The Corning-Vitro joint venture between American company Corning and Mexican company Vitro failed due to cultural differences in management practices. Corning had a decentralized, risk-taking culture while Vitro had a formal, hierarchical culture. Corning encouraged competition and individual rewards, while Vitro focused on cooperation and group rewards. The cultural clashes led to communication issues and misunderstandings. After two years, the $130 million venture was dissolved and the companies now simply distribute each other's products. The failure showed the importance of understanding cultural differences before entering joint ventures.

1. Cross Cultural ConflictsThe Corning-Vitro Joint Venture Derrick Quals Ryan Huelsmann

2. Corning Incorporated Famous for Oven-ready glassware Other diversifications: Fiber Optics Environmental products Laboratory Services Has had previous success in globalization and Joint Ventures with other companies

3. Corning Inc. (cont.) Innovative leader in foreign alliances for over 73 years. First joint-venture was with St. Gobain, a French Glass maker. Together they produced Pyrex cookware in Europe during 1920’s Joint- Ventures total to 50 ventures Only 9 were unsuccessful

4. Corning Product

5. What Has Corning Inc. Done lately? Today, Corning is a global leader in five vital market segments: Display Technologies – glass substrates for LCD flat panel televisions, computer monitors, laptops and other consumer electronics Environmental Technologies – ceramic substrates and filters for mobile emission control systems Telecommunications – fiber optics, cable and hardware & equipment for telephone and internet communication networks Life Sciences – optical biosensors for drug discovery Specialty Materials – advanced optics and specialty glass solutions for a number of industries

6. Vitro Founded in 1909 Located in Monterrey, Mexico One of the worlds largest glass manufacturer Concentrates on drink-ware Other Diversifications: Automobile Windshields Washing Machines Beverage Bottles Fragrance Bottles

7. VITRO Product

8. Corning-Vitro Shared similar product specializations Shared similarities in history, customer- orientated philosophies, goals, and objectives Looking to capitalize on NAFTA by accessing the Mexican market In 1992, they formed a joint venture This was a first for an American-Mexican joint venture

9. Match made in Heaven

10. Hofstede’sCultrual Dimensions America’s corning Mexico’s Vitro Low power distance Flatter, decentralized structures People from the top would let the people on the bottom make decisions and listen High power distance People blindly obey orders, very centralized, tall structures The top makes all decisions and the bottom follows them to the letter

11. Hofstede’sCultrual Dimensions America’s corning Mexico’s Vitro Low Uncertainty Avoidance Willing to accept risks of the unknown Less managerial structure More managerial risk taking High Uncertainty Avoidance High need for security Structure organizational activities Less managerial risk taking

12. Hofstede’sCultrual Dimensions America’s corning Mexico’s Vitro High Individual Wealthier Greater individual initiative Protestant work ethic High collectivist Poorer Less individual initiative If there is it has to come from the top Less support of a Protestant work ethic In this case, Catholic

13. Hofstede’sCultrual Dimensions America’s corning Mexico’s Vitro Masculine Stress earning, wealth, recognition, advancement On the lookout for the next opportunity for promotion or raise More easily achieved in Low Power distance nations and movement is easier Feminine Cooperation, friendly atmosphere, employment security Makes it easier for loyalty for a company to exist This dimension that encourages Vitro to be more formal and polite

14. Culture Clash in Management Corning Vitro Decentralized Middle- and lower- level managers involved in decision making Depending on the type of decision, such as distribution or consumer, chief executive would never know about it. Centralized Top managers make all important decisions Middle-level managers were seldom asked to contribute Mr. Loose comments “My experience on the Mexican side is that someone in the organization would have a solution in mind, but then the decision had to be kicked up a few levels.”

15. Culture Clash in Management Corning Vitro Informal Forward Moved quickly Open to acknowledge problems in hopes to try to fix Formal Family oriented Very polite Believed to have moved slowly Bureaucratic and hierarchal Unwillingness to acknowledge problems Thought it was rude

16. Culture Clash in Management Corning Vitro Competition Encourage competition between their people Quick-action and aggressive sales stemmed from this aspect Always attempting to be better at selling, at producing, at anything else that would help the business thrive Cooperation Encourage cooperation amongst people Slower, deliberate approach to sales It was in a closed economy in Mexico with little competition Main focus was on product reliability

17. Culture Clash in Management Corning Vitro Individual rewards Encourage competition and used to enhance the competition perspective discussed earlier Encourage people to come up with new ideas, to earn more sales, to produce better, etc. Group rewards Encourage cooperation amongst people Necessary to make products reliable

18. Culture Clash in Management Corning Vitro Risk More open to risk Have to change in order to survive and every decision requires an element of risk Corning wanted to distribute its products to Wal-Mart and K-Mart Safety Averse to risk Vitro was in a closed economy in Mexico with little competition It was out of its element with Corning’s method of doing business

20. People identify more with their occupation

21. Not saying that loyalty for the organization does not exist, but its at a minimumHigh Organizational Loyalty Stems from its bureaucratic and hierarchical structure Very loyal to family and patrons

22. Aftermath In 1994, the $130 million venture ended and the money was returned in full. To this day, Corning still investigates what it could have done differently. Both Vitro and Corning have changed their relationship into a distribution of each other’s products. Encourages companies to get an understanding of culture and management practices before entering into joint ventures

23. Sources Bardois, Charles C. "Cultural Valuse Cause a Clash." New York Times [New York] 1992, 22nd ed., Business sec. Print. (Corning Inc) http://www.corning.com/products_services/index.aspx Darling, Juanita. "The Great Trade War- U.S, Mexican Glassmakers Partnership Breaks the Mold." Los Angeles Times [Los Angeles] 18 May 1993. Print. Durr, Clyde B., Sylvie Rousselen, and Frank Bournios. Cross Cultural Approaches to Leadership Development. 5th ed. N.Y: Penguin, 2001. Print. Luthan, Fred, and Jonathen P. Doh. International Management. 7th ed. New York: McGraw-Hill International. Print. Schuller, Randell S., Susan E. Jackson, and Yadong Lou. Managing Human Resources in Cross-Border Alliances. 7th ed. N.Y, 2005. Print. Smith, Dan. State of the World Atlas. 8th ed. New York: Penguin, 2008. Print. (VITRO) http://www.vitro.com/vitro_corporativo/ingles/abus.htm