Market Entry Strategy Evaluation: A Joint Venture Case Study

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The risks and benefits of a joint business venture of Saffire
Freycinet, Australia with Gilsland Hall Hotel to enter
international markets of UK
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Executive Summary
The particular project has framed a project management plan with which an application of small
scale research has been conducted on the business organisations that are namely, Saffire
Freycinet, Australia and Gilsland Hall Hotel, UK. The research is totally upon the business
implications that might provide benefits and risks to international joint venture partnership that
the Saffire Freycinet, Australia shall be undergoing in order to enter into the international
markets of UK for higher expectancy of business productivity and profitability.
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Table of Contents
Task 1-Project Plan..........................................................................................................................4
Task 2-Research report....................................................................................................................9
References......................................................................................................................................26
Appendices....................................................................................................................................28
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Task 1-Project Plan
1. A brief explanation of the proposed topic and why you have chosen it.
Joint Venture market entry strategy is the type of market expansion approach with which two
organisations are said to form a partnership business in new markets all across the globe. The
organisations that are going in partnership may have their existing business implications within
those nations that shall serve as the major constituent for higher business productivity for the
organisations that are expensing and penetrating into new markets. The particular research study
shall be emphasising upon the business benefits as well as the business risks of the joint venture
for the Saffire Freycinet, Australia that shall form partnership trade with the Gilsland Hall Hotel,
UK in order to experience the new international markets for its business implications of
productivity and profitability. There may be times when risks and threats shall generate
regarding the partnership that both the organisations are looking forwards however, with some of
the strategies recommended shall aid the existence as well as suitability within the markets.
2. An aim and some objectives for your proposed research.
The entire research shall follow a particular aim with which the various aspects of business
research shall become evident. The study shall focus upon the aim to identify and evaluate the
benefits as well as the market risks that are projected upon the Saffire Freycinet, Australia under
the international joint venture proposition with Gilsland Hall Hotel, UK. The aim of the research
shall be followed under the listed objectives:
 To enquire and understand the aspects of international joint venture and other approaches
to market expansion
 To identify and evaluate the aspects that shall serve as benefits for Saffire Freycinet,
Australia to expand into new markets of UK under joint venture partnership with
Gilsland Hall Hotel, UK
 To identify and evaluate the aspects that generate risks and threats for Saffire Freycinet,
Australia to expand into new markets of UK under joint venture partnership with
Gilsland Hall Hotel, UK
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 To recommended various aspects with which Saffire Freycinet, Australia shall be able to
decrease the intensity of risks of joint venture partnership and suit the same for higher
expectancy of business productivity and profitability
3. A brief discussion of the scope and limitations of the project.
Scope
Included Scope
The particular research study shall cover the aspects with which only primary research through
quantitative data collection and analysis of the data findings shall be carried out. Moreover, the
research shall be focused upon the identification and analysis of the benefits, risks and
recommendation for generating higher business productivity through international joint venture
for Saffire Freycinet, Australia.
Excluded Scope
Qualitative data findings and analysis of the same as well as secondary research shall be
excluded within the particular research study. Moreover, the explanation as well as comparison
of international joint venture strategy with other approaches of international expansion shall be
excluded in the particular research.
Limitations
The entire research is limited to only one type of primary research that is through quantitative
means rather the use of semi-structured interviews also. The research is limited to only risks and
benefits of international joint venture however, comparison of various approaches could have
been considered if there were ample amount of resources and budget for the same.
4. Resources and cost considerations.
Resources Time Cost per hour Total Cost
Topic research 5 hours 5 25
Setting up research hypotheses 7 hours 5 35
Preparation of project 12 hours 10 120
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management plan
Preparation of questionnaires 10 hours 10 200
Conducting survey 15 hours 10 150
Documenting research findings
and analysis
4 hours 5 20
Grand Total 54 hours 45 550
Table 1: Resource and Budget estimation
(Source: Created by the learner)
5. A Gantt chart or work breakdown structure in order to provide timeframes and stages
for completion.
SL no. Activities Start Date Duration End Date
1 Topic Selection 16/02/2019 1 17/02/2019
2 Conducting research regarding the
research topic
17/02/2019 3 20/02/2019
3 Setting aim and objectives 20/02/2019 4 24/02/2019
4 Research related to organisational
data
24/02/2019 6 02/03/2019
5 Critical review of the literature 02/03/2019 7 09/03/2019
6 Planning of project management
aspects
09/03/2019 8 17/03/2019
7 considering budget estimation and
risk log
17/03/2019 3 20/03/2019
8 Defining research methodologies 20/03/2019 2 22/03/2019
9 data collection through survey 22/03/2019 12 03/04/2019
10 Analysis of collected data findings 03/04/2019 10 13/04/2019
11 Documentation of analysed findings 13/04/2019 2 15/04/2019
12 Concluding and setting
recommendation for future research
15/04/2019 1 16/04/2019
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13 Final documentation and submission 16/04/2019 1 17/04/2019
Table 2: WBS
(Source: Created by the learner)
Topic Selection
Conductin research regarding the research topic
Setting aim and objectives
Research related to organisational data
Criutical review of the literature
Planning of project management aspects
considering budget estimation and risk kog
Defining research methodologies
data collection through survey
Analysis of collected data findings
Documentation of analysed findings
Conclusing and setting recommendation for future
research
Final documentation and submission
16.02.19 08.03.19 28.03.19 17.04.19 07.05.19
Figure 1: Gantt chart
(Source: Created by the learner)
6. A risk registers covering the main risks with the proposed research.
Weeks Risks Intensity Influence on
project
Methods to resolve
risks
1. Incomplete research HIGH HIGH Guidance from
project supervisor
and mentors
2. Improper
implementation of
LOW MODERATE Monitoring the
implementation of
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project management
plan
each stage of project
management
3. Irrelevant data
collection
MODERATE MODERATE Reviewing and
documentation of
data findings
Table 3: Risk log chart
(Source: Created by the learner)
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Task 2-Research report
CHAPTER 1 Introduction
Introduction
The impact of the joint venture business is instrumental as it has an influence on the growth of
the company. The company is influenced by the policies that are regulated by the trade markers
of the business. The aim of the project is to influence the benefits and negatives of the joint
venture regulation. However, the BREXIT implications have a regulatory impact on the business
of the company (Westman, 2016). The companies that initiate in the partnership of the business
also influence the business operations of the company. Therefore, it is important to evaluate the
regulations of the two companies that partake of the partnership business.
Background of the Company
The companies that have been taken into consideration are Saffire Freycinet Australia with
GilsLand Hall hotel. These companies will initiate into a joint venture partnership for the growth
of the business. Saffire Freycinet is situated in Australia and is a luxury lodge that provides
amenities to locals and foreigners (saffire-freycinet.com.au, 2019). This is a coastal luxury
accommodation that is located in the Tasmania Coast. This company is sophisticated and
provides luxurious amenities to the organization customers. The company Gilsland Hall hotel is
a manicured hotel that guarantees a proper and aesthetic view to its customers. These companies
will initiate in a joint venture partnership (discovercarlisle.co.uk, 2019).
Rationale
The rationale of the research is to investigate the factors that would influence the growth of the
business. The joint venture undertaking and its benefits have been provided a substantial
understanding on the benefits and the risks associated with the growth of the company. There are
situations that have been addressed with the views and perspectives for the growth of the
business. Hence, with the understanding of the business organizational objectives and marketing
strategies that is significant for the comprehension of the business. Hence this is an important
part of the research.
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CHAPTER 2 Literature Review
Joint Venture
According to Beamish (2013), joint ventures are the strategic cooperation in which at least two
companies agree to form a common enterprise for project work. The concept of the joint venture
is quite similar to a partnership. All members of a particular joint venture share the expenses
involved with the common project. Each of them is accountable for own income tax. If the joint
venture makes some profit, the net income is shared among partners. If the partners of joint
ventures form a company, the gains will be taxed as per the tax rules defined for a company. As
stated by Killing (2013), the most important aspect of the joint venture is that each partner
forming the business will retain ownership as per the personal current as well as fixed assets. It is
important not to mix joint venture accounts with personal accounts for avoiding conflicts. The
reasons for entering into a common business may vary depending on the situations. A company
may want to expand its business, develop its product ranges or gain more returns from the
existing business for which it can tap into the improved or specialized resources including
marketing, technical, and financial or human resources.
Types of Joint ventures
As demonstrated by Sun and Lee (2013), the common structures used for joint ventures may
include company limited by shares, limited liability partnership, and contractual venture. The
key features of the company limited by shares include public filings, limited liability and
separate entity. The particular structure is highly recognized and it has a transparent corporate
identity along with reputable corporate governance. It can have its own assets and enter into any
contract on its own. It permits for implementing employee incentive schemes. However, the
comprehensive legislative framework restricts the flexibility of each partner.
According to Ertug et al., (2013), the key features of contractual venture include limited liability,
tax transparent and separate entity. The particular structure has a flexible option that can be
established and dismantled easily. The joint venture party shares liability based on specific
contracts. The tax amount will be imposed as per the gain and loss of the venture. However, the
contractual venture is lacking in presence of a separate legal entity. It is difficult to raise a loan
from external sources, as the particular venture is not treated as a legal entity. According to
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Manasakis et al., (2014), the key features of limited liability partnership include tax transparent,
public filings, separate liability and separate entity. The joint venture structure is accepted as a
partnership business for common tax purpose. It provides the benefits of having a transparent
corporate identity. However, security and guarantees are required in order to raise finance for the
venture. Another type of joint venture structure is limited or general partnership. The key
features include tax transparency and limited liability. The sensitive information can be remained
as completely private in this joint venture structure. It is regarded as a popular investment
vehicle. However, any changes made to this joint venture structure will form a new arrangement
that can be a time to consume and expensive process.
Joint Venture: Benefits
The market is quite easier to understand and serve after gaining entrance into foreign markets
through a joint venture. As opined by Killing (2107), creating a joint venture can be beneficial in
terms of better access to specialized human resources and superior technology. If the joint
venture project fails, only one party will not bear the loss amount. As each party share expenses
voluntarily, each of them will support the loss also. Some innovative ways are available to exit
from the joint venture business. If a small company will start a joint venture business with a
renowned company, the chances of success become very high. The credibility of that small
business can improve vastly. Although the partnership is for a specific purpose, the relationship
can be established for a longer time. After getting success from a joint venture, it will be easier to
create more venture deals.
Joint Venture: Risks
The risk of the external business environment is more for a joint venture. According to Wu et al.,
(2013), the political conditions such as corruption, political conflicts, and dynamic Government
policies can bring a threat to the success path of a joint venture. Apart from this, the risk from
economic conditions like interest rate, FDI policies, and international trade policies can weaken
the joint venture’s financial position. As stated by Yan and Luo (2016), the social factors
presenting a risk for partners of a joint venture may include the different tastes, beliefs, and
interests of people, mismatch of culture and others may influence the performance of a joint
venture. Additionally, there is no scope for flexibility such business. If partners will focus only
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on their common business, their separate business may be hampered. If the firms aiming to
establish a joint venture do not have similar business or responsibilities, it may lead to an
unsuccessful business. Lack of coordination can result in a significant imbalance of investment,
expertise, and assets. If some sorts of contracts are involved with a joint venture, it is difficult to
exit the partnership.
Risk mitigation strategies
According to Chang et al., (2013), a lot of planning and market research are required before
establishing a common business. It will be simpler for a participant to assess the political, social
and economic scenarios of a country in which it wants to get access. There should not be the
presence of any communication gap between partners, as they need to clearly understand their
purpose and objectives.
Literature Gap
The literature review outlines the structures of joint ventures along with their advantages and
disadvantages. However, it has included some effective risk management and mitigation
strategies.
CHAPTER 3 Methodology
Research Philosophy
In order to define research philosophy in simple terms, it can be said that the research philosophy
is the paradigm with which the researches and dissertations find a base in order to carry out on
well defined purposes. While a selecting a particular research philosophy, the researchers has to
choice to choose from four types of research philosophy that are namely, Positivism,
pragmatism, Interpretivism and realism. However, the particular research shall be conducted
under Positivism research philosophy in order to link research outcomes with the research
hypothesis and objectives that are mentioned above. The significance of particular philosophy to
be adopted in the research study is to build a positive knowledge that are based on natural
phenomenon, properties and interrelationships., which are derived from observations and
experiences (Robson and McCartan, 2016).
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