable portion of the workforce of the joint venture incomes from Bangladesh, over time, the Grameen Group can have a professional workforce with the knowledge to produce the brands produced by the joint venture. If that were to happen, Grameen Group could choose to leave the joint venture and reap all the benefits. Given the cases of how Danone has fared in its joint ventures in China and India as explained by Griffin and Pustay (2015) if such a situation were to arise Danone would lose and have to surrender its involvement in the joint venture. Grameen Group could also decide to conceal some of the useful information for the successful performance of the joint venture, and that would be another disadvantage to Danone in this venture. On the side of Grameen Group, a possible pitfall is that Danone could decide to change the joint venture terms in a way to favour itself. Such change in business terms could come at a disadvantage to Grameen Group, especially if the new terms are not easy for Grameen Group to comply with (Griffin & Pustay, 2017).

Danone – Wahaha Joint Venture

In the joint venture between Danone and Wahaha in China, the primary benefits that Danone sought to gain are similar to those it gained from its joint venture with the Grameen Group in Bangladesh. According to Griffin and Pustay (2015), Wahaha is the largest marketer of bottled water in the Chinese market. Consequently, entering into a joint venture with Wahaha Danone managed to tap into the extensive ready market for soft drinks that recognize Wahaha as an outstanding brand. Also, Danone could have access to use consumer information about consumer behaviour and about the legal and political system in the country, all of which are necessary for successful operation in the market. As Wahaha must have had good distribution channels in the local market, Danone also joined the venture to benefit from these distribution channels when taking its products to reach the end consumers. For the local company, Wahaha chose to enter into this joint venture to benefits from the expert knowledge for product manufacturing, marketing skills, and also financial benefits (Griffin & Pustay, 2017). Wahaha’s employees could gain a lot from the joint venture from working together with the experts in Danone, and the company could also enhance its overall financial performance by leveraging the financial clout brought into the venture by Danone.

Avoiding the Problems in Joint Venture

The joint venture between Wahaha and Danone did not last to its initial plans. The failure resulted because Zong Qinghou, the founder of Wahaha, ended up forming 20 soft drink brands similar to those that were made by the joint venture (Griffin & Pustay, 2017). Such a move by Wahaha’s founder was in violation of the joint venture agreement, essentially because the 20 brands outside the venture were targeting the same market that the products of the joint venture targeted. The details of this case show that there are several measures that Danone could have adopted and implemented to prevent such problems in both China and India. One of these measures is that Danone should have utilized its financial capability aggressively and ensure that the joint venture’s products were reaching out to all the potential market. From the perspective of Wahaha, Danone was not serious in making serving this market, and this prompted the local company to develop the extra brands. If Danone was aggressive enough in serving the Chinese market, possibly these problems could not have occurred. A second important measure that could have helped Danone avoid the issues in China and India could have been ensuring full commitment to each of its joint ventures not just in China and India, but everywhere. Zong indicated that his move to acting contrary to the terms of the joint venture was because Danone had in the past operated unfaithfully in other joint ventures, the cases of Mengui dairies and the Hui Yuan company being notable examples. By committing to the full in each of its joint ventures, Danone could have to build a positive image about itself which could have significantly contributed to successful joint ventures. Lastly, Danone should have ensured to complete all essential activities of the move in time. For instance, in the case of Wahaha brand name transfer to the joint venture Danone waited for so long to make such a request and this is why it could not win the case between it and Wahaha for violation of the joint venture terms. Acting promptly to all-important joint venture-related matters could help Danone resolve some of these challenges before it was too late,


Datta, A.K., Haider, M.Z. & Ghosh, S.K. (2019). Economic analysis of dairy farming in Bangladesh. Tropical Animal

Health Production, 51, 55–64.

Griffin, R. W., & Pustay, M. W. (2015). International business: A managerial perspective. New York, NY: Pearson.

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