Emerging Market - Joint Venture

Research
Project

ABSTRACT
Globalisation help an organisation in expansion of its business activities such as
marketing, human resource, operations etc. For entering into international market, there are
different number of entry modes available such as joint venture, strategic alliance, exporting,
franchising, licensing etc. All these are essential but for expanding business activity in
international market, Joint venture is considered as best and effective strategy. For completing
current research, various activities like introduction, literature review, research methodology,
data collection, analysis, recommendation and conclusion have been discussed that will help in
making whole research more successful. Along with this, the part of literature review has been
don thorough secondary research method and research methodology is includes various methods
that will be applied by investigator to gather data and information. Furthermore, data analysis
and collection is based on research objectives that includes different questionnaire asked from
respondents to understand their view points. Apart from this, recommendation and conclusion
will include necessary areas for better improvement.

Table of Contents
ABSTRACT ....................................................................................................................................3
TITLE..............................................................................................................................................1
CHAPTER 1: INTRODUCTION ...................................................................................................1
CHAPTER 2: LITERATURE REVIEW.........................................................................................3
Globalisation...............................................................................................................................6
Other entry modes.......................................................................................................................7
CHAPTER 3: RESEARCH METHODDOLOGY..........................................................................7
CHAPTER 4: DATA COLLECTION AND INTERPRETATION .............................................10
CHAPTER 4: REFLECTION, CONCLUSION AND RECOMMENDATION...........................22
REFLECTION...............................................................................................................................22
RECOMMENDATION ................................................................................................................23
CONCLUSION .............................................................................................................................24
REFERENCES .............................................................................................................................25

TITLE
“Vodafone using joint venture as entry strategy into the Romania market and impact on
its profitability”
CHAPTER 1: INTRODUCTION
Background of the research
Joint venture is considered as a new business enterprise that is developed from two or
more companies in order to enhance their business performance and expand their operation at
new market place. Business organisations are now a days emphasising on enhancing their
business by expanding it at international marketplace. Globalisation refers as an effective process
used by multinational organisation for integrating and interacting among people, governments
and companies worldwide. It is the spread of technology, goods, information and jobs across
national cultures and boundaries. This defined as an essential process because it can increase the
standard of living in less developed nations by giving job opportunity, modernization and
enhanced access to products and services (Beamish, 2013). For this, they prefer to adopt various
kind of entry mode which makes it easier for them to enter into international market scale. Some
of the common and influential entry modes are Licensing- It is an official permission, permit
something. License can be granted through one party to another as a components of agreed
among those parties. It is a kind of transfer- related market strategy. It consists firm to granting
the permission to firm in other country to use intellectual property for defined period of time.
Franchising- It is form of business through which owner of service, method and product obtain
distribution by the affiliated dealers. Joint Venture It is cooperation enterprise entered in to
through two or more than business entity for purpose of particular project and some other
business activities. The main reason of joint venture is related to attaining the specific objectives.
Export: In this business organisation exports its products in another country for grabbing
attention of customers improvising its sales as well as profitability. All of these strategies are
highly effective and helps companies in increasing sales of products as they are able to approach
more number of customers. This directly places impact on the profitability of the company which
also contributes in improvement in market share. Along with this, Vodafone decide to expand
their business activity in Romania with Telekon Romania, joint venture is more effective and
useful strategy for them. There are different benefits for Vodafone for using joint venture such
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as new insights and expertise, better resources, not require more time and cost etc. Thus, all these
are major benefits of joint venture which will support an organisation by improving its
profitability and growth at international market such as Romania.
A joint venture introduces as a business arrangement in which there is two and more than
that companies are agree to pool resources for the motive of achieving a particular task. Joint
venture is a best entry mode strategy, in which each participants is liable for losses, profits and
cost associated with it. Along with this, parties enter into joint venture agreement in order to pool
strengths and maximise competitive benefit while reducing risk (Abd-Karim and et. al., 2014).
An international joint venture occurs when two organisations based in two or more nations from
a partnership. An enterprise which needs to explore global trade without taking any
responsibilities or duties of cross boundary business transactions has better choice of forming a
joint venture with an international partner. For this report, Vodafone is a chosen
telecommunication organisation which was founded in 1982 by Nick Jeffery. Company wants to
expand their business activity by using joint venture with Telekon Romania. It is a
telecommunication company in Romania which was founded in 1930. Joint venture is most
essential strategy because it provides a better chance for an organisation to save time and money
in marketing, operation and advertising costs.
Research Aim
“Vodafone using joint venture as entry strategy into the Romanian market and impact on
its profitability”.
Research Objectives
 To review literature on joint venture and profitability.
 To carry out primary study on joint venture and profitability To recommend how Vodafone can use joint venture to increase profitability.
Research Questions Is joint venture the right strategy to increase profitability?
Rational of the research
The main purpose of this investigation is to analyse that whether joint venture is the right
strategy for Vodafone in order to increase their profitability at international market place. For
understanding effectiveness of this strategy, both the literature review as well as primary
methodology of data collection will going to be used so that desired information can be gathered
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on the selected topic. Along with this, it will also help in acquiring feasible results on the study
too which will provide appropriate guidance to the company.
CHAPTER 2: LITERATURE REVIEW
A literature review refers as a comprehensive and detail information of previous study on
a specific topic. It is a most important part of research project which will support a researcher to
address all objectives and questions of research in more effective manner (Butković, Bošković
and Katavić, 2014). Main intent of literature review section is to investigate the conflict as well
as gaps in previous study. In this, different authors provide their view point about the topic which
will support an investigator to analyse important and issue of research.
Concept and Importance of Joint venture and profitability
According to the Johnston and Rudyak, (2017) it has been stated that joint venture
considered as the arrangement of business in which two or more than two different parties are
accept to pool their resources for aim of attaining particular objectives. Under this, each
participant is responsible for losses, costs and profits related with this. Venture is own entity that
is separated from other business interest of participants. It can be with firm of similar sector or
some other sector but with combination of both they will generate the competitive benefit as
comparison to other players at market place. In addition to this, joint venture cab be flexible that
can be in regards to needs of business. An arrangement among firms should have terms and
conditions in detailed with respect to activities which will be carried through them. In context
with Vodafone which is a UK based multinational telecommunication firm has decided to adopt
the joint venture as a strategy with the IBM in order to pursue solutions in variety of developing
technology industry. With this assistance, being a mobile phone network operator, through joint
venture strategy, Vodafone gain a number of opportunities to work in collaboration with IBM
and expand its business easily over market area of Romania, in following way –
New sights and expertise- Under this, starting joint venture in Romania gives better
opportunities to Vodafone business to gain the new insights as well as expertise. It is helpful for
company to understand the market and provide the short term partnership which have forged. As
it is also may provide support to business organization in opportunities to expand their business
activities with innovative ways. This will contribute in establishing positive and competitive
advantage from its rivals.
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Intellectual property gains- For business, advanced technology is complex for business
in order to develop in- house. The companies enter in to the joint ventures with advanced
technologies for gain access to assets without having spent money and time to create assets for
themselves in- house. As Vodafone is a large size organisation and with better access to
financing that may be contribute working capital strength of the joint venture with company that
has limited financing capabilities but it gives key technology fort sales as well as development of
services or products.
Better resources: It is also an effective that forming a joint venture in Romania will
provide access to better resources like specialised staff and technology as well. In this regards,
all the equipment and capital is also helpful in providing better access to establishing their
competitive brand image at market place. Furthermore, better consumption of resources also
contribute in enhancing the positive brand image at global market place by operating their
business.
Barriers to competition- The main importance of joint venture is to avoid competition
and the costing pressure. With the help of collaborating with some other companies in Romania,
Vodafone can reduce erect barriers for rivals that can make this complex for them to penetrate
marketplace.
Synergy benefits- Under this, joint venture can provide similar kind of synergy
advantages which organisations look for in the mergers and acquisitions. It can be financial
synergy and operational synergy. The financial synergy minimizes cost of capital and on the
other hand in operational synergy, two organisations working together and enhance efficiency of
business operations.
In joint venture, as new company is to be formed to attain particular aim of partnership
such as temporary arrangement among two or more than two forms (MARKET ENTRY STRATE-
GIES, 2018). Therefore, joint venture is beneficial as risk minimizing mechanism in the new-
market penetration, pooling of the resource for big project. It may be investing in new business
operations or include sharing the assets for combined advantages to both involved parties. In ad-
dition to this, most common joint ventures consist use of assets in a proper and effective manner.
According to the Majocchi, Mayrhofer and Camps, (2013) Joint venture refers to business ar-
rangement under which two or more than two different parties agree to be pool resources for an
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