The Design and Management of International Joint Ventures
International Joint Ventures
An international joint venture is a company that is owned by two or more firms of different nationality.
Strategic alliances vary widely in terms of the
level of interaction and type, and equity joint ventures usually require the greatest level of interaction, cooperation, and investment.
International Joint Ventures
Joint ventures have moved from being a way to enter foreign markets of peripheral interest to become a part of the mainstream of corporate activity.
The popularity and use of international joint ventures and cooperative alliances has remained strong.
However, failures do exist and are usually widely publicized.
Why Companies create International JVs
New Markets
To take existing products to
foreign markets
To diversify into a new business
Existing Markets
To strengthen the existing business
To bring foreign products to local
markets
Existing Products New Products
Strengthening the Existing Business International JVs are used by firms wishing to
strengthen or protect existing businesses through: Achieving Economies of Scale. Raw Material and Component Supply. Research and Development. Marketing and Distribution. Divisional Mergers.
Joint Ventures are also used for: Acquiring technology in the core business Reducing financial risk
Other motives for International JVs Taking products to foreign markets
Following customers to foreign markets Investing in “markets of the future”
Bringing foreign products to local markets Complementarily of interests
Diversification
Requirements for International JV Success
Testing the Strategic Logic Partnership and Fit
Complementary Needs Acquisition of capabilities due to learning Corporate culture compatibility
Shape and Design Strategic freedom Managerial roles
Requirements for International JV Success
Doing the Deal Trust vs. Legal considerations
Making the Venture Work Managing Cultural Differences Flexibility