Benefits and Risks of Joint Venture Projects for ASDA and Tengri

UNIT 6
Contents
Executive Summary............................................................. ....................................................2
Introduction..............................................................................................................................2
Discussion................................................................................................................................... 3
Recommendation...................................................................................................................... 10
Conclusion. .................................................................................................................................14
Reflection. ...................................................................................................................................15
References. .................................................................................................................................17
Global organizations mostly adopt the joint venture strategy in order to expand into
international market. In order to enter into a joint venture, organizations need to conduct
thorough analysis of the business strategy of their own organization and also of their potential
partners with whom they wish to enter in to the joint venture. Detailed analysis of the business
strategies and activities helps business organization to choose the right joint venture partner
based on the strategic fit. One of the most important element which is associated with a joint
venture is development of the joint venture agreement between both the organization which
helps in detailing all the terms and conditions for the joint venture that both the partners to
follow regarding the joint venture. There are various benefits which are associated with a joint
venture strategy such as sharing of risks, access to improved resources and technology, gaining
of new expertise and insights etc. Apart from the benefits, there are various risks involved in a
joint venture project such as lack of equal involvement of the partners, issues regarding sharing
of intellectual property, cultural imbalances, lack of clear communication etc. In order to
maximize the benefits of a joint venture and to minimize the risks of a joint venture it is
recommended to organizations for having a repeatable model of success, aligning joint venture
objectives with corporate growth strategies, focusing on intercultural management etc.
Introduction
Joint ventures are one of the most popular international market entry modes which are being
followed by numerous organizations considering the benefits which are associated with it. An

international joint venture is a separate legal organizational entity in which two partners who
are economically, geographically and legally independent of each other participate. Multiple
multinational companies have utilized the international market entry mode of joint venture in
order to enter into developing countries. International joint ventures are popular institutional
forms chosen by less developed countries in order to attract foreign direct investment and
knowledge. There are various benefits which are associated with using joint venture as a
market entry mode for international markets for both the organizations involved. However,
apart from the benefit, there are various risks which are associated with entering into
international market through joint ventures. The aim and objective of the current project is to
help in analyzing the risks and benefits for ASDA and Tengri in using joint venture, as the
preferred market entry mode. The other aim and objective of the project is also to provide
recommendation to ASDA and Tengri to ensure the success of the joint ventures project which
will help them to utilize the growth opportunities. It is very important to analyze the risk and
benefits of joint venture as a result of the increasing in joint venture project with every passing
day, so that companies remain aware of the pros and cons associated with joint venture before
entering in it.
Discussion
Project Plan
In order to ensure the success of a joint venture project plan is very necessary which details all
the activities that need to be performed in order to ensure that the joint venture project gets
completed on time. One of the most important part of the project plan is to conduct internal
and external environment analysis in the form of SWOT analysis and PESTEL analysis of ASDA
and Tengri. The next important part of the project plan is to analyze the cost of the joint
venture project and the resources which will be required for the project. It is important for
identifying the strengths and weaknesses of the business strategy of the company. It is also
important to analyze the impact of various macro-economic factors on the business strategy of
the company. The next important part of the project plan of the company is to research the
activities of business organizations in the area or market in which ASDA and Tengri plans to
enter into a joint venture. It is important for getting an idea regarding the viability of the Joint

Venture project of the company. Another important part of the project plan of the joint venture
of the company is to identify various companies in an area with whom it can enter into a joint
venture. It can be done by comparing the working methods of the organizations belonging to
that area in order to ensure strategic fit. Another most important element of the project plan
for ASDA and Tengri regarding starting a joint venture project time involves stakeholder
engagement of the organization. It is very important from the point of view of ASDA and Tengri
to engage their stakeholders for ensuring the success of the joint venture project. During the
stakeholder engagement process, ASDA and Tengri should focus on gaining view and insights
from the stakeholders of the company regarding the joint venture project of the company and
ensure their buy in regarding the joint venture project. ASDA and Tengri should also focus on
managing various changes in the organization which can be caused as a result of the joint
venture project of the company in order to ensure the success and effectiveness of the joint
venture project of the company. As stated by Chung-Jen et al. (2018) the next element of the
project plan of the company deals with selecting the ideal partner to enter into a joint venture
based on the strategic fit between ASDA and Tengri and the company and also depending on
the business potential of the company. As stated by Totten (2017) another crucial element of
the project plan of the joint venture of ASDA and Tengri and an Indian company is development
of the marketing plan and business plan of the new joint venture project based on which it will
operate. It is also important to develop the cash flow projection. It will help in detailing about
the sources of funding of the joint venture project, borrowing of funds for the joint venture
project, division of profit and losses and division of capital gains and losses. Another most
important part of the project plan of the company is development of written joint venture
agreement. It will help in detailing all the terms and conditions related to the joint venture
project such as legal structure of the joint venture, business objectives of the joint venture,
financial arrangements, resolution of conflicts and disputes, use and protection of intellectual
property and day to day strategic decision making. As stated by Kjar (2016) another important
element of the project plan of ASDA and Tengri is development an agreement which will detail
the policies and procedures to be followed in case if the joint venture needs to be terminated.
It is important for avoiding potential future disputes and length legal procedure. The last

element of the project plan of ASDA and Tengri details the distribution of business activities
between both the companies which leads to successful initiation of the joint venture
agreement.
The project plan of the joint venture between ASDA and an Indian company should consist of
the following activities in order to complete the project on time is as follows:
Task Start date End date
Researching the activities of
other business organization
in the area
1/05/2019 10/05/2019
Carrying out internal and
external environment
analysis of the company
11/05/2019 13/05/2019
Estimating cost and
resources for the joint
venture project
14/05/2019 16/05/2019
Comparing the working
method of the company with
that of the potential partners
17/05/2019 22/05/2019
Conducting stakeholder
engagement in order to gain
insights of the stakeholders
of the company regarding the
joint venture
23/05/2019 31/05/2019
Choosing the right joint
venture partner
1/06/2019 05/06/2019
Preparing business and
marketing plan for the joint
venture
06/06/2019 10/06/2019

Preparing cash flow
projections
11/06/2019 15/06/2019
Preparing written joint
venture agreement
16/06/2019 23/06/2019
Preparing agreement
regarding the termination of
joint venture in case of rifts
between the companies.
24/06/2019 27/06/2019
Distribution of business
activities
28/06/2019 30/06/2019
Initiating the joint venture 1/07/2019

Date 1st
May
5th
May
10th
May
15th
Ma
y
20th
May
25th
May
31st
May
5th
June
10th
June
15th
June
20th
Jun
e
25th
June
1st
JulyTask
Researching
the activities
of other
business
organization
in the area
Carrying out
internal and
external
environmen
t analysis of
the
company
Estimating
cost and
resources
for the joint
venture
project
Comparing
the working
method of
the
company
with that of
the