International Joint Venture: Ashford Castle & Petersham Hotel

Desklib provides past papers and solved assignments for students. This report analyzes the risks and benefits of a joint venture between Ashford Castle and Petersham Hotel.

The risks and benefits of a joint business venture Ashford
Castle, Ireland with Petersham Hotel, UK to enter international
market of UK
1

Table of Contents
Task 1: Project Plan...................................................................................................................3
Task 2: Research Report............................................................................................................8
Reference List..........................................................................................................................25
Appendices...............................................................................................................................27
2

Task 1: Project Plan
A brief explanation of the proposed topic and why you have chosen it
A joint venture is a form of partnership that creates a third independently managed firm. In
this particular market entry strategy, two firms agree to work together and maintain a
relationship for future business perspectives. In the past years, many firms have collaborated
to form a new venture for various purposes such as gaining a higher percentage of market
share, expanding the business to new markets and others. The joint venture is one of the
appropriate strategies to start the foundation of business in other countries. The research
topic is about identifying the risks factors and benefits available for Ashford Castle, Ireland
that shall collaborate with Petersham Hotel, UK. It will identify some opportunities that
Ashford Castle, Ireland needs to grab from the international market of the United Kingdom. It
can use the market potential and expertise of Petersham Hotel, UK to continue its business.
Despite greater support from this local hotel of the UK, Ashford Castle, Ireland may face
some risks that may take a lengthy process for the establishment of a new and successful
enterprise. Therefore, the paper will encompass some risk mitigation strategies that can be
helpful for both enterprises.
An aim and some objectives for your proposed research
The research paper aims at evaluating the anticipated benefits as well as risks that can be
experienced by Ashford Castle, Ireland, and Petersham Hotel, the UK after their entry into an
international joint venture.
The objectives are listed below.
 To investigate different aspects of the joint venture in international market expansion
 To enquire some catalyst that will provide benefits for Ashford Castle, Ireland while
entering into the UK market in collaboration with Petersham Hotel, UK
 To evaluate some risk factors that may affect the success of an international joint
venture created by both enterprises
 To assemble strategies for mitigating risks associated with joint venture business of
Ashford Castle, Ireland, and Petersham Hotel, UK
A brief discussion of the scope and limitations of the project
Scope
3

Included Scope
The scope included in the study is to carry out the quantitative research for reaching
conclusion. The study will list out the factors posing risks and benefits on Ashford Castle,
Ireland, and Petersham Hotel, UK. It will compile strategies for gaining benefits in terms of
increased profitability and productivity.
Excluded scope
In order to perform the same study on an international joint venture’s risks factors and
benefits, secondary as well as qualitative research instruments have been excluded.
Additionally, the other strategies of market entry and their advantages in relation to joint
venture have not included in the study.
Limitations
The research findings will be limited to the data assembled from the survey process, which is
a part of quantitative research. The survey results are also limited to only one geographical
region.
Resources and cost considerations.
Resources
The resources directly used in the project are human resources, equipment, software, and
others. Additional resources like technological infrastructure including internet connection
drive for data storage and articles and journals for developing knowledge are parts of this
project.
Cost
Particulars Time (in an hour) Cost/hour Total amount
Topic selection 4 5 20
Formulating objectives 4 4 16
Research on past studies 12 5 60
Designing questions for the
survey
10 6
60
4

Compiling research findings 15 6 90
Analysis of collected data 12 4 48
Documentation 6 4 24
Total 63 34 318
Table 1: Cost estimation
(Source: Created by the learner)
A Gantt chart or work breakdown structure in order to provide timeframes and stages
for completion.
Serial
no
Activities Start
Date
Duratio
n
End Date
1 Choosing a topic
2/24/201
9 1
2/25/201
9
2 Setting objectives
2/25/201
9 2
2/27/201
9
3
Formulating a budget plan, risk assessment,
and scope
2/27/201
9 10 3/9/2019
4 Conducting research on organisations 3/9/2019 2
3/11/201
9
5
Conducting secondary research for reviewing
articles
3/11/201
9 7
3/18/201
9
6 Determining methodologies
3/18/201
9 3
3/21/201
9
7 Designing survey questions
3/21/201
9 3
3/24/201
9
8 Quantitative data collection
3/24/201
9 12 4/5/2019
9 Data compilation and interpretation 4/5/2019 6
4/11/201
9
10 Project report documentation
4/11/201
9 2
4/13/201
9
5

Table 2: Key Activities
(Source: Created by the learner)
Choosing topic
Setting objectives
Formulating budget plan, risk assessment and
scope
Conducting research on organisations
Conducting a secondary research for reviewing
articles
Determining methodologies
Designing survey questions
Quantitative data collection
Data compilation and interpretation
Project report documentation
2/24 3/6 3/16 3/26 4/5 4/15 4/25
Figure 1: Gantt chart
(Source: Created by the learner)
A risk register covering the main risks with the proposed research.
Risks Impact on
project
Intensity Methods to resolve
risks
Resource shortfalls High Moderate Proper resource
allocation to sub-
activities
Inaccurate cost
forecasting
Moderate Low Establishing cost
control measures
Failure to pursue a
methodology
Moderate Moderate Reviewing research
techniques and
practicing their
application
Incorrect and irrelevant
data
High High Reviewing data before
documentation
6

Table 3: Risk log
(Source: Created by the learner)
7

Task 2: Research Report
CHAPTER 1 Introduction
Background of the study
International joint venture collaboration has a positive impact on a business’s success and
growth, as it enables a firm to acquire greater market coverage in a foreign country by getting
maximum support from a partner. The aim of the study on joint venture is to find out positive
and negative factors influencing its success. With the completion of the project, the
researcher will gain an overall idea of the international joint venture and its impact on each
participant. The study highlights the risk factors available for Petersham Hotel, UK and
Ashford Castle, Ireland if they are entering into international joint venture agreement.
Background of the company
Petersham Hotel is a renowned four-star hotel located in Richmond, UK. It serves excellent
dinning, elegant rooms, and amazing event spaces to customers (petershamhotel.co.uk, 2019).
It is famous for its modern British Cuisine. Ashford Castle is a luxury five-star hotel located
in Congo, Ireland. It is one of the award winning hotels of Ireland (ashfordcastle.com, 2019).
It offers delicious cuisine, estate activities, exquisite interiors and marvelous views to
customers. These two renowned hotels will start their partnership business through a joint
venture.
Aim and objectives
The research paper aims at evaluating the anticipated benefits as well as risks that can be
experienced by Ashford Castle, Ireland, and Petersham Hotel, the UK after their entry into an
international joint venture.
The objectives are listed below.
 To investigate different aspects of the joint venture in international market expansion
 To enquire some catalyst that will provide benefits for Ashford Castle, Ireland while
entering into the UK market in collaboration with Petersham Hotel, UK
 To evaluate some risk factors that may affect the success of an international joint
venture created by both enterprises
8

 To assemble strategies for mitigating risks associated with joint venture business of
Ashford Castle, Ireland, and Petersham Hotel, UK
Rationale
Recently, business firms are facing several challenges of global business expansion such as
cultural and language barriers, problems while adapting a new business environment, local
competition, compliance issues, and others. Additionally, they are unable to determine which
strategy will give them maximum benefits. If they are opting joint venture, there is an
opportunity to gather an understanding of local consumer behaviour, political and other risks.
They may face adverse situations that cannot be solved; thus leading to dissolving of the
international joint venture. With understanding the common goals of partners and their
business models before collaboration may reduce some sorts of risks.
CHAPTER 2 Literature Review
The role literature review is to survey books, journals, scholar articles and other sources
related to an issue. It provides a summary, description and critical evaluation of works
conducted in the past similar to the research topic being investigated. In this project, the
literature review section reviews the joint venture business, its risks, and benefits along with
mitigation ways for risks.
International Joint venture
Two organisations based on different countries collaborate to form an international joint
venture. An organisation that aims at exploring the international market without taking the
entire responsibilities of business transactions can opt for forming a venture with an
international partner. It can gain advantages by getting the opportunity to use resources,
capital, people, technologies, markets and other aspects of the foreign partner. Such resource
sharing not only provides benefits to international companies but also helps local companies
to show their improved performance. According to Killing (2013), the basic elements of an
international joint venture may include joint property interest, common financial objectives,
contractual agreement, limited duration, and purpose. International joint ventures are formed
through contracts that include some agreements ensuring that organisations are entering for a
common purpose. The businesses forming international joint venture may have a life span for
a longer or limited period. As opined by Ertug et al., (2013), each participant contributes
cash, property and other resources to build a new project. The international joint venture is
9

not a contractual relationship but a contribution of two or more firms to a newly formed
enterprise. The participants share intangible and identifiable profit, loss and other financials.
No such independent legislation and laws restrict establishment of a joint venture in the UK.
Such ventures are established as per the rules mentioned in the Company Act 2006.
Additionally, Limited Liability partnership Law governs some forms of joint ventures. Some
formal requirements need to be fulfilled to operate as a joint venture business. Companies
must choose their registration package that can meet their requirements before establishing
cross-border joint ventures in the UK.
Types of the joint venture
An international joint venture can be of many types and forms. Some common forms include
limited-function, full-function, and short-term collaboration. As opined by Ertug et al.,
(2013), the limited-function international joint venture is based on coordination or co-
operation between parties associated with it. It functions and operates for a limited period and
business activities. Short-term collaboration is appropriate when two or more enterprises
want to work on a particular project. Such enterprises do not intend to carry out a long-lasting
relationship. The purpose of a full-function joint venture can be to create a new company,
autonomous economic entity, or to exchange shares. The parties of such ventures invest in
large scale as compared to the limited-function joint venture. They intend to keep a long-
lasting relationship by performing all functions. According to Yan and Luo (2016), the
potential structure for an international joint venture can be specific collaboration agreements,
contractual agreements, the establishment of corporate joint ventures, or creation of limited
liability partnership.
Reasons for the formation of a joint venture
Risk sharing is a motivator of for forming a joint venture. As stated by Reuer et al., (2014),
organisations operating in capital-intensive industries may fail in their projects for which they
want to share the risk with another company. A joint venture with a larger organisation can
give economies of scale to another party to help it in establishing a business. Organisations
having a basic understanding of a particular market collaborate with local companies to get
instant access to market knowledge, customer behaviour, and others. When a firm faces
financial constraints and wants to expand its market and product, it may search for a right
partner that can help in providing necessary credibility and finance. If a company wants to
10

acquire another company but cannot succeed due to unavailability of cost and geographical
constraints, collaborating with a right partner is a feasible option.
Benefits of the joint venture
There are many benefits for joint venture partners if they are competing with a large
corporation. Each member contributes equal initial capital for the establishment of the new
enterprise or project, which results in alleviating some financial burdens imposed upon each
organisation. Additionally, each of them takes equal profit after the success of the venture of
the amount is not specified before. The members are bound to share return amounts, as they
are sharing equal expenses. It is difficult for a firm to acquire advanced technology, critical
intellectual property, and other resources. As demonstrated by Klijn et al., (2014), joint
venture collaboration can provide access to such firms for using these critical resources of
their firms.
Some new enterprises struggle to earn market credibility and strong customer base. In this
case, reputed and established firms can provide their credibility to such firms through joint
venture partnership. Collaborating with established companies may help in dealing with
market competition and increasing market share. According to Pajunen and Fang (2013),
enterprises dealing with similar products can dominate a larger market after collaboration
through a joint venture. In order to operate a target market, it is essential to building expertise
and knowledge that can be a time-consuming process. Collaborating with businesses having
specific expertise can reduce this time that may be required for developing market
knowledge.
Risk factors associated with joint venture
The management of international joint venture often leads to conflict due to different
management and operating styles. One participant may try to dominate the other one, which
may pose an obstacle for the new venture. The members may have the same interests but
their objectives can be different- leading to another conflict situation. This can influence the
harmony of partners adversely; thus resulting in joint venture operation costly and lengthy.
Some partners do not provide adequate support in the primary stage of the operation that may
lead to lengthy operation of the venture. Clashes in business culture and other disputes can
control the business and operational decisions of an international joint venture. If objectives
and goals are not disseminated to people, it is difficult to imagine the success of the joint
venture.
11

Literature Gap
The researcher has not reviewed the mitigation strategies that can deal with risk factors linked
with the success of an international joint venture. This gap will be studied in further sections
of the research.
CHAPTER 3 Methodology
Introduction
Research Methodology comprises of specific techniques applied for identifying, processing,
analysing and interpreting data (Dawson, 2019). This allows the audience to evaluate the
validity of a study carried out during a research paper. It allows for choosing primary or
secondary or a combination of both research methods in a particular paper. The section
evaluates the tools that have been used for doing research on a joint venture.
Research Philosophy
It is a comprehensive term associated with the building of knowledge and understanding the
nature of acquired knowledge. It involves the set of beliefs that shape actions for a research
paper. The pillars philosophy are categorised into various forms that are positivism, realism
along with interpretivism (Davies and Hughes, 2014). The suitable pillar chosen for doing
research on joint venture is that positivism. The purpose of this philosophy is to uncover the
truth behind the research process. Its advantage is that it makes research more structured by
collating logical deduction with individual observations. The structure given by positivism
philosophy gives little scope for drastic variable changes. Additionally, it makes the research
more accurate by applying scientific and mathematical tools. However, improved structured
design poses a pre-arranged boundaries and limitations to the study. Its effect is negligible on
the research.
Research Approach
It is an integrated plan that includes the research purpose, stages, and methods of research.
The sub sections of approach are deductive along with inductive. The effective approach or
reasoning is deductive, which is the reasoning of more than one statement to find a logical
conclusion (Saunders and Lewis, 2012). It is popular for its soundness and validity. As it
allows for following logical rules, the conclusion tends to be true and appropriate. The
hypothetical conditions chosen under it make a research problem simpler. Hence, it is a
12