Understanding Motivations and Suitability of International Joint Ventures

This report discusses the understanding of motivations behind formation of international joint ventures in the globalization process, analysation of decision-making criteria which determines the suitability of use of international joint ventures, and the benefits and challenges of use of international joint ventures.

Individual Academic Report

Table of Contents
Executive Summary.........................................................................................................................3
INTRODUCTION...........................................................................................................................4
Reports are different from the essays. A report is a short document and for a particular purpose a
report is written. It is concise and up to the point. It is normally formed to analyse or evaluate a
situation and also it has recommendations for the future. A report is a document which is well-
structured and clear. Reports are needed for the business or workplaces etc. reports should be in
precise format and contents of the reports change with the departments and the organization.
Report contains description of the situation, evaluation of the research, recommendations and
conclusions. Marks and Spencer is a multinational London based company. It sells clothing,
food products, home décor and other home products etc. it has a complete range of clothing for
men, women, kids. The company is listed on the London stock of exchange. This study will
discuss the understanding of motivations behind formation of international joint ventures in the
globalization process. Analysation of decision-making criteria which determines the suitability
of use of international joint ventures. Further demonstration of the suitability of international
joint ventures in global expansion. This study will also explain benefits and challenges of use of
international joint ventures..............................................................................................................4
MAIN BODY...................................................................................................................................4
1Literature review............................................................................................................................4
Motivation behind the formation of international joint ventures.................................................4
Analysing decision-making criteria which determine the suitability of international joint
ventures........................................................................................................................................5
Suitability of international joint ventures in global expansion....................................................6
Benefits and challenges of the use of international joint ventures...............................................7
Analysis and discussion...............................................................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

Executive Summary
Analysis of requirements of globalisation is done in this report and the requirement and
important of joint ventures is also covered in this report. Evaluation of international joint
ventures is done in this report with the analysis of different effectiveness which is achieved due
to joint ventures is also analysed. Effectiveness of joint ventures in terms of factors due to which
M&S has to increase its geographic reach and the effectiveness of factors which are affecting the
decision-making for analysing the effectiveness of joint ventures. Analysis of several benefits
which are achieved due to this joint ventures is done and evaluation of different challenges
which are achieved due to joint ventures is also covered in this report.

INTRODUCTION
Reports are different from the essays. A report is a short document and for a particular
purpose a report is written. It is concise and up to the point. It is normally formed to analyse or
evaluate a situation and also it has recommendations for the future. A report is a document which
is well-structured and clear. Reports are needed for the business or workplaces etc. reports should
be in precise format and contents of the reports change with the departments and the
organization. Report contains description of the situation, evaluation of the research,
recommendations and conclusions. Marks and Spencer is a multinational London based
company. It sells clothing, food products, home décor and other home products etc. it has a
complete range of clothing for men, women, kids. The company is listed on the London stock of
exchange. This study will discuss the understanding of motivations behind formation of
international joint ventures in the globalization process. Analysation of decision-making criteria
which determines the suitability of use of international joint ventures. Further demonstration of
the suitability of international joint ventures in global expansion. This study will also explain
benefits and challenges of use of international joint ventures.
MAIN BODY
1Literature review
Motivation behind the formation of international joint ventures
Complementary of assets and resources:
As per author Kabiraj and Sengupta (2018) Companies do the international joint ventures due to
the lack of assets or the resources needed for the expansion. This will get benefit to both the
companies who are in joint venture. First company can get the benefit of the latest technology of
the second company and the second company can get the distribution capabilities of the first
company which can help both the partners in increasing the market share.
Trade barriers mitigation:
Companies do international joint ventures because they want to mitigate the trade barriers which
comes in the future. Many global companies do joint ventures with the local companies so that
they do not face the trade barriers which foreign company have to face while enter the new
market. In some countries government even have strict rules for foreign companies so this is also

the reason to do the joint venture as foreign companies do not have any choice and if they want
to enter that market then joint venture is only the option.
Reduce costs:
As the author Parameswar and Dhir (2020) International joint ventures reduce the costs. It help
both the companies in beating the global competition. It reduces the costs related to the
equipments, infrastructural costs. Machinery etc. as in joint ventures both the companies will pay
for the expenses. To develop the new products or launching the products in the new markets are
the expensive process for the company if they are going alone in the new market. Costs and risks
are shared between both the partners and leading the higher development. Company can also
reach the economies of scale and achieve the production rationalization.
Market value:
International joint ventures create the positive market value of both the firms. The brand of the
company become the trusted brand which help the company in increasing the market share as
well. Company will also get the loyalty customers.
Analysing decision-making criteria which determine the suitability of international joint ventures
Some criteria are:
Shared investment:
According to Dong and et.al. (2019) Every party in the joint venture contribute their share of
capital in the business which depend on the partnership agreement made by the companies. As a
result it reduces the financial burden from the each partner. In this all the companies invested
particular amount, and they are liable to take profits according to the ratio which is mentioned in
the agreement of partnership.
Technical expertise:
Every company will bring some technical knowledge and expertise to the business and in this all
the companies are going to have benefits with each other. It will also make the joint venture
strong and also help in smooth running of business operations.
New market penetration:
Author says Parameswar, Dhir and Ongsakul (2018) International joint venture will help the
companies to enter the new market quickly and easily because all the regulations are considered
and followed by the local company. International company will also get relaxation from the rules

and laws which are mandatory have to follow by the foreign companies. This will facilitate the
easy entry in the country.
Customer preference:
Foreign company will not have to do the research about the taste and preference of the
consumers because local market have all the knowledge about the preference of the consumers.
By doing joint venture it saves the time, costs and efforts of the company. Local company will
get the benefit of expertise or other advantage from the foreign company and foreign company
will get the benefit of the local knowledge from the local company.
Synergy benefits:
As Nadiyah, Vojisavljevic and Amar (2020) Synergy benefits will company get if they do joint
ventures same the synergy benefits which they get from mergers and acquisitions. Synergies can
be of many type like the financial synergy which reduce the capital cost or the operational
synergy in which, if two companies are working together will enhance the operational efficiency.
Barriers to competition:
This is one of the biggest reason why company adopt joint venture because it avoids the
competition and the pressure related to pricing. Company do partnership so that they will reduce
the competition because they had done partnership with their competitors only.
Suitability of international joint ventures in global expansion
Economies of scale:
As Nippa and Reuer (2019) If any company having the fixed cost which is high then doing the
joint venture with the other company help to achieve the economies of scale which is very
important if company is competing internationally and it is also the good method in which both
the companies can use each other's resources and achieve the objectives.
Market access:
It is beneficial for the global expansion because foreign companies don't have idea about the
customer behaviour and also company is not aware of the channels through which they can do
distribution of the products. Entering into the joint venture can help the company in providing
effective distribution channel instantly and also make the good customer base.
Geographical constraints:
As per author Kabiraj and Sengupta (2018) To do the partnership with the local company is
always beneficial for the foreign companies because foreign company may feel difficulty in

entering in the new market alone because as company don't have the experience of the local
market and also have to face the barriers which are there by the government for the foreign
companies.
Acquisition barriers:
When a company want to acquire the other company but fail to do so because of the costs, legal
barriers or the restrictions then adopting joint venture is the good option. As compare to the
acquisition, joint venture is the less costly and less risky. Sometimes company's also do joint
venture if in future they are planning to acquire that company. If joint venture fails then company
have to face the half loss because they have invested half only but if acquisition fails then full
investment of the company will go waste.
Specialized staff:
As the author Parameswar and Dhir (2020) The specialization of the workforce will get under
joint venture. This will be the benefit for both the companies.
Benefits and challenges of the use of international joint ventures
Joint ventures: joint ventures are very useful when a company want to enter the new market. In
the markets where inward in vestments can't be made then joint venture in the solution to enter
that markets.
Benefits of international joint ventures:
New expertise and insights: According to Dong and et.al. (2019) Joint ventures help the
companies in sharing the technology. It also helps in gaining the new insights and company can
also share each other's expertise. Enables the sharing of complementary IP assets which is
required for the production and the delivery of the goods and services.
Better resources: it will help to use the better resources which can be the staff or any other
resources. The Latest equipments and more capital can bring into the business.
Knowledge of local markets: Author says Parameswar, Dhir and Ongsakul (2018) joint
ventures help to gain the knowledge of the local markets. Easy entry in the channels of
distribution and also get easy access to the raw materials. Advantages of the government
contracts and local production related facilities. It also helps in reducing the political friction and
improve the national acceptance of the company.
Shared risks and costs between both parties: if in case joint venture fails then a company is
not alone to bear all the risks because both companies will share the losses.

Challenges of international joint ventures:
Restriction of the flexibility: As per author Kabiraj and Sengupta (2018) it not always happen
that company will get flexibility in the joint ventures, sometimes it got restricted as well. Lack of
focus by the participants in the joint ventures and in that the individual business have to suffer.
Vague objectives: normally objectives in the joint ventures are not completely clear and the
people which are involved in this also have vague idea of the objectives. Objectives are not
properly communicated.
Clash of cultures: As the author Parameswar and Dhir (2020) there is a possibility of the
cultural clashes which results in the poor integration and cooperation. As people have different
preferences, beliefs, choice etc. can create the clashes if not considered.
Analysis and discussion
Motivation for joint ventures in global market-
Joint venture is business partnership between two or more organization which is done in
order to increase company's geographic reach in other country by which organizational sales can
be increased. Following are the factors which motivate organizations like M&S to increase their
involvement in international joint ventures.
Increase market competition in host country-
Market competition has increased drastically and because of which company has to
increase its geographic reach in other locations in such a way that high customer count with the
least amount of competition can be achieved by which efficient economic growth can be
achieved by which chances of goal achievement can be increased (Sun, Deng and Wright, 2020).
Technological advantages-
Technological advancement have motivated organizations to increase their geographic
reach in other wide areas because through this advancement's synchronization can efficiently
establish, despite geographic distances because of which high productivity and goal achieving
capability can be achieved.
Low production cost-
Joint ventures are made in such a way that company is able to share its resources with the
other organization because of which the production cost for developing a product is reduced and

with that productivity is also increased because of the sharing of workforces and machineries by
which production cost is reduced into equal parts (Zekiri, 2016).
Sharing of resources-
In joint ventures organizations can share their resources with each other in such a way
that high productivity is achieved. With that M&S can share the market analysis with the other
local company and vice versa can be achieved due to which all the partner companies will be
able to evaluate the different working capabilities and process, by which employee creativity can
be increased.
Increased customer count-
The main advantage of joint ventures is that through thus company can attract new
customer towards the organization by which high sale can be achieved because customer will get
new and rare product because of which high engagement towards the organizational activities
can be achieved.
Decision marking criteria for decision-making in international joint ventures-
One of the main advantage of this joint venture is that organizational expenditure of
M&S will be equally distributed among all the partners by which expenditures can be reduced
and since equal amount of contribution has to be made by all the partners. Therefore, double
work quality is achieved in minimum expenditures.
M&S can share its organizational working resources like advanced machineries and other
technological advantages with the partner company then by which new creative products can be
developed by which high work productivity can be achieved (Razzaq, A. and et.al, 2018).
Through this technology sharing organization can develop products in such a way that customers
achieve new and creative product on the basis of their requirements by which customer
engagement can be increased.
M&S provide wide range of products to its customers at an affordable pricing but with
the increasing market competition company has to increase its geographic reach in other areas by
which efficient economic growth can be achieved and with joint venture company can achieve
high sales in half of the expenditures. Due to this factors company has to implement new market
penetration in its joint venture decision-making by which effectiveness can be increased.
While decision-making for the implementation of joint venture M&S has to make sure
that it is able to effectively segregate the market place by which customer segmentation can be

done by which products placement can be made on that basis by which high effectiveness is
achieved due to which chances of failure can be reduced (Oliveira, 2017).
Barriers of competition-
Market place has to chosen in such a way that company has to face minimum amount of
market competition by which high market share can be achieved due to which chances of brand
switching can be reduced for the customer side. With that due to this reduced market competition
company can achieve high sales and by which sales and brand awareness can be increased at the
same time.
Suitability in international joint venture-
By increasing the geographic reach in internation market M&S can increase its market
share and organizational sales because of which efficient economical growth can be achieved
due to which company can get sufficient amount of investments for developing its future
strategies. Through this M&S can achieve high brand awareness and due to which chances of
efficient sustainability as per the changing market trends can be increased by which goal
achieving capabilities can be increased.
M&S must make joint ventures with the local company of the targetted location by which
company can evaluate the customer requirements and develop products in such a way that
customer count can be increased. Through this joint venture M&S can utilize the pre-installed
organizational resources of the local company by which expenditures made on developing
infrastructure can be reduced.
Cultural differences makes a direct impact on the buying capability of the buyer because
of which M&S has to make sure that through this joint venture it can position product according
to the cultural diversity of the targetted location. Through this company can make sure that it is
providing products as per customer requirement by which probability of getting high sales can be
increased (Minbaeva and et.al, 2018).
In order to provide products on the basis of customer requirement M&S has to make sure
that employees are able to work as per changing organizational requirement because of which
these joint ventures are considered as an effective option for providing training to employees in
such a way that their creativity and loyalty towards the organization is increased.
Benefits and challenges of international joint venture-

Benefits
Sharing of Expertise-
Each organization is having its own unique working capabilities and per its
organizational work culture because of which differences in experience is achieved, therefore
through these joint ventures organizations like M&S can share their experiences with its local
partner company by which out of the box product can be developed.
Increased resources-
Joint ventures are made in such a way that organizations can share the resources with
each other by which product quality can be increased and productivity can also be increased and
thus through these joint ventures M&S can reduce the expenditures for implementing
machineries and work forces because both the partner companies are sharing same target because
of which high productivity is achieved (Shu, Jin and Zhou, 2017).
Knowledge of local market-
Through these joint ventures with local companies M&S will get a better understanding
of local market and customer requirements by which it can develop its organizational working
strategy in such a way that customer requirement are being fulfilled by which sales can be
increased and organizational expenditures can be recovered by chances of goal achieving can be
increased.
Challenges
Reduced flexibility-
Joint ventures may provide high creativity and working capabilities but due to the
cultural differences between M&S and its partner local organization, work flexibility for
implementing changes is reduced because of which company faces limitations in providing new
products to its customers.
Vague objectives-
Joint venture is the working partnership between two different organizations and because
of which miscommunications and misunderstanding often arises because of which working
capabilities of the organization is often affected and chances of breaking the venture increased
because of which joints ventures are very fragile.
Clash of culture-

In order to achieve high work quality and productivity M&S has to develop effective
communication with the partner company by which work efficiency can be increased however
this is not easily achieved because of the cultural differences and thus organizational conflicts
may arise.
CONCLUSION
It can be concluded that it is very important for organizations to increase their
geographical reach in such a way that company's customer count can be increased by which
company can achieve its organizational goals. Globalization is important for organizations but at
the same time it is expensive because of which organizations like M&S have to implement joint
venture by which expenditures can be reduced and at the same time efficiency can also be
increased. In order to increase the effectiveness of joint ventures organizations have to evaluate
the work capabilities of its joint venture by which risk factor can be reduced and high probability
of goal achieving can be increased. Through this company may reduce the chances of failure but
still it has to make sure that it is able to effective understand the new market place by which high
customer attraction can be achieved and also with that a efficient boost to economic growth can
also be achieved. Therefore, joint ventures are a best option for organizations to increase their
customer count at an reduced cost, but at the same time it has to make sure that all the legislation
laws are being fulfilled by which company can reduce the chances of getting penalties for not
working as per governmental laws.

REFERENCES
Books and journals
Dong, X. and et.al., 2019. Conditional effects of justice on instability in international joint
ventures. Journal of Business Research. 101. pp.171-182.
Gao, Y., 2019. The way collaboration benefits vocational students: a case study of a joint venture
college in China. Asia Pacific Journal of Education. 39(1). pp.65-78.
Kabiraj, T. and Sengupta, S., 2018. A theory of joint venture instability under inter-partner
learning. Research in International Business and Finance. 46. pp.363-372.
Minbaeva, D. and et.al, 2018. Disseminative capacity and knowledge acquisition from foreign
partners in international joint ventures. Journal of World Business. 53(5). pp.712-724.
Nadiyah, K., Vojisavljevic, V. and Amar, K., 2020, July. International Joint Venture (IJV) in
emerging economies: Case Study of Automotive Industry. In IOP Conference Series:
Materials Science and Engineering (Vol. 885. No. 1. p. 012062). IOP Publishing.
Nippa, M. and Reuer, J.J., 2019. On the future of international joint venture research. Journal of
International Business Studies. 50(4). pp.555-597.
Oliveira, S.M., 2017. Partner selection in international joint ventures: A framework for the
analysis of factors relevant to the selection of partners. The Marketing Review. 17(2).
pp.199-215.
Parameswar, N. and Dhir, S., 2020. Interpretive ranking of choice of interaction of parent firms
post-international joint venture termination using TISM-IRP. Global Journal of
Flexible Systems Management. 21(1). pp.1-16.
Parameswar, N., Dhir, S. and Ongsakul, V., 2018. Purpose of international joint venture and
interaction post termination. Journal for Global Business Advancement. 11(6). pp.687-
705.
Razzaq, A. and et.al, 2018. Critical external risks in international joint ventures for construction
industry in Pakistan. International Journal of Civil Engineering. 16(2). pp.189-205.
Shu, C., Jin, J.L. and Zhou, K.Z., 2017. A contingent view of partner coopetition in international
joint ventures. Journal of International Marketing. 25(3). pp.42-60.
Sun, P., Deng, Z. and Wright, M., 2020. Partnering with Leviathan: The politics of innovation in
foreign-host-state joint ventures. Journal of International Business Studies. pp.1-26.
Vanyushyn, V. and et.al, 2018. International coopetition for innovation: Are the benefits worth
the challenges?. Review of Managerial Science. 12(2). pp.535-557.
Zekiri, J., 2016. Motivating factors and the modes of entry in other markets. Ecoforum
Journal. 5(3).

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