A successful case stufy of a Joint Venture Free essay! Download now
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A successful case stufy of a Joint Venture
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DescriptionA successful case stufy of a Joint Venture
Joint ventures as a means of foreign market entry have accelerated sharply since the 1970s. Besides serving as a means of lessening political and economical risk by the amount of the partners contribution to the venture, joint venture provide a less-risky way to enter markets that pose legal cultural barriers than would be the case in an acquisition of an existing company.
Therefore, a joint venture may be a corporation, limited liability company, partnership or other legal structure, depending on a number of considerations such as tax and tort liability. Joint ventures can be long-term, like promoting a product together, or some can be short-term, like bartering (trading) products and services. Joint venture ideas are virtually endless.
A joint venture is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise.
Joint ventures generally are business partnerships established between two or more parties (individuals, business groups, companies, corporations) for the purposes of expanding the business and achieving merits by joining forces and working as a team.
Thus, it can be said that-
1. A Joint Venture is an agreement between two or more people or businesses
2. Joint Venture’s provide benefits to all parities involved
3. Joint Venture’s are built around relationships.
Four factors are associated with joint venture:-
Joint ventures are established, separate, legal entities
They acknowledge intent by the partners to share in the management of the joint venture.
They are partnerships between legally incorporated entities such as companies, chartered organizations or governments and not between individuals.
Equity positions are held by each of the partners.
A joint venture can be attractive to an international marketer:-
When it enables a company to utilize the specialized skills of a local partner
When it allows the marketer to gain access to a partners local distribution system
When a company seeks to enter a market where wholly-owned activities are prohibited
When it provides access to markets protected by tariffs or quotas, and
When the firm lacks the capital or personnel capabilities to expand its international activities.
Companies usually form a joint venture to achieve particular objectives, such as a joint venture may continue to operate indefinitely as the objective is redefined.
Almost every conceivable combination of partners may exist in a joint venture, including:-
Two companies from the same country joining together in a foreign market.
A foreign company joining with a local company.
Companies from two or more countries that establish a joint venture in a third country.
A private company and a local government that form a joint venture.
A private company joining a government-owned company in a third country.
Some primary benefits associated with joint venture include:
Reduction of risk of failure by sharing the burden ...
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