Joint venture of an MNC in socialist, capitalist and mixed economy

By Rajkumar Didwania XMBA-15 Malad west.

Definition
The strategic alliances which allows companies to gain competitive advantage through access to a partners resources, including markets, technologies, capital and people. Within IJVs one or more of the parties is located where the operations of the IJV take place and also involve a foreign company

Reasons for Forming a Joint Venture

Risk Sharing Economies of Scale Market Access Geographical Constraints Funding Constraints Acquisition Barriers

Basic Elements of an IJV

Contractual Agreement Specific Limited Purpose and Duration. Joint Property Interest. Common Financial and Intangible Goals and Objectives. Shared Profits, Losses, Management, and Control.

Factors affecting IJV

Poor formation and planning Unexpected poor financial performance Management problems Inappropriate management structure

Pros and Cons for IJV

Joint ventures enable production and delivery of innovative goods and services.[5] smaller organization an effective method of obtaining the necessary resources to enter a new market. Joint ventures can be used to reduce political friction and improve local/national acceptability of the company.[5] Joint ventures may provide specialist knowledge of local markets and access to supplies of raw materials, government contracts and local production facilities.[5] joint ventures with host governments have become increasingly important. To undertake Large projects Which can not be handled alone Exchange controls may prevent a company from exporting capital and thus make the funding of new overseas subsidiaries difficult. The supply of know-how may therefore be used to enable a company to obtain an equity stake in a joint venture, where the local partner may have access to the required A major problem is that joint ventures are very difficult to integrate into a global strategy. The trend toward an integrated system of global cash management, via a central treasury, may lead to conflict The objectives of the partners become incompatible. Problems occur with regard to management structures and staffing of joint ventures.[5] Many joint ventures fail because of a conflict in tax interests between the partners.

Comparison
Consideration China Germany India

Political
Economical Social

No
Yes No

Yes
No Yes

Yes
Yes Yes

Technology
Legal Environmental

No
No No

Yes
Yes Yes

No
Yes yes

Thankyou