Joint ventures
Joint ventures can be defined as "an enterprise in which two or more investors share ownership and control over property rights and operation".
Joint ventures are a more extensive form of participation than either exporting or licensing. In Zimbabwe, Olivine industries has a joint venture agreement with HJ Heinz in food processing.
Joint ventures give the following advantages:
• Sharing of risk and ability to combine the local in-depth knowledge with a foreign partner with know-how in technology or process
• Joint financial strength
• May be only means of entry and
• May be the source of supply for a third country.
They also have disadvantages:
• Partners do not have full control of management
• May be impossible to recover capital
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Anderson and Coughlan8 (1987) summarise the entry mode as a choice between company owned or controlled methods - "integrated" channels - or "independent" channels. Integrated channels offer the advantages of planning and control of resources, flow of information, and faster market penetration, and are a visible sign of commitment. The disadvantages are that they incur many costs (especially marketing), the risks are high, some may be more effective than others (due to culture) and in some cases their credibility amongst locals may be lower than that of controlled independents. Independent channels offer lower performance costs, risks, less capital, high local knowledge and credibility. Disadvantages include less market information flow, greater coordinating and control difficulties and motivational difficulties. In addition they may not be willing to spend money on market development and selection of good intermediaries may be difficult as good ones are usually taken up …show more content…
This requirement may be driven by local regulations or by the company’s wish to market the product or service in a locally friendly fashion. While this may seem to be a simple task, it’s often a source of embarrassment for the company and humor for competitors. David Ricks’s book on international business blunders relates the following anecdote for US companies doing business in the neighboring French-speaking Canadian province of Quebec. A company boasted of lait frais usage, which translates to “used fresh milk,” when it meant to brag of lait frais employé, or “fresh milk used.” The “terrific” pens sold by another company were instead promoted as terrifiantes, or terrifying. In another example, a company intending to say that its appliance could use “any kind of electrical current,” actually stated that the appliance “wore out any kind of liquid.” And imagine how one company felt when its product to “reduce heartburn” was advertised as one that reduced “the warmth of heart”! [2]
Among the disadvantages of exporting are the costs of transporting goods to the country, which can be high and can have a negative impact on the environment. In addition, some countries impose tariffs on incoming goods, which will impact the firm’s profits. In addition, firms that market and distribute products through a contractual agreement have less control over those
Company has evolved to handle joint ventures, but not all of them turn into successes.
An increasing problem in modern society is that many teenagers are being condemned in the last few years for simply witnessing an attack. Joint enterprise is a doctrine of common law which condemns people for participating or witnessing an attack. Joint enterprise was introduced up to 300 hundred years ago and now people think that it should be banned due to many teenagers getting convicted for being present at an attack. Joint enterprise is a legal doctrine that assigns criminal obligation to the participant .We have seen that more than 1853 people have been charged with homicide under the provocative, legal standard of joint enterprise in the past eight years. Joint enterprise can apply to all crimes, but in recent times, it has been mainly used as a way of prosecuting homicide, especially in cases involving gangs of young men.
Joint Stock Companies- A Joint Stock Company is a company that has stocks that are available to be shared by different shareholders. Joint Stock Companies were formed around the 1600s by the English parliament after the amount of money spent in the battle against the Spanish for North America. This made it possible to gather money to colonize.
A joint stock company was when people bought shares in companies that were hoping to explore the New World.
Joint-Stock Company: A business with transferable shares and shareholders having little to no liability for their debts. a business that sought to separate that of legal existence and the sharing of ownership between the shareholders.
The foreign partner can also become a competitor by selling its production in places where the parental company is already in.
Chase, R.B., Jacobs, F. R., & Aquilano, N.J. (2006) Operations management for competitive advantage (11th ed). New York: McGraw Hill/Irwin
A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.
Although partners learn from each other through alliances, promoting inter-firm learning happens when all participants acknowledge a number of critical factors that help or hinder collaboration (Dickson et al., 1997). Compatibility is a critical factor when companies decide to join with one another, and management on both sides examine if the partnership will deliver desired results (Dickson et al., 1997). Although partnering with businesses that offer
International joint ventures is an overseas business owned and controlled by two or more partners; starting such a venture is often as an entry strategy (Deresky, H. 2014.p.377), while joint ventures refers to an independent entity jointly created and owned by two or more parent company.
One problem that trade barriers have caused is that they increase the cost of enterprises, affecting the international competitiveness of enterprises. For a long time, due to the low technological content of Chinese export products, mainly to win international markets at low prices, the developed countries have adopted some ways, such as the green subsidy system, the green packaging system, the green fortress and so on. By imposing import surcharges, increasing the cost of
The lesson learned from this is that sometimes it is easier and faster reach a new market via joint venture, even though the profit will be less, but the company can save a lot of money in studying the new market trying to understand the new culture and how they purchase and also it can minimize the risk because there is a national brand supporting the new international brand, which gives confidence and security to the customers.
A partnership is a business organization where the partners own the business together and are
The 3 entry modes present different advantages and drawbacks, Franchising Strategy showed low control in the operations, low risk of exposure, low investment and high support from the local partner. Joint Venture entry mode indicated moderate-high investment, moderate risk, medium exposure and moderate control. Lastly, Greenfield entry mode denoted high risk, high investment, high control of the operations and high exposure.
vertically integrate instead of attempting to collaborate with their partners and allowing their partners to control the