“A Joint venture involves two or more legally distinct organisations (the parents), each of which actively participates, beyond a mere investment role, in the decision-making activities of the jointly owned entity” (Geringer, 1988). The parties (often companies or individuals) contribute equity to develop a new entity and control the business, share risks and consequently share revenues generated by the venture. It is called an International joint venture (IJV) if at least one parent is headquartered outside the venture’s country of operation or if the JV has a significant level of operation in more than one country (Geringer & Hebert, 1989). IJVs are beneficial for companies to gain access to a certain market or advantage from the distribution potential of the local partner and pre- empting competitors, to gain access to new technological knowhow, diversify into new businesses and to share costs and risks associated with the developments in certain areas (Rumpunen, 2011). One feature of IJVs that has captured the attention of many academics is that the typical life of an IJV seems to be short. In particular, when compared to the life of a wholly-owned subsidiary (WOSs) of an MNC (Geringer & Herbert, 1989). Gomes-Casseres (1987) found that even though the liquidation process of IJVs is similar to that of WOSs, the sell-out rate of joint ventures (to one of the partners or outsiders) is higher. IJVs have a low rate of success due to various reasons, some internal and others external. Conflict between partners, negotiation problems, cross-cultural differences, ownership structure, commitment issues, management style are some internal reasons. External reasons include overestimated market, local government & infrastructure chang... ... middle of paper ... ...anagers treat associations differently. Jones & Shill (1993) stated that cross-cultural differences "lead to endless, energy-and-time consuming debates-futile talk that produces a lot of heat and prevents the company making the decisions it has to" using IJVs in Japan as an example. Unlike internal factors, external are difficult to anticipate and can have a great impact on IJVs. Marketplace changes, technology development and issues, regulatory uncertainties and economic downturns impact the advancement of IJVs. IJVs are less stable in industries with intensive consolidation or volatile growth (Kogut, 1991 and Hennart & Zeng, 1997). Changes in local government policies regarding FDI and equity IJVs affect working and cause IJV instability (Boddewyn & Brewer, 1994). Such drastic changes have occurred in many countries over the past few decades (Yan & Gray, 1994).
Hofstede (1983) suggests that individuals from similar cultures have a “collective mental programming” which is part of their conditioning that they share with other citizens of the country they reside in but not with other citizens who do not live in the same country. Hofstede defines this “collective mental programming” as culture (Armstrong, 1996). Several researchers have documented the cultural influence on consumer behaviour (e.g Erickson et al, 1984). Other researchers have focused on ethnic differences (e.g. Wallenford and Reilly, 1983). Tse et al (1988) also investigated whether a manager’s home culture has “predicable” significant effects on decision making of executives from the People’s Republic of China and Canada.
As defined by Geringer (1988), a joint venture (JV) is when two or more distinct companies come together and form a new entity. Geringer and Hebert (1991) extend this definition to include IJVs and stated that if the headquarters of one of the partners is outside the country where the JV is set-up or if it has operations in multiple countries, it is an IJV.
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
The topic under review is strategic alliances. This particular form of non-equity alliance between firms in the same industry (competitors) is becoming an increasingly popular way of conducting business in the global environment. Many different reasons of why such alliances are occurring have been recognized. These include: the increasing globalization of the world's economy resulting in intensified global competition, the proliferation and disbursement of technology, and the shortening of product life-cycles. This critique will use Kenichi Ohmae's viewpoint on strategic alliances as a benchmark for comparison. Firstly, a summary of Ohmae's article will be provided. Secondly, in order to critique Ohmae's opinion, it will be necessary to review other literature on the topic. Thirdly, a discussion of the various viewpoints and studies, that have hence arisen, will be discussed in detail. Finally, conclusions will be drawn with implications for companies operating in today's global environment, together with suggestions for future research on strategic alliances.
Gilpin discussed the MNC’s evolution through the lenses of a number of business economic theories. Using Raymond Vernon’s Product Cycle Theory, the overseas expansion of American companies until the 1960s was shown as a means of preempting foreign competition and preserving monopoly positions, which was possible then because of the wealth and technology gaps that existed between the US and the rest of the world (282-83). Following the closing of such gaps, Dunning and the Reading School’s Eclectic Theory explained the next stage of the MNC’s evolution as propelled by the great leaps made in technology and communication, which made internationalized management both possible and viable (283). Michael Porter’s Strategy Theory, meanwhile, asserted that the MNC is now in the era of strategic management, wherein activities and capabilities spanning borders allow it to “tap into the value chain” in the most advantageous positions (285-85). Gilpin made an interesting point, however, that MNCs are oftentimes the result of market imperfections and unique corporate situations. In many instances, the decision to expand a firm’s operations in another country was a means of circumventing protectionist measures and trade barriers, or simply to curry favor with governments, as practiced by IBM (280...
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda could avoid the restrictions on the import quota by assembling cars locally, because these cars would be considered locally produced. Moreover, a local partner could assumedly offer a better insight of the market.
Oesterie, M. J., Richta, H. N., & Fisch, J. H. (2012). The influence of ownership structure on internationalization. International Business Review, 22(1), 187-201.
Tallman, S., & Shenkar, O. (2004). International Cooperative Ventures Strategies: Outward Investment and Small Firms from NICs. Management International Review. Vol. 39 (5), 299-315.
private equity firm with the company it buys and ensures that the company has a lasting success.
Entrepreneurship - a special kind of activity. Its constant conditions are limited resources, competition and uncertainty of the situation. The main tools of the entrepreneur are: thrift, cooperation and innovation. Consequently, enterprise is the independent economic entity, with rights of a legal entity, which is based on the use of labor collective property produces and sells products, works, and provides services.
A production department is the piece of the organization that produces goods and services that are in turn sold to the outside market for consumption. Service departments back up the production department by providing services to the production department. For example, in an organization that manufactures custom furniture, the production department might be responsible for cutting and assembling raw materials thus creating pieces of furniture. The service department would include maintenance professionals who repair and equipment used in the manufacturing process as well as office staff, human resources and other support departments within the organization.
18. Rugman, Alan M. and Collinson, Simon. International Business 4th Edition. Essex : Pearson Education Limited, 2006.
Loyal investors act as partnership; provide sustainable power of financial support, continuous development in new market, more benefit into the company, strong cash