TTL 10 - TM
THE TYPE OF
ALLIANCE
STRATEGY
The type of alliance strategy that Groupon
and Tencent entered
Joint Venture:A joint venture is a combination
of two or more parties that seek the
development of a single enterprise or project
for profit, sharing the risks associated with its
development.
Groupon entered China by setting up a Joint
Venture with Tencent, where Groupon invested
$8.6M for a 40% stake in the GaoPeng joint
venture.
KEY MOTIVATED
REDUCING RISK & SHARING COSTS
China posed a unique set of
challenges and risks for foreign
companies. By partnering with
Tencent, Groupon could share the
financial and operational burden of
entering a complex market. Joint
ventures can be a way to mitigate
risks associated with unfamiliar
business environments.
Q2 - Have Groupon and Tencent made the right
decision with respect to selecting each other as
alliance partners?
No.
1. Conflict in
Management and
Operations
The early conflict between Groupon
and Tencent, even before the
GaoPeng joint venture began
operations, indicates a lack of
alignment in management styles and
strategic priorities.
2. Differing Strategies
and Expectations
Groupon's rush to hire people,
launch the website, and provide
services in a Western style
clashed with Tencent's
preference for a slower
approach and a website
displayed in Chinese style.