The biggest apprehensions in international business are related to transactions and negotiations crossing national as well as cultural borders. In order to make this mechanisms take place on an international base level, businesses awareness of external uncertainties needs to be tackled and turned into a beneficial dimension. Reducing risks and getting access to new markets are major goals of international co-operations such as mergers, strategic alliances, contractual forms of co-operation and international joint venture (IJVs). International Joint Venture A joint venture is a collaboration agreement between two or more companies, which entails the sharing of profits and losses, skill and managerial expertise and technology to a varying degree. Joint ventures are typically formed between smaller domestic companies and foreign multinational companies and should incur benefits for all parties. Multinational companies tend to use joint ventures as a mode of entry into a foreign market and capitalize on domestic government relation and local knowledge whereas smaller domestic companies seek out the growth opportunities arising from access to new technology, managerial expertise and access to a global marketplace (Weston and Mitchell et al., 2004). Apart from the economic benefits derived from a joint venture, many companies also pursue this strategy to reduce risks associated with new business ventures. Joint ventures serve the purpose of achieving a joint goal and are therefore regarded as temporary arrangements (ANDRÄ, BROLL; 2012). Joint ventures are generally approached from two distinctive points of view: on the one hand the control perspective, which emphasizes the tradeoff between control and the risk of appropriation of... ... middle of paper ... ...nt if they are in need of the partner’s technology, as they need to build trust. The ownership structure is a tradeoff between control and efficiency, to the one extreme there is high foreign ownership which leads to high knowledge transfer and high control by the foreign party but little efficiency in the long run as the local firms perceived responsibility is low, and on the other extreme is a high ownership percentage by the local company which leads to little knowledge exchange and thus again a poor performance. In order for a joint venture to be successful a balance between the two extremes needs to be found. In conclusion equal partnership, good planning and communication between the partners and careful selection of potential partners after in depth industry and market analysis and possible synergetic effects characterize the most successful joint ventures.
... it is can at times be about co-operation and this is evident in the merger of BHP and Billiton in 2001. What BHP Billiton should have learnt from this analysis is that if they continue to diversify, look for new opportunities in emerging markets and maintain a good public image than maintaining success will not be as difficult as it is to build it up in todays times. It is also important to note as it has been evident in the past that the joint ventures and mergers are becoming increasingly more popular as it opens up many different avenues into conducting business in other parts of the world as well as giving more power and control to MNCs in controlling markets, in an increasingly more globalized world we must put at best foot forward to diversify and integrate business and cultures to remain globally competitive.
Partnership is generally straightforward and need low costs to be framed it just require an understanding between the parties. All partners evolve in the administration and making the decision as they all have the right to help in any decision. As they are a number of partners that implies they have a much greater source of funds than a sole trader. On the other hand, the Disadvantages of partnership are that it doesn 't have a legitimate identity of its own. The survival issues, as the partnership will be broken up in light of the death of the partner or regardless of the fact that the partner went insolvency. Endless obligations, where the debts in partnership might be taken generally as it could be taken from their own assets to settle the
“A Collaborative Business Structure is designed to bring parties together in a long-term relationship to achieve a common goal. Sometimes this is done through the formation of a new entity, such as a partnership or joint venture that explicitly sets up an opportunity for each of the participants to combine its strengths with those of its partner to their mutual benefit. Clearly, this works best when the strengths of each one match up well with the constraints of the other (Chesterfield Group, 2017)
After a period of continuing growth, the stagnant sales growth of the automotive industry in the late 1970s led all car makers to start to look for methods to fit the new climate. With the purpose of using money on research and development more effectively, spreading the risk of making main components in greater volume, and accessing to new market which were hard to enter, more and more automobile producers reached to the conclusion of collaborating with others. In addition, to remain independent, joint venture seemed to be the best answer. (Campbell, Stonehouse & Houston 2002)
Joint venture and M&A are an integral part of business. Love them or hate them, you cannot just ignore them. Be it, oil, telecom, education or the food sector, or be it Reliance (RIL and RPL), Tata’s (Tata and CMC), Pfizer (Pfizer and Pharmacia), AOL Warner (AOL and Time Warner), Joint ventures and M&A’s have brought new life to the style of doing business in today’s world.
In the past two decades, international alliances have become a central part of companies’ competitive and growth strategies (Kale and Singh, 2009). However, alliance termination rates are reportedly over 50% (Lunnan and Haugland, 2008). This paper aims to critically examine the reasoning behind the low success rates of International Joint Ventures (IJVs).
Again, JCB was afraid that by sharing their technological knowledge with Escorts, they would take that knowledge and become a direct competitor to JCB. Another disadvantage of a joint venture is it does not give a firm the control its needs over subsidiaries to realize experience curve or location economies. (Hill, 201??) Because JCB had a minority stake, their control was limited as was their expansion strategy. JCB was afraid that Escorts might share or leak the insight, knowledge and technology that was being used by JCB to give them its competitive advantage, which could ruin their chances of doing business in the Indian market
When using the joint ventures, some advantages are the opportunity to acquire a local official permission to sell it and the tariff is not so high. In addition, access to technology,
The joint venture as a partner in the network causes the result that benefits shareholders. In addition, it also increases the ability of the growth in international business and also makes a good public image, these effects to the prices of stock.
The intensive competition will lead companies to move in a global direction to increase revenue. However, every company strives to initiate and or create a competitive advantage in regards to their goods and services or whatever the company is offering. Core competencies are what lead companies to form a joint venture, partnerships, alliance, and cooperative strategies. Per (Michael & Hitt, 2017) “because firms reallocated and have similar needs, it’s easier for them to jointly work together, for example, United States alliance between Ford and General Motors in developing upgraded nine and ten-speed transmission.” By combining the companies, it turns out to be a complementary asset and enhances the quality of the products. For
create more quick results within the joint venture that should be done if they work in a
Therefore, the strategic partnership between China Unicom and China Telecom Unicom S.K allowed to compete favorably as they had gained a technological edge. Share the financial risk. China Unicom and S.K can make use of the strategic arrangement to reduce the financial risk of their individual company. For example, when two companies jointly invested with an equal part in a project, the greater potential that each stand to lose is only half of the total project cost if not the company. Achieving synergy and competitive advantage.
Despite the fact that legal arrangements are mandatory to establish and continue the operation of a joint venture, to be able to thrive, joint ventures have to be efficient, living and maturing relationships. Maintaining positive communication among the business decision-makers after the development of the joint venture is extremely important. At times, circumstances may change and management and the joint venture itself have to b...
Before the alliance the two firms were in totally different market and they were also in different country but the industry was of same type. Both of the firms were aware about their future plan and lacking.