What do we learn from synergy of joint ventures and mergers?


Whenever corporations join their forces together, they bring bigger values and better business positions. No doubt!

Of course, if they would like to make it successful, they do need to consider each other organizational culture, what they bring on a table (asset, value, investment &, etc.) and what they take (more profit, recognition, more customers &, etc.). Assuming that they successfully do all arrangements then most of the time the result is amazing.

1. Recently, International Olympic Committee (IOC) and Airbnb signed a $500m Olympics sponsorship deal based on which Airbnb will be an official partner of IOC regarding accommodation.

What do we learn?

Cities don't like Airbnb because they bring heavy traffic and change the model of accommodation specifically in center of cities with cheaper amounts. People don't like them since they make apartments more crowded and even some neighborhoods are changed to party places for nights!

Now, Airbnb can claim a better face. And governments must build many hotels for visitors during the Olympic games. Usually, after the games, these hotels won't be occupied and the investment is considered a big waste out of the pocket of taxpayers.

Airbnb is helping governments and taxpayers to save money and to support the environment by less construction. The company raises its environmental bar and this is an opportunity to make money and smartly gain reputation!

On top of it, Airbnb is going to create a platform for athletes to sell their time and expertise. Former Olympic athletes can train people in different areas and charge them for the time and lessons. Surely, these athletes will appreciate the opportunity. It is not about money always, sometimes it's about recognition. They would love to be recognized again!

2. Google bought Fitbit (smartwatch brand) for $2.1 Billion

What do we learn? 

Fitbit is successful but under pressure of rivals. Apple Watch 3 series has almost the same price and the brand is more well-known. Xiaomi has lower prices and in some models very similar functions. Google will support the company with new investments in sales, marketing, and novelty in software to compete better with others.

In return, Google will get access to all users' health data and wellness. Healthcare and the business world around it is what many companies such as Apple are working on it. Of course, any data can support deals with insurance companies and the agreement for any new business model. Also, Google will gain the knowledge and technology of hardware and smartwatches.

Recently, the US government mentioned that they will audit Google for this deal since they are worried about users' data. We will see how it goes on.

3. BMW and Mercedes - when you can't beat them, join them!

These two brands are traditional German competitors for years but the fast changes in the automotive industry regarding mobility made them establish a company together to join their technologies, customer lists, and applications to win the war before some start-ups beat them.

The new company is active in car-sharing, support for parking spaces, public transportation, etc.

What do we learn?

The automotive industry is struggling! Governments are pushing them for less and less emissions and producing more electric vehicles, people are sensitive about environmental issues while new platforms such as car-hailing companies (Ex. Uber) or car-sharing companies are proving to people that without owning a car, they can have cheaper and easier transportation. They use cars whenever they need them without being worried about insurance, maintenance, parking space, etc.

Here BMW and Mercedes know that their core business (producing cars and technologies) is in danger but they see themselves as competitors only in core business and not the new business models that no one is sure about their future!

Let's not forget that by this date, 19/11/2019, Uber is still in loss and no one knows what will happen to these new platforms and when they can be profitable.

It seems very wise and smart if these two brands join together, start a business model and instead of competing with each other try to take the leadership of the market. The investment is over $ 1 Billion and both companies already have applications and platforms with a remarkable number of customers.

There are many examples in other industries. What we should consider is the power that is created by these joint ventures. As we spoke, in the beginning, we should be careful about the company cultures and financial expectations.

So, next time if you have any offer to sell your company or to join a competitor try to study the situation seriously and search in what is in it for you.