International Joint Ventures (IJVs) Essay example

Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang & Xin (1999) note that from the Chinese

When the companies joining create a separate organization to create their product, the enterprise is called a joint venture.

Joint Ventures (JV)- an agreement under which two or more partners own or control a business.

The exchange theory is a psychological theory that helps individuals make choices based on the costs and benefits of the situation. By visualizing the outcome, it helps the individual make a decision on the situation. Most times the benefits are valuable outcomes and the costs are what they might be losing. The more the benefits outweigh the costs, the easier and more efficient the outcome will be. In the novel, Road Ends by Mary Lawson, the main characters take many life changing decisions by using the exchange theory.

The exchange theory is a psychological theory that helps individuals make choices based on the costs and benefits of the situation. The person visualizes the outcome to help make a decision, most times the benefits are good outcomes and the costs are what they might be losing. The more the benefits outweigh the costs, the easier and the more efficient the outcome will be. In the novel, Road Ends by Mary Lawson, the main characters take many life changing decisions by using the exchange theory.

Businesses today operate an environment that differs greatly from anytime millennia, centuries or even decades ago. The pace of businesses has increased exponentially with the continuous improvement of information technology, telecommunications and geolocation supported by satellites and progressively more efficient modes of transportation and mechanization. The ability to move products globally overnight, increasing levels of automation, and collaboration instantaneously via virtual means has forever changed and reduced traditional barriers businesses face while creating a myriad of new challenges, risks and opportunities.

Which is cost difference determines the patterns of international trade. Absolute advantage is trade benefits when each country is at least cost producer of one of the goods being traded. In the 1800s, David Ricardo developed the theory of comparative advantage to measure gains from trades. This theory is based on comparative advantage and it states each nation should specialize in production of those goods for which its relatively more efficient with a lower opportunity cost.

Hill, C. (2011). International business, competing in the global marketplace. (8 ed.). New York, NY: McGraw-Hill Irwin.

The third circumstance for MNEs using IJV is to gain access to a specific market, where regulations favour domestic companies for example China, Russia (EU) (Dr. Ananthram. 2016). In this case the MNEs do not have the understanding of carrying out business activities in another country, which may include the taste of consumer products or appropriate methods of distribution which in turn can prove to be expensive and time

Co-investment and joint venture manufacturing arrangements can help lower capital costs and leverage existing local capability, however, this approach also needs to consider the risk of IP loss and lower management control. In contrast, leveraging LE existing Indonesia & China manufacturing capability via an import model would lower upfront

Top glove could use the opportunity to minimize the internal weakness which is using the joint venture and the diversification component. First, though the joint venture with others firm. The resources, technology, management and culture is share in between the organization to achieve the same goals. For example, Top Glove management could learn and adapt the Japanese business culture since Top Glove and Fimatec had joint venture. Both company management able to exchange the culture and practice that improve both management performance. So the weakness of management problem could be minimize since the management is improving through the venture. Besides that, opportunity for joint venture in between the international company could to gain the business model and image of company. These action could be attracting for those professional who seeking the job applicants. Lastly is the problem of heavily invest in R&D. The cost for Top Glove spend in R&D function is very high in each year. So, Top Glove need to conduct diversification in different market to gain profit. R&D function could help to invent new product or service, but still Top Glove need to fit in different market to increase the profit. So the diversify in different market could help Top Glove to increase profit to cover the heavy cost in R&D

* To structure deal as joint venture, which would be an economical approach to entering the market with the access to the technology, cross-marketing and profits. May bring, however, the lack of control to achieving "Anywhere, Anytime" vision.

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

International New Ventures (INV)are firms who target the international market while lunching their operations (Shenkar and Luo P 11) unlike the traditionally operating firms who target the domestic market before exporting to other countries.

Joint ventures have further benefits. Joint ventures are based on sharing individual ability and resources for the purpose of achieving a mutually beneficial objective. Sony gains access to Ericsson’s market share and their network of infrastructure and handset technology. Ericsson can acquire Sony's experience on consumer electronics, fashionable designs and production processes. Hence, the joint venture overcomes Sony's low market share and strengthens Ericsson's ability of research and product development. Thus joint ventures resolve the opportunism issue with OEM, licensing and franchising.