Premium Essay

Joint Venture Example

In: Business and Management

Submitted By lazuardhi
Words 301
Pages 2
JOINT VENTURE
A joint venture is a strategic alliance where two or more parties, usually businesses, form a partnership to pool their resources, share markets, intellectual property, assets, knowledge, and, of course, profits for the purpose of accomplishing a specific task.
A joint venture differs from a merger in the sense that there is no transfer of ownership in the deal.
This partnership can happen between goliaths in an industry. Cingular, for instance, is a strategic alliance between SBS and Bellsouth. It can also occur between two small businesses that believe partnering will help them successfully fight their bigger competitors.
Companies with identical products and services can also join forces to penetrate markets they wouldn't or could not consider without investing tremendous resources. Furthermore, due to local regulations, some markets can only be penetrated via joint venturing with a local business.
In some cases, a large company can decide to form a joint venture with a smaller business in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain, even with plenty of cash at their disposal.
The reasons legitimate company chooses the joint venture strategy is not separated from the reasons above. legitimate eventually choose Tsui Wah restaurant as partners because of limited resources that faces legitimate company can be pervaded by Tsui Wah restaurant, such as:
1. Tsui wah is well known in hongkong so it makes easier for legitimate to enter the market in hongkong
2. Tsui wah restaurant have an equipment that can help us to make our product
3. By joining with tsui wah, legitimate have decreasing one big competitor in hongkong
Internal reasons
1. Strengthen the company
2. Spread the cost and risk
3. Increase the access to resources
4. Access to the new customer
5. Access to the innovative…...

Similar Documents

Premium Essay

Joint Ventures with Chinese Companies

...Joint ventures with Chinese companies Some multinational companies have opened subsidiaries in China through joint ventures with Chinese companies. Not all of them are successful though; there are advantages and disadvantages of such joint ventures. In the last years, China has emerged as “a worldwide economic powerhouse”[1], becoming more and more attractive as a joint venture partner for multinational companies in order to gain access to the Chinese market. Foreign companies can profit from Chinese knowledge of the Chinese market, their contacts to important government institutions, their knowledge of the Chinese way to do business and Chinese regional characteristics. Cheap production opportunities and an already existing team of workers can also be a huge advantage for them. In addition to that, the companies can save money and reduce their risks should a particular project fail through resource and capital sharing.[2] Especially advances in technology are really expensive, therefore pooling money and personnel can cut costs significantly. The German carmaker Daimler AG for example has recently been involved in a joint venture with China’s BYD Co Ltd to produce electric cars. That way, they are sharing the high costs of producing such a car.[3] The foreign business partner usually contributes to the cooperation with know-how about production procedures and techniques as well as excellent distribution strategies and managerial expertise. Moreover, joint ventures......

Words: 540 - Pages: 3

Premium Essay

Joint Venture

...A joint venture is a special type of strategic alliance in that a new business entity is created that is legally separate and distinct from its parents. A primary advantage of a joint venture is that the venture can have a broader purpose, scope, and duration compared to other types of strategic alliances. Moreover, joint ventures tend to be more stable than non-joint venture strategic alliances. Joint ventures in which there is shared management or that are managed by one parent may have difficulties because there may be a tendency to try to please management from the founding companies rather than focusing on what is best for the joint venture. In contrast, non-joint venture strategic alliances are useful because they allow participants to focus on a particular project, yet do so without creating a new entity. Furthermore, non-joint venture strategic alliances can help firms overcome short-term hurdles. The basic benefits partners are likely to gain from their strategic alliances are ease of market entry, shared risk, shared knowledge and expertise, and synergy and competitive advantage. Strategic alliances can ease market entry because they allow firms to overcome barriers such as entrenched competition and hostile government regulations and/or reduce the cost of entry. Strategic alliances can also enable firms to reduce or control exposure to risk. Firms can gain knowledge and expertise via strategic alliances, as well as synergy and competitive advantage. ......

Words: 312 - Pages: 2

Free Essay

Joint Venture

...Since 2007 the global recession has been remarkable for all entrepreneurs, and gradually had to go looking for alternative ways to take their businesses forward. The following paper will analyze the basics that can help or hurt a company in order to become internationally succesfull, and also remark the keys to business survival with the aim of expanding its presence in emerging markets.  exporting  licensing  joint venture  equity stake/acquisition EXPORTING Pros:  In developing countries it is necessary to reach an international level of quality, to upgrade machinery, raw materials and processes, based on imports needed for export.  In countries with higher manufacturing costs, probably out cheaper to import than produce, thus becoming resellers, from manufacturers to retailers.  In countries with free trade treaties gradual reduction of import taxes to zero, lower the cost of international purchases. Cons:  Buy in another country reduces income country where the entrepreneur. Symptoms of economic problems as higher imports than exports, reduce sources of employment, output and cause national currency is exchanged for foreign currency.  Imports are always implicit risk of increase in the price of foreign currency. Businesses tied to increased foreign currency for imports which are their main source of income, should contract hedging or futures brokerage firms in order to protect themselves.  Imports, in high degree, dependent on the entrepreneur...

Words: 925 - Pages: 4

Premium Essay

Joint Venture

...Joint Venture The globalization strategy our team is going to explore for Moonglow is Joint venture. We are going to discuss the pros and cons to a joint venture along with some environmental factors that Moonglow needs to consider before deciding on a location. We are also going to explore different organization structures and give a recommendation on how to restructure Moonglow to succeed in the global market. Lastly, we will describe ways Moonglow can expand internationally while maintaining its eco-friendly practices and continue producing organic products. According to Jones (2011) a joint ventures is a “strategic alliance among two or more organizations that agree to establish and share the ownership jointly of a new business” (p. 342). Joint ventures are formal and bounded by a legal agreement with all parties’ rights and responsibilities spelled out. Joint ventures are considered one of the best methods for entering into foreign markets. As with any business venture, there are pros and cons that need to be considered (Jones, 2011). Many foreign markets have the potential to be closed to outside companies. Joint ventures make entering into closed markets easier. The pros to entering into a joint venture are access to limited capital resources, transfer of technology, bypass of legal restrictions, access to raw material, knowledge of regulatory climate, and investment incentives (Hall, 1984). In a joint venture, Moonglow will......

Words: 2524 - Pages: 11

Premium Essay

What Is Joint Ventures

...What is a Joint Venture? Joint ventures can take on many looks, but the basic gist is that two or more companies come together to pool their talents, resources and customer lists for the benefit of all. The joint venture allows you to share advertising dollars for a more effective campaign and gives you the opportunity to ride the coattails of a bigger, more established company in order to boost your reputation and build your customer base. Most joint ventures take place between related companies that share a similar target market, but do not compete directly in the goods and services they offer. Benefits of a Joint Venture There are many reasons to consider jumping into a joint venture with another small business, including: * Access to a whole new target market through your JV partner * The ability to reach a larger market base through pooled resources * The opportunity to capitalize on the established reputation of a more experienced business * The sharing of risks, as well as resources, to make your advertising dollar stretch further * Access to resources you may not have had in the past, such as specific skills your JV partner brings to the table that you did not currently have in your own labor pool * Access to new markets and distribution networks increased capacity sharing of risks and costs with a partner access to greater resources, including specialized staff, technology and finance; * Growth without having to borrow funds or look......

Words: 630 - Pages: 3

Premium Essay

Joint Venture

...A joint venture is a partnership or alliance among two or more businesses or organizations based on shared expertise or resources to achieve a particular goal.1 There are many good business reasons to participate in a joint venture partnering with a business that has complementary abilities and resources, such as finance, distribution channels, or technology, makes good sense. These are just some of the reasons partnerships formed by joint venture are becoming increasingly popular. A joint venture is also considered a strategic alliance between two or more individuals or entities to engage in a specific project or undertaking. Partnerships and joint ventures can be similar but in fact can have significantly different implications for those involved. A partnership usually involves a continuing, long-term business relationship, whereas a joint venture is based on a single business project. Parties enter joint ventures to gain individual benefits, usually a share of the project objective. This may be to develop a product or intellectual property rather than joint or collective profits, as is the case with a general or limited partnership. A joint venture isn’t like a general partnership; it’s not a separate legal entity. Revenues, expenses and asset ownership usually flow through the joint venture to the participants, since the joint venture itself has no legal status. Once the joint venture has met its goals the entity ceases to exist. Being a part of a joint venture has......

Words: 1514 - Pages: 7

Premium Essay

Joint Ventures

...MARUTI SUZUKI INDIA LTD. Maruti Suzuki is India and Nepal’s leading automobile manufacturing company and the market leader in the car segment both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian government and 54.2% by Suzuki of Japan. The BJP led government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007 Govt. of India sold its complete share to Indian financial institutions. The Govt. of India no longer has stake in Maruti Udyog.  7. JOINT VENTURE Relationship between the Government of India under the United Front (India) coalition and Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian media till Suzuki Motor Corporation gained the controlling stake. The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director will have a tenure of five years.  8. CARS Manufactured locally 800 (Launched 1983), Omni (Launched 1984), Gypsy (launched 1985), WagonR (Launched 2000), Alto (Launched 2000), Swift (Launched 2005) Estilo (Launched 2009), SX4 (Launched 2007) Swift DZire (Launched 2008), A-star (Launched 2008) Ritz (Launched 2009), Eeco (Launched 2010) Alto K10(Launched 2010)  9. CONTD.. Imported Suzuki Grand Vitara,......

Words: 10019 - Pages: 41

Premium Essay

Joint Venture

...A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares. In European law, the term 'joint-venture' (or joint undertaking) is an elusive legal concept, better defined under the rules of company law. In France, the term 'joint venture' is variously translated as 'association d'entreprises', 'entreprise conjointe', 'coentreprise' and 'entreprise commune'. But generally, the term societe anonyme loosely covers all foreign collaborations. In Germany,'joint venture' is better represented as a 'combination of companies' (Konzern)[1] On the other hand, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are "co-venturers". The venture can be for one specific project only - when the JV is referred to more correctly as a consortium (as the building of the Channel Tunnel) - or a continuing business relationship. The consortium JV (also known as a cooperative agreement) is formed where one party seeks technological expertise or technical service arrangements, franchise and brand use agreements, management contracts, rental......

Words: 7550 - Pages: 31

Premium Essay

Mergers and Joint Ventures

...Mergers and Joint Ventures Alisa King, Antoinette Penny, Mia James ECO/365 January 20, 2015 Mr. Gregory Ficklin Mergers and Joint Ventures In this essay team A will discuss the differences between horizontal, vertical and conglomerate mergers and how those differ from a joint venture. Horizontal mergers occur when two competitors merge and become a large corporation. For example, both Comcast and Time Warner cable were competitors until they merged just last year. Usually the larger company, that is the more financially sound of the two buys out the smaller less financially sound company. In that case the smaller company would benefit the most because they won’t have to go out of business or initiate major cut backs in order to stay afloat. Vertical mergers ensue when two non-competing companies that feed off each other in the supply chain come together as one. For instance, if Dairy Queen vertically merged with an ice cream supplier they could receive better deals on wholesale ice cream. This would increase profits thus making Dairy Queen increase their order which would increase profits for the ice cream supplier. Most vertical mergers happen because both businesses involved will benefit from the vertical merger. A conglomerate merger happens when two businesses have nothing to do with one another, meaning they do not engage same kinds of business, merge. Furthermore, there are two kinds of conglomerate mergers, pure and mixed. Pure conglomerate......

Words: 655 - Pages: 3

Premium Essay

Joint Venture in Russia

...firms as they expand their global reach. Joint Venturing in Russia Joint venturing is becoming an increasingly popular strategy for setting up international operations. Russia is particularly interested in these arrangements because of the benefits they offer for attracting foreign capital and helping the country tap its natural resource wealth.However, investors are finding that joint venturing in Russia and the other republics of the former Soviet Union can be fraught with problems. For example,Royal Dutch Shell was recently pressured to give up its majority stake in Sakhalin Island to Gazprom. BP has been forced to renegotiate its contracts with its Russian joint-venture partner, TNK. New laws will require foreign investors interested in Russian energy projects to pair with Kremlin-approved organizations, further empowering the Russian company and government. Kremlin power is not the only problem facing joint-venture investors in Russia. Others include the following: 1. Many Russian partners view a joint venture as an opportunity to travel abroad and gain access to foreign currency; the business itself often is given secondary consideration. 2. Finding a suitable partner, negotiating the deal, and registering the joint venture often take up to a year, mainly because the Russians are unaccustomed to some of the basic steps in putting together business deals. 3. Russian partners typically try to expand joint ventures into unrelated activities. 4. Russians do......

Words: 1305 - Pages: 6

Premium Essay

Joint Venture

...idea of joint ventures in the universal vitality division and builds up a joint endeavor model, as a business advancement and evaluation device. The joint endeavor model displays an orderly strategy that depends on present day business brainpower to evaluate a potential business wander by utilizing an adjusted score card method to screen potential accomplices, in view of their mechanical and budgetary center abilities. The model can be utilized by business improvement administrators to saddle the capability of joint dares to make monetary development and reasonable business extension. Besides, associations with nearby organizations can help to moderate econo-political hazard, and encourage purchase in from the national governments that are ordinarily the essential partners in the vitality area wanders (specifically or in a roundabout way). The specific instance of Eskom Enterprises (Pty) Ltd, a completely claimed auxiliary of Eskom, is highlighted. Table of Contents 1. BACKGROUND 4 2. INTRODUCTION 4 3. PROBLEM STATEMENT 5 4. CRITICAL ANALYSIS OF A JOINT VENTURE STRATEGY 5 4.1 What are joint ventures? 5 4.2 The elements of business strategy 6 4.3 Partnership capabilities: a value-added perspective 7 5. ALIGNING THE TECHNO-FINANCIAL STRATEGIES OF PARTNERS 8 5.1 Technology strategy 9 5.2 Financial strategy 10 5.3 The need for a strategic fit between partners 11 6. THE JOINT VENTURE MODEL (JVM). 12 6.1 RECOMMENDATION FOR THE FIRM OF JOINT......

Words: 3204 - Pages: 13

Premium Essay

Mergers and Joint Ventures

...Mergers and Joint Ventures ECO/365 Microeconomics May, 8 2015 Mergers and Joint Ventures As a team, we learned about the different types of mergers and the differences between them. We also discussed how they differ from a joint venture. Different types of mergers We will start with the first type of mergers, which is Horizontal Merger. In a Horizontal Merger, pair of companies in the same industry that sell the same stuff or services combine their businesses together. This is the most common type of merger and is usually tends to occur in industries that are not very competitive. By combining businesses, they are able to save money in certain areas like double advertisement cost. The next type of merger is Vertical Merger. In a Vertical Merger, again, a pair of companies combines businesses but the difference from a Horizontal Merger is that these companies sell and make different products or services but each one contributes to a single final product. These types of mergers usually occur in assembly line type businesses like automotive for example. When the companies merge together to produce a final product they can find ways to help cut production cost and sometimes even material costs. Now we will talk about a Conglomerate Merger, this is when two or more company’s combine, and these companies are involved in totally unrelated types of business activity. Although, there are two different types of Conglomerate Mergers and......

Words: 517 - Pages: 3

Free Essay

Joint Venture

...en Chine : la représentation, la Joint Venture (JV) et les sociétés à capitaux 100% étrangers (WFOE) c'est-à-dire la filiale 100%. Parmi elles, la Joint Venture a longtemps été la première forme d'investissement autorisée et le mode d'opération favorisé par les entreprises étrangères en Chine car il est souvent le seul à être permis. Les joint ventures dans la création de sociétés en Chine Aujourd'hui, il existe en Chine un enthousiasme sans précédent pour les joint ventures. Même s'il ne faut pas nier l'existence d'un ralentissement de la croissance du nombre de nouvelles sociétés de ce type, il y a toujours des entreprises étrangères cherchant à s'installer en Chine. Selon M. Yao Shenhong, ancien porte-parole du ministère chinois du Commerce, ce pays a absorbé davantage d'investissements directs étrangers en 2013 que l'année précédente, dépassant les 85 milliards d'euros. Par contre, il faut prendre conscience qu'aujourd'hui, les mésaventures de certains groupes commencent à faire douter de la pertinence de cette organisation juridique. En ce qui concerne la main d'œuvre, c'est aussi un souci majeur posé par la création de joint ventures, les entreprises étrangères acceptant souvent une main d'œuvre mal qualifiée de la part de leur partenaire. Il faut alors fournir une série de formations coûteuses et longues afin qu'ils soient qualifiés pour leur poste. Pourquoi avoir recours à une joint venture ? Malgré tout, le mode joint-venture possède encore des......

Words: 678 - Pages: 3

Premium Essay

Joint Venture in the Philippines

...RESEARCH ON JOINT VENTURE IN THE PHILIPINES Group Research Work Submitted to the Ramon V. Del Rosario College of Business De La Salle University – Manila In Partial Fulfillment Of the requirements in BUS520M Business Law Submitted by: GROUP 4 Amparo, Lourdes Lagman, Mia Marie Legaspi, Jill Noreen Submitted to: Atty. Antonio Ligon April 6, 2016 I. Background 1. Philippine Business a. History 2. Doing business in the Philippines b. Forms of business 3. Definition and Origin of Joint Venture (JV) II. Statement of the Problems 1. What are the applicable laws in joint ventures? 2. What are the tax implications? 3. Are our current joint venture laws sufficient? Especially with the Asean integration? III. Statement of Objectives The research study aims to: 1. Identify the applicable laws in joint ventures 2. Identify the tax implications in joint ventures 3. Identify insufficiencies (if any) in our current joint venture laws and make recommendations IV. Discussion 1. Nature of Joint Ventures in Philippine setting 2. Governing Laws 3. Foreign Investments 4. Scope of Joint Venture Business Activity 5. Taxes in Joint Venture 6. Example of JVs in the Philippines V. Analyses VI. Recommendations VII. Learning Points VIII. References I. Background of Philippine Business History Historians state that the early start of......

Words: 6012 - Pages: 25

Free Essay

Joint Venture

...Sunshine powers joint venture in India 1- Because BP company is using the solar power which is not harming the environment by the smokes that pollute the weather. Yes I think it is taking sufficient measures toward developing new forms of fuel as they have the capability to manufacture solar cells, assemble solar modules and balance solar power systems. 2- India is a good location for developing solar power products due to several reasons, First it has the suitable weather that is needed for producing such energy in an effective way , Also the availability of the skilled work force and the Engineers as there are over 600 workers who are employed at three manufacturing centers and eight offices that the BP company owns in India, it provides its products for all of India. Another good country is Sri lanka, it is rich with the sources needed for producing solar power products, also there are high skilled workers with low wages and suitable regulations and rules. 3- I think the pros are motivating the economic activities and increasing the flow of money, reducing the unemployment and encouraging domestic companies to be more efficient. And the cons are having an inflation and some domestic companies may suffer from the competition. They might only perform in their home country, yes I think it is a wise to allow them to operate independently because they may have good strategies and management plans that help in increasing the profit as each branch is related to different......

Words: 347 - Pages: 2