The best way to define collaboration is to outline it as the process of two or more people or organizations working together to complete a task or achieve a goal. Collaboration is a working practice whereby individuals work together for a common purpose to achieve business benefit. 

Joint ventures are a type of collaboration, where two or more companies pool resources and expertise to achieve a specific goal, often forming a separate legal entity to manage the joint undertaking. Joint ventures involve the pooling of resources, expertise, and technology by the participating parties. They are typically formed to achieve a particular objective, which could be a one-off project or an ongoing task. Joint ventures often involve the creation of a new legal entity to manage the joint undertaking. For example, Maruti – Suzuki. A well-known example of a joint venture between the Government of India and Suzuki Motor Corporation (Japan), formed in 1981 and now known as Maruti Suzuki India. Suzuki Motor Corporation owns 56.2% equity in the company. In the financial year 2023-24, Maruti Suzuki India’s net sales reached ₹1,349,378 million, with a net profit of ₹132,094 million. They currently offer 18 models in India, sold through NEXA, ARENA, and commercial retail channels. 

Maruti Suzuki’s core competencies lie in its ability to deliver affordable, reliable, and fuel-efficient small cars, coupled with a strong focus on customer satisfaction and a vast network for sales and service. 

In collaborations which are also called strategic alliance. A strategic alliance is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence. The participating entities share the risks, rewards, and responsibilities according to the terms outlined in a joint venture agreement. Joint ventures are often used as strategic alliances for  market entry into new territories or undertaking large-scale projects. 

Tata Starbucks Private Limited, formerly known as Tata Starbucks Ltd, is a 50:50 joint venture company, owned by Tata Consumer Products and Starbucks Corporation, that owns and manages Starbucks outlets in India. The outlets are branded Starbucks “A Tata Alliance”. India. As of 2023, Tata Starbucks operates over 300 stores across the country, offering an extensive range of coffee beverages tailored for Indian preferences. The joint venture created a strong brand recognition and a loyal customer base, store expansions in metro cities and tier-2 locations with localization of menu items to appeal to Indian tastes.

Licensing in business collaboration that involves one entity (the licensor) granting another (the licensee) the right to use their intellectual property like trademarks, patents, or technology under specific terms, enabling the licensee to leverage that Intellectual Property for their own business purposes. 

Licensing partnerships offer partners access to established brands or technologies, enabling them to enhance their offerings or enter new markets without developing these assets from scratch. And the licensor benefits from additional revenue through licensing fees or royalties, while also extending their brand reach.

One real-practical example of a brand licensing deal is Barbie. The global brand is known all over the world and has licensing deals with all kinds of businesses, retailers included. One such retailer is Shopify merchant and the Oodie, which sells limited edition Barbie products.

Netflix’s success in India, including successful licensing of content which stems from investing in local content, securing exclusive streaming rights, and adapting to the Indian market with diverse offerings, including regional content and tiered subscription plans. Netflix partners with content and studio providers to license rights for other titles. These titles may only be available in certain countries or for a limited time. The Indian subsidiary of subscription-based US streaming services company Netflix reported a net profit of Rs 52 crore for the last fiscal year.

Collaborating with global partners helps in mitigating risks associated with market entry, expansion or innovation initiatives. By sharing responsibilities and resources with trusted partners, businesses can more effectively navigate challenges, uncertainties and geopolitical complexities.

Franchising is also a business collaboration which inherently involves collaboration between a franchisor (the original business) and franchisees (those who operate under the brand’s name). This partnership allows for brand expansion and shared resources and expertise. This relationship is built on cooperation, where both parties work together to achieve shared goals, such as brand consistency, customer satisfaction, and business growth, new products etc. The franchisor provides the brand, systems, training, and support to the franchisee, while the franchisee operates the business according to the franchisor’s guidelines. 

To open a McDonald’s franchise, one needs significant capital, experience in the food service industry, and a willingness to follow the McDonald’s system, with initial investments potentially exceeding $1 million. The cost to open a McDonald’s franchise in India can range from ₹6.6 crores to ₹16 crores, depending on factors like location, size, and restaurant format, with an average franchise fee of ₹25-30 lakhs. 

Starting a KFC franchise in India requires a substantial investment, typically ranging from ₹1 crore to ₹2 crore, covering licensing fees, infrastructure, equipment, and initial working capital. The estimated start-up cost can range from ₹ 96 lakhs to ₹ 2 crores. Also, ₹ 36 lakhs are required as a franchise fee to become a KFC franchise owner in India. Franchising is a viable and increasingly popular collaborative model in India, offering benefits like brand recognition, established business models, and ongoing support, contributing to economic growth and employment. 

Among retail brands Adidas, a global leader in sportswear, and Allbirds, came together for its sustainable footwear, came together to design a shoe with an exceptionally low carbon footprint.

The first Futurecraft Footprint sneakers were considered the most sustainable in the world and took the fashion world by storm. While an average pair of Adidas sneakers has an average carbon footprint of 10 kg and 15 kg, the new shoes had a lower footprint of only 2.94 kg of CO2 emissions per pair. Both Adidas and Allbirds were aligned in their commitment to sustainability. While both brands approached shoemaking differently, their combined efforts were rooted in reducing environmental impact.  Adidas brought decades of sportswear design experience to the collaboration, while Allbirds contributed its unique knowledge of sustainable materials and production methods.

Conclusions

Business collaboration can work well, leading to increased innovation, productivity, and employee satisfaction, but requires clear communication, trust, and the right tools to be effective. 

Organizations go international for expanding global market space and to increase overall sales revenue and reduce operational costs, through attracting a larger customer base. In addition, through the help of technologies and the revolution of the internet, international business has become even more attractive, for micro and smaller businesses. Because of the subcontracting, outsourcing and various other forms of internationalization, they are able to reduce costs and improve their business management and operational efficiency.

Expansion through internationalisation benefits companies for achieving better economies of scale. When countries open up trade barriers and lowering tariffs across the world, internationalization allows companies to diversify their businesses enabling to ease the risk of slowing demand, across different countries. Operating in various countries also gives companies the opportunity to invest in innovation and develop different variations of their products and services, which shields them from declining interest in a particular product or service. It attracts FDI in country. Going international enables companies to have access to a broader talent pool. Many companies opt for internationalization to avoid saturation in home market. Following are different forms of Internationalization:

Exporting

Businesses that sell their goods and services to customers in other countries are exporting them: they are producing them in one country and shipping them to another. Exporting is one way that businesses can rapidly expand their potential market. India exports refined petroleum, rice, raw sugar and aluminium to other Asian countries, Japan, China etc.  

Wholly owned subsidiary

A wholly owned subsidiary is a company whose entire stock is held by another company, called the parent company. The subsidiary usually operates independently of its parent company with its own senior management structure, products and clients. Tata Consumer Products owns wholly owned subsidiary such as Tetley, Tata Coffee and Tata Starbucks – a JV between Tata Global Beverages and Start bucks, UK.

Franchising

Franchising is a tool for expansion in new markets by organizations; it’s a strategy for business expansion. Where implemented, a franchisor licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee.

A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business’s (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name.

In order to qualify for a conventional franchise of McDonald, one needs to $250,000 (not borrowed). For acquiring franchise the individual or firm needs to pay an initial franchise fee of $45,000 directly to McDonald’s. The other costs go to suppliers, so this is the only upfront fee one pays to McDonald’s.

Licensing

Licence is an official permission or permit to do, use, or own something. A license can be granted by a party to another party as an element of an agreement between those parties. A shorthand definition of a license is “an authorization to use licensed material”.

Chota Bheem the cartoon series is being aired through Pogo TV for the past 10 years. Green Gold Animation, the owner of Chota Bheem has been licensing the Intellectual Property to different manufacturers and has been associating with retailers since 2010. Some successful licensing tie-ups are Chhota Bheem with Parle G biscuits, Chhota Bheem with Asian Paints, Chhota Bheem-Camlin and Chhota Bheem-Bikaji. One of the major challenges faced in this industry is that of piracy.

Joint Venture

A joint venture is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. It is usually time framed.

In a joint venture (JV), each of the participants is responsible for profits, losses, and costs associated with it. However, the venture has its own entity, separate from the participants’ other business interests.

Some examples of successful joint ventures are Vodafone & Telefónica agreed to share their mobile network. BMW and Toyota co-operate on research into hydrogen fuel cells, vehicle electrification and ultra- lightweight materials.

Merger and Acquisition

A merger occurs when two separate entities combine forces to create a new, joint organization. Meanwhile, an acquisition refers to the takeover of one entity by another. Mergers and acquisitions may be completed to expand a company’s reach or gain market share in an attempt to create shareholder value.

Mergers and acquisitions take place for many strategic business reasons, but the most common reasons for any business combination are economic at their core. Organizations opt for mergers and acquisitions even for gaining a competitive advantage or larger market share. Companies may decide to merge into order to gain a better distribution or marketing network.

Corus was acquired by Tata Group in April 2007 and joined the Tata Steel family in a transaction that created one of the world’s largest steelmakers, with a major presence in Europe as well as Asia. Corus acquisition paved the way for the Tatas to enter the UK steel sector.

Zomato acquired Uber Eats India for ₹2492 crores. Such mergers are quite common in start-ups. The reason is that most of the Indian start-ups are backed by deep pockets and depend so much on investors. If the funding stops, start-ups end in the lurch. Some other deep pockets would go ahead and buy them. Zomato hence acquired its competition Uber Eats India, contesting another competitor ‘Swiggy’ in the bid.

This is similar to how Ola once bought ‘TaxiForSure.’ TaxiForSure ran out of money. It increased fares. Ola arrived in the market with fresh funding and hence offered cheap tickets. It later bought ‘TaxiForSure’ with only competition surviving in Uber.

Subcontracting

Subcontractors undertake a contract from the contractor. Subcontractors undertake work that a contractor cannot organize but for which the contractor is responsible. A subcontractor has a contract with the contractor for the services provided. An employee of the contractor cannot also be a subcontractor. A subcontractor is an individual or a business that signs a contract to perform part or all of the obligations of mentioned in the contract. A subcontractor is a company or person whom a general contractor hires to perform a specific task as part of an overall project and normally pays for services provided to the project. 

In the garment industry, a subcontracting unit is a factory that mainly does garment stitching work. They don’t need to set-up other facilities and staffs for layer cutting, garment finishing, and packing activities. In apparel supply chain garment exporters receive original contract from apparel brands, international buyers or retailers. These export houses get their excess production done from subcontractors.

Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. While Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Outsourcing

Outsourcing is a business practice in which services or job functions are given out to a third party. In information technology, an outsourcing initiative with a technology provider can involve a range of operations, from the entireness of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development or QA testing (Quality Assurance) outsourcing is normal practice.

Some large organizations choose to outsource IT services onshore (within their own country), near shore (to a neighbouring country or one in the same time zone), or offshore (to a more distant country). Near shore and offshore outsourcing have traditionally been pursued to save costs.

In 2019, Samsung decided to relocate some of its supply chain to China. The South Korean electronics giant wants to lower production costs on its budget handsets. The firm reportedly wants to manufacture around 60 million of the 300 million devices it plans to ship in 2020. Outsourcing the production of 60 million phones to Chinese firms will also help Samsung to effectively compete with Chinese smartphone makers.