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Turning back the clock: Joint venture transition at the post‐communist dawn
Author(s) -
Cyr Dianne J.
Publication year - 2003
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.10102
Subject(s) - joint venture , transition (genetics) , citation , communism , management , computer science , sociology , world wide web , business , law , political science , economics , commerce , biochemistry , chemistry , politics , gene
The Thomson-Polkolor joint venture (JV) agreement was signed on May 22, 1991 combining the strength of the French Thomson Consumer Electronics (Tubes and Display) division with Polkolor, the ailing Polish television picture tubes producer. The strategic intent of the joint venture was to create an exemplary company, a shining example of total quality management in post-Communist Poland. The Wall had recently come down, foreign investors were foraging into Central/Eastern Europe, and Thomson was seeking a new manufacturing opportunity. Located near Warsaw, Thomson Polkolor is a fully autonomous, integrated facility manufacturing finished tubes as well as all the necessary components: glass, masks, yokes, and electron guns. The manufacturing plants employee approximately 3,100 people in an expansive area of nearly two million square feet. As early stages of the venture had progressed even better than expected, Thomson increased its original $35 million investment to $100 million by 1992. Just one year into the venture, Thomson-Polkolor produced 1.1 million picture tubes in a radically modernized facility. Thomson-Polkolor was established after almost two years of negotiations between Thomson and the Polish Ministry for Ownership Changes. Thomson had originally considered investments in other locations including Eastern Germany, the Czech Republic, Hungary and Turkey. A primary reason for choosing Polkolor was their compatibility with RCA and Corning technology used at Thomson. In addition, Poland was attractive for investment due to proximity to Eastern markets, and the reduced cost of labor. However, according to JV Managing Director Bernard Varaut, "While the cost of labor may be considered as an advantage for maybe six to seven years, this is not the primary reason [for the venture]. We need to take the longer term view". With this in mind, Thomson focused on two main objectives for the formation of the JV: 1) to complement their existing product range in Europe with the manufacture of small and medium size picture tubes, and 2) to be the "number one" supplier of color picture tubes in Central and Eastern Europe. On the verge of bankruptcy and with production virtually halted in September 1990, the 1