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Inter-Optics Plc’s Joint Venture in India

Lessons learned from the first stage of the project

Inter-Optics plc is a company based in Northern Europe. It has been successful over the years in the production of contact eye lenses, spectacles, and in the manufacturing of other eye-care products. This company has found a good market for its products in the European Union. The company has been in the course of expanding its markets into Asia and the Middle East. This is to be achieved through the exploitation of this new market.

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For the company to enter successfully into the new market, it has formed a partnership with one of the most successful companies in the region that deals with the same line of work in the provision of a wide range of eye-products. This company is based in India and is called Sign Optical Industries (SOI).

It can be clearly seen that it is necessary for a company to have a good relationship with other companies both locally and on the international scene (Wit and Meyer, 2010). Partnerships are important since they provide a forum for exchanging ideas. This presents a good opportunity for companies to share information and also to formulate new ideas that are creative and innovative in nature that act as a base for solving the problems that a company or an industry may be facing at a given time (Bidgoli, 2006).

It is easier for businesses to grow and expand through the formation of the partnership. This expansion can be through the formation of mergers and acquisitions that lead to companies coming together in order to achieve a given goal or objective. In this case, Inter-Optics plc formed a partnership with Sign Optical Industries (SOI) of India. SOI is one of the best companies in the region that deals with the production and manufacturing of eye-care products in the country and within the entire region.

Through its high-quality work, the company has managed to gain a good reputation globally. Coming into partnership with such a company is advantageous. This is because the chance of success of the venture of expansion is very high (Cross, 1997). Inter-Optics are well aware of this fact and that is why they have invested a lot of money in the construction of a manufacturing plant. The construction of this plant is estimated to cost around 25 million Euros. This is a lot of money to spend especially in the expansion into a new market.

Having a joint venture especially while entering a new market is at times viewed as a form of minimizing the risks (Cross, 1997). This is because the costs of the expansion are shared among the parties that are involved in the joint venture. This reduces the capital share that is required to start the venture. If the expansion fails to become successful, the losses are also shared equally depending on the terms which the parties agreed on.

If the same case was experienced on a company that was working on its own, it would then encounter all the cost of expansion on its own which is very expensive. It would also face all the losses on its own and this may even cause the company to be unsustainable in the long run thus will leave the market. Inter-Optics is well aware of these facts and that is why it entered into a partnership with SIO. This was a move that aimed at maximizing the chances of success and profitability while entering into the new market (Lou, 2010).

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Another lesson that we can learn from Inter-Optics is the formulation of objectives while starting off a new project. Objectives are key elements that determine the success or failure of any project (Camilleri, 2011). This is because they act as rules and guidelines which have to be adhered to in the course of the project. The main objective of the joint venture between Inter-Optics plc and ISO is to manufacture and produce a wide range of eye-care products that could be sold within the region and other neighboring countries. Looking critically at this objective, it is evident that the companies say that the region has good potential to support the demand for their products.

Therefore, through their joint venture, they can be able to produce the products that are required by the consumers of the region. In the process, they will be able to satisfy the needs of the customers in the region, a move that will enable them to earn consumer loyalty. The presence of loyal customers is a good indication of the success of a venture and the company is therefore assured of having a high chance of being sustainable in the market even in the long run (Biddle et al., 2003).

For effective and efficient implementation of the objectives, Inter-Optics and ISO have divided the project into different parts and phases. The project has been divided into the following four units; unit A (Lens technologies), Unit B (Spectacle frames), unit C (eye-care products), and unit D (Research and special projects). Each unit has to be completed within a specified time period according to the schedule of development.

Unit A, B, and C have to be completed within 15 months from the time which the project began. Failure of this will be an indication of the project not being on schedule, a factor that might make the venture not to be successful. Unit D, on the other hand, is a long-term project therefore it should be focused on once the company has become settled and is stable in the new market.

Having these objectives in place is essential for the growth and development of any venture. This is because they act as rules and guidelines that have to be followed to ensure that the company becomes successful in the industry in the short run and in the long run. Setting up of mini-targets which have to be achieved in the course of development is also essential. These targets can be used to measure the level of development that is being experienced by the company in the process of development (Callahan, 1997). Achieving these targets within the stipulated time period indicates that the progress of development is good. On the other hand, an investigation should be conducted if there are deviations from these expectations.

Therefore, before the commencement of the second stage of the project, Inter-Optics need to ensure that the progress of the project is according to the schedule that had been set initially. Units A, B, and C need to be stable and operational before they can commence working on unit D. this is because units A, B, and C were short term achievements but unit D is a long term achievement of the venture. Inter-Optics should also ensure that the expenditure is in line with the budget and any deviations should be investigated.

Project approach that should be used in the second phase

The project approach that was used in stage 1 was fairly effective but in the course of its application, it suffered some minor setbacks. These setbacks made the project not to be on schedule as it was completed in 18 months instead of the projected 15 months.

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Due to this delay, an increase in costs was experienced. The initial budget was supposed to cost no more than 25 million Euros. However, by the time the project was complete, the costs had exceeded the budget by 240,000 Euros. This increase in time and costs can be attributed to poor planning techniques that were not effective and efficient in ensuring that the goals and objectives that were set are attained (Aribarg et al, 2010)

To avoid the repetition of these events during the second phase, it will be necessary to modify the project approach that will be used. To ensure that operations are conducted efficiently and effectively during the second phase, the project should be vision lead and outcome-driven. This will ensure that the vision, goals, and objectives that have been set by Inter-Optics and ISO are achieved by the time the project comes to an end.

This approach also ensures that there is a desired outcome from the project. The desired outcome should ensure that the products and services of the company are of the best quality and are consistent with the needs of the customers. This ensures consumer satisfaction, a move that will make the company have a good reputation in the region (Biddle et al., 2003). This will increase the demand for the products that are produced by the company hence the company will earn a lot of revenue. Having a constant cash flow will enable the company to be sustainable in the market by being able to survive in the short term and in the long term.

To achieve this, the project should follow the basic steps and procedures. It should be simple, measurable, attainable, and reliable and it should have a time limit within which it should be completed. This should be the first step for the approach while designing the project. The project should also have a good management model. It should incorporate program management, portfolio management, and project management.

The program management level should ensure that the project is aligned with the visions, goals, and objectives of the organization. This can be achieved by setting clear priorities of the project, factoring in the risks that might be involved, and ensuring that the project has good governance. The portfolio management level is concerned with closing the projects to ensure that they have a maximum value. It also ensures that there are good communication channels among all the individuals that are involved in the project and there is a flow of authority that follows a given chain of command. Every individual who will be involved in the project should be answerable to someone of higher authority.

The level of project management should ensure that all the requirements of the project are implemented within the stipulated time. The project should also have the desired outcome in terms of quality and should be completed within a certain given time.

The project team should be composed of members from both parties who have formed the joint venture. It should therefore be composed of members from Inter-Optics and ISO. These members should report to the senior engineer from Inter-Optics who in turn reports to the project manager from Inter-Optics. This chain of command should be followed to the latter. The members who will form the project team should be highly skilled and experienced in their respective fields. This will ensure that they will give proper direction and guidance to the people who will be working under them.

While selecting a principal engineering contractor, the project team should ensure that the firm that gets the tender is highly qualified and has a good reputation in the field. It should also ensure that the company that is awarded the tender has a lot of experience, especially in India. This is to ensure that the company is well aware of the risks and challenges it may face before the project commences. Such a company will therefore be well prepared for the task that lays ahead hence it will always be on schedule while working on the project. This will minimize the costs that may otherwise occur as a result of lagging behind as it was experienced during stage one of the operation.

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Having this approach in place will ensure that the project will be completed on schedule. This will be because the employees will be working under strict conditions of achieving the goals and objectives that have been set by the project team. Through the efficient communication channels, each employee will know his roles and duties which he has to perform to perfection. The workers can always ask for directions and clarifications because they know to whom they are supposed to report. This will increase their motivation and make them work even harder (Nicolini, 2000). This approach will also ensure that there is cooperation among the different units of the project.

It will also enhance teamwork among the employees and the project team. Through working together, it will be easier for the company to achieve its goals and objectives during the second phase of the project. This will ensure that the company is stable in the market and it has a wide range of eye-care products to meet the demands of the customers in the region. This will make the company have a good reputation in the region and be profitable in the short run and in the long run.

Terms and conditions for the tendering process

Inter-Optics need to review its tendering process. During the first stage of the project, the company which was awarded the tender for construction was not competent. Even though the company had a good reputation in Europe through its high-quality construction works, it did not have any experience in construction outside the region. The project team should therefore have taken this fact into consideration as it was essential to the success of their project.

They however ignored this fact and awarded Lindberg Systems B.V. the contract. The project commenced at a slow rate because the employees had not adapted to the weather in India. They were complaining of poor health conditions and unfavorable working conditions. As a result, the project was behind on schedule which was a huge blow especially since it led to unnecessary expenditures.

To avoid this in the future, inter-optics should an efficient tendering process in place (Gitman and Mcdaniels, 2008). This tendering process should identify and clearly state the requirements of the project that they want to put in place. This can be achieved by having in place a clear business case that contains all the details of the project. The company should also have a contract strategy that clearly states the roles of all the parties contained in the contract. It should also have an evaluation criterion that is transparent, free, and fair and lastly, it should state the specifications that are required from the companies that are bidding for the tender.

The company should then source the market and identify which companies meet the specifications that are required by their project (Hannagnan, 2007). They should do a background check for all the companies which fit their specifications. This will assist them in determining the strengths and weaknesses of these companies thus they have a rough idea as to whether or not the company can fully meet their requirements. This should form the basis of their pre-search criteria.

The company should develop an invitation to tender. An invitation to tender is the act of offering companies the chance to bid for a given tender. Once this step is complete interested companies will apply to be considered for the offer. From the companies which have applied, the project team should conduct a performance measurement that is aimed at establishing the strengths and weaknesses of these companies. The project team is also expected to evaluate the bid which the tendering companies have offered. After considering all these factors, the tendering team should award the tender to the company that best fits their requirements. In making this decision, the project team should be rational to ensure that the best and most effective company is awarded the tender (Ritter, 2000).

Once the tender has been awarded, the successful company should sign a contract agreement which contains the terms and conditions that will bind the two parties in the contract (Selwyn, 2006). The terms and conditions that are formulated by the company (Inter-Optics) are meant to ensure that its rights are not breached in the course of the contract and if they are breached the company will be in a position to be awarded damages from the other party. Inter-Optics will therefore have a chance to terminate the contract and sue for loss and claim unliquidated damages in the event of a breach of the tender contract. The terms and conditions should therefore have a clause for penalty and claims for unliquidated damages, a clause for exclusion and limitation, retention of title, and indemnity.

In the event when a contractor breaches the contract, the company will stand a better chance of suing for damages and being awarded compensation which should be in the value of the damage that was suffered. These terms and conditions will bind both parties into the contract and minimize the chances of either party breaching the contract. The company will therefore be eligible for damages once the contract has been breached. This will therefore ensure that it does not suffer losses of any kind due to the torts committed by other parties like it did when Lindberg Systems B.V. slowed down the first stage of the project. Inter-Optics should therefore develop strict terms and conditions which will prevent such events from happening in the future.

References

Aribarg, A., Pieters, R. and Wedel, M. (2010) Raising the BAR: Bias Adjustment of Recognition Tests in Advertising. Journal of Marketing Research 3 (47), 30-41.

Biddle, J.E., Davis, J.B. and Samuels, W.J. (2003) Contributions of Medieval Muslim Scholars to the History of Economics and their Impact: A Refutation of the Schumpeterian Great Gap. A Companion to the History of Economic Thought. Malden: Bradshaw.

Bidgoli, H. (2006) Handbook of information security. New York: John Wiley and Sons.

Callahan, M. (1997) From Training to Performance Consulting. Chicago: American Society for Training and Development.

Camilleri, J. (2011) Project Success: Critical Factors and Behaviours. Boston: Gower Publishing.

Cross, R.G. (1997) Revenue management: hard-core tactics for market domination. Washington: Broadway Books.

Gitman, L. and McDaniels C. (2008) The Future of Business: The Essentials. New York: Cengage Learning.

Hannagnan, T. (2007) Management: Concepts and Practices; Financial Times. ND: Prentice Hall.

Lou, Y. (2010) Entry and Cooperative Strategies in International Business Expansion. London: Greenwood Publishing Group.

Nicolini, D. (2000) Organizational Learning. Journal of Management Studies, 37 (6), 783-795.

Ritter, L. S. (2000) Principles of Money, Banking, and Financial Markets. Menlo Park: Addison-Wesley.

Selwyn, N. (2006) Selwyn’s Law of Employment. Oxford: Oxford University Press.

Wit, B and Meyer, R. (2010) Strategy: Process, Content, Context, An International Perspective. New York: Cengage Learning EMEA.

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