International Business Transactions and Negotiations that Cross National and Cultural Borders

2010 Words9 Pages
The biggest apprehensions in international business are related to transactions and negotiations crossing national as well as cultural borders. In order to make this mechanisms take place on an international base level, businesses awareness of external uncertainties needs to be tackled and turned into a beneficial dimension.

Reducing risks and getting access to new markets are major goals of international co-operations such as mergers, strategic alliances, contractual forms of co-operation and international joint venture (IJVs).
International Joint Venture

A joint venture is a collaboration agreement between two or more companies, which entails the sharing of profits and losses, skill and managerial expertise and technology to a
…show more content…
Ownership structure

Many managers see the Ownership structure of a joint venture as the key element of the agreement as it is an indicator for the level of control and power that each party exerts.

Li and Zhou et al., point out that the ownership level also gives an indication of the level of collaboration between partners, especially in cases where the majority of shares is held by one single party (2009, pp. 865--884)

Joint venture perspectives

Collaborative perspective The collaborative perspective focuses on the value creation of a Joint Venture.
Li and Zhou et al. state that a balanced partnership will lead to both parties feeling responsible for the venture and thus increase engagement with the task and therefore increase productivity. Knowledge sharing is emphasized and the knowledge is not simply transferred to the joint venture, but adapted to suit local market conditions.
In case of an equal partnership both parties are likely to perceive themselves as responsible for the joint venture, as profit and losses are shared.

This responsibility in turn leads to more faith in the venture, which generates a feeling of safety and ultimately enhances the partner’s commitment to the joint venture, which showed to increase productivity (Li and Zhou

More about International Business Transactions and Negotiations that Cross National and Cultural Borders

Open Document