international joint ventures Assignment

Added on - 15 Mar 2021

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EssayNowadays international joint ventures are seen quite often. Many organizations areshowing interest in becoming joint ventures whether it is within a nation or with anotherorganization overseas. Organizations consider forming joint ventures with otherorganization that has similar product lines for getting different kinds of advantages aswell as for expansion of their businesses. There are a handful of reasons fororganizations to grow their business internationally. Such as, they can enter differentmarkets; share the risk, financial restrictions are minimized, etc. The capacity of jointventures mostly depends on the similarity of these organizations. A contract of jointventures between two organizations with out of the ordinary characteristics can bring ina lot of benefits. The objectives of these organizations should be aligned. Otherwise,there can be an occurrence of one organization profiting over others which can becomea reason for unnecessary conflicts among themselves. The organizations have to befinancially stable for these kinds of businesses since inadequate funds can put the otherparty involved at risk. A resemblance in the plan of action should be prioritized. Legalfeatures of ally countries have to be checked properly and the suitability of the directiveshave to complement each other.When businesses situated in two countries or more than two countries collaborate iscalled an international joint venture. Different organizations are taking differentmeasures for expanding their market. Entering a foreign market and do well regardlessof their differences need structured planning. It is one of the most significant ways ofenlarging a business globally. In this essay, confirmations and analysis of somescholars regarding international joint ventures and intercontinental augmentation ofbusinesses will be delivered. There are lots of factors that encourage organizations toenter the foreign market through international joint ventures. Such as expansion ofbusiness, sharing risk, increased customer base, sharing knowledge, etc. There arealso some factors to be considered before signing up for an international joint venturefor more profits. The rationality behind using international joint ventures as a way ofentering the foreign market is also discussed here. International joint ventures are notall about advantages. Several disadvantages have to be considered properly.2
Otherwise, the joint venture will be a huge failure and both parties involved will have topay a fortune.Now, to analyse the role of international joint ventures for the successful pursuitinto foreign markets,several pieces of research and conclusions reached by differentscholars will be explored. According to a research conducted by Park and Harris in2014, for constructing receptive capacity, international joint ventures require propermicro-foundations separately; procedure and organizational levels, and reasonableinterrelations between each other, particularly by making experienced and properlytrained international joint ventures managers learn who are given organizational andprocess independence to spend on learning. For example, we can analyse Samsung-Tesco international joint ventures that properly learned retail operation from one partnerand put it in the South Korean surroundings known to the other party (Park and Harris,2014). In the research conducted by Watanabe et al., it was shown that due to Uber’sstrategy of using ICT- driven disruptive business model, it succeeded in internationalaugmentation and now, Uber is used over 479 cities in more than 75 different countriesglobally. It was also recommended that the implementation of ICT- driven disruptivebusiness models not only in the transportation sector but also in other sections as well(Watanabe et al, 2017). Businesses planning of entering the international market haveto focus on international market tactics, market analysis aimed at acquiring foreignmarket intellect, innovation, and automation, conversion of product, adjusting services,cooperative deal, an exhaustive vision so that they can succeed in the global marketwhich was discussed in the research directed by Osano in 2019. He also added theconsiderable international market tactics variables include the integration of marketingplans, globally publicizing, cut-throat pricing tactics, outer consultative services, qualityof the products, limitation regarding trade, foreign market intellects for finding out theproper market for the business, international rivalry, distribution channels, expenditureopportunities, cooperation with large organizations or company, etc.According to Bondeson and Eliasson in 2019, some farms focus on supervising andcorrelating between the restricted access to the firm’s resources as well as the speedneeded for their organization throughout the globalization process. Also, some activities3
should be avoided since these don’t focus on the big picture and responsible for slowingdown the globalization process. Informal liaison procedures are more useful than theformal ones in this process (Bondeson and Eliasson, 2019). International joint venturesare a well-known way of getting into and utilize a new market and make manyresearchers intrigued to analyse different stages and activities undertaken byinternational joint ventures (Parameswar, Dhir, and Ongsakul, 2018). According toNippa and Reuer, an international joint venture is a sort of international strategicalliance that is very important and it is an attractive topic for intellectuals for doingresearches (2019). They also stated that several experimentation scopes would helpboth international joint ventures and intimately connected literature and subjects,hypothesizes of intercontinental organizations, etc. Quick international economic growthand relaxation have expanded the stimulations and opportunities for the organization fortheir entrance into the international joint venture contracts. It was also verified from theresearch that there are different effects of cultural differences among different aspectsas well as the disparity in the design of interrelation among cultural differences. Also,the perpetuity of international joint ventures depends on their age (Tower, Hewett, andFenik, 2019). There are several reasons for an organization to be interested ininternational joint ventures. Those are lower production cost, beneficial financialconversion rate, fewer taxes, etc. But several disadvantages have to be considered.Through an appropriate constructed agreement can lessen these risks (Dinu, 2016).According to Khamaksorn, Kurul, and Tah in 2017, international joint ventures amongintercontinental organizations among developed and developing countries arecontemplated as a successful approach for getting all kinds of benefits in theinternationalized business world. Transferring knowledge is a significant procedurewhere an organization learns different tactics and measures implemented by anotherorganization. An organization’s efficacy in studying and transfer of knowledge isdependent on different factors that ease the ability of an organization to obtain andutilize knowledge. Knowledge coordinators, different techniques of transferringknowledge and tools, etc. are included in these.According to Oparaocha in 2015, organizational network connections have a favourableinfluence on the globalization process of SMEs. But the importance of this influence is4
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