PROJECT OF INTERNATIONAN BUSINESS

SUBMITED TO:MIS ANAM AMEEN1/26/2015

NCBA&EDHA CAMPUS BARKI ROAD LAHORE SUBMITED BY: . Musaddiq Hussain .Waqas Haider Bhatti .Waseem Ahmad .Abdul Aleem .M Ahsan Shabir .Atif Ali

OUT LINES OF PROJECT. Definition of joint venture business..Features of joint venture business..Advantages of joint venture business..Disadvantages of joint venture business..Definition of Wholly owned subsidiary company..Parent company..Advantages of parent company..Disadvantages of parent company..Conclusion.

What is a Joint Venture?A business arrangement in which two or more parties agree to pool their resource for the purpose of accomplishing specific task in joint venture each of the participant in responsible for profits or losses and costs associated with its. Essential features of a joint venture listed as follows: The purpose is to execute a particular venture or project No specific firm name is used for the joint venture business. It is formed by two or more persons. It is of a temporary nature. Hence, the agreement regarding the venture automatically stand terminated as soon as the venture is completed. The co-ventures share profit and loss in the ratio. The main advantages of a joint venture are: Sufficient Resources: Since two or more persons pool their resources, there is sufficient capital available. Ability and Experience: In joint venture the different ventures may be having different skills and experience. The benefit of their common wisdom will be available to the venture. Spreading of Risk: The co-ventures agree to share the profits and losses in a particular ratio. This implies that the risk is also borne by them in that ratio. More resources: Since two or more firms join together to form a joint venture, there is availability of increased capital and other resources. Access to new markets: By engaging with a foreign collaborator, the products and services can be marketed in a foreign country.

New and improved Technology: One partner may have the new and improved technology but do not have the resources. Other partner may have resources like capital but do not have the technology. In such causes joint venture can fetch new and improved technology as well as great resources. By engaging a foreign partner, improved foreign technology can be availed from it's foreign collaborator. Exchange of Products: Joint venture companies can offer their existing product to sell through the partners network and share the profit. Both JV partners can do the same. By exchanging products and services of the partner, they can diversify the product basket and sell it to their existing customers and increase the profit. Disadvantage in the joint venture form of business. It takes time and efforts to form the right relationship. The objectives of each partner may differ. The objectives needs to be clearly defined and communicated to everyone involved. Imbalance in the share of capital, expertise, investment etc., may cause friction in between the partners. Difference in the culture and style of business lead to poor co-operation. Lack of assuming responsibility by the partners may lead the collapse of business. Lack of communication between the partners may affect the business. Wholly Owned Subsidiary Definition: Awholly owned subsidiaryis a company that is completely owned by another company called theparent companyorholding company. Parent company : whose common stock is 100% owned by another company, called the parent company. Advantages: The parent subsidiary structure isolates risks because the two companies are separate legal entities. The losses at a subsidiary do not automatically transfer to the parent company. The parent can exercise control over a subsidiary if it owns a large block of its stock, but not necessarily a majority of the shares. Even a fractional ownership of the shares of a widely held company could result in effective control. The parent-subsidiary operating structure allows for greater diversification and increased efficiencies partly because senior management at the parent company does not have to be involved in the operational details of its subsidiary, according to "Rating Parent/Holding Companies and Their Subsidiaries," a 2010 document by the Dominion Bond Rating Service. Disadvantages: The parent company does not have complete access to the cash flow of the subsidiary, unless the parent controls 100 percent of the shares. To maintain its image and reputation, the parent company may have to pay for the subsidiary's debts even if it has no legal obligation Lending institutions may require guarantees from the parent before lending to one of its subsidiaries. The parent company could be liable for damages if an operating subsidiary violates the law or is subject to enforcement actions, says Dominion Bond Rating Service.Conclusion:It is concluded that the joint venture business is better then the subsidiary company and parent company because of different businessmen joint together own businesses and becoming a new business with the name of a new name of business or a combine name business. The main advantage of joint venture business is that we can understand the customs of other company or other country are easily come into mind so for the time of running business we have no problems.