Joint Venture Case Study

Joint Stock Companies- A Joint Stock Company is a company that has stocks that are available to be shared by different shareholders. Joint Stock Companies were formed around the 1600s by the English parliament after the amount of money spent in the battle against the Spanish for North America. This made it possible to gather money to colonize.

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

A joint stock company was when people bought shares in companies that were hoping to explore the New World.

Each company blindly went into negotiations assuming their senior negotiators would be their best negotiators without taking into account the differences in personalities and culture. Sakari’s lead negotiator and vice-president, Kuusisto should have mitigated these concerns with the opposing Sakari management prior to the initial meetings. If these concerns were outlined with relevant solutions, then the potential of opposition of the deal would have been lessened. Items of Disagreements by both parties Equity ownership Both Nora and Sakari agreed to an initial investment of RM5 million to form the JV but disagreed on the equity share proposed by each side (273). Sakari proposed a 49 -51 percent split between itself and Nora to control the JV, however Nora countered with a 70-30 split between itself and Sakari based on the historical foreign equity regulation set by the Malaysian government. These negotiations were taken place in 2003; approximately 5 years after the Malaysian government adopted new regulations that did not employ these percentages any longer. Despite the new regulations, Nora appeared very inflexible. Each company had significant long-term equity ownership concerns which could have been mitigated if Nora would have negotiated further. Technology transfer Sakari wanted to protect their intellectual property (IP)

Joint-Stock Company: A business with transferable shares and shareholders having little to no liability for their debts. a business that sought to separate that of legal existence and the sharing of ownership between the shareholders.

As of 2007, Danone, the French multinational food company, was in a fierce battle with China-based Wahaha Group (the largest beverage producer in China) to win control of their joint ventures (JVs) in China. The fight is reported to have started in 2005 when Danone uncovered some unusual financial figures at the JVs, but this did not become known to the public until 2007, when Danone and Wahaha Group failed to resolve their disputes on the selling price of Wahaha-related non-joint ventures (non-JVs). The quarrel between Danone and Wahaha Group has escalated. It involves disputes on brands, as well as on perceived unequal commitments to the JVs. Lawsuits

e. A parent’s less-than-wholly-owned subsidiary issues its shares in exchange for shares of another subsidiary previously owned by the same parent, and the noncontrolling shareholders are not party to the exchange. That is not a business combination from the perspective of the parent.

“Only one reporting entity, if any, is expected to be identified as the primary beneficiary of a VIE. Although more than one reporting entity could have the characteristic in (b) of this paragraph, only one reporting entity if any, will have the power to direct the activities of a VIE that most significantly impact the VIE’s economic

Danone felt that the U.S. was an emerging market for yogurt and hence, Dannon focused its marketing strategy on increasing the yogurt consumption and expanding the category. Dannon had to follow Danone and maintain a strong commitment to CSR. At Danone, local decision making and was trusted and encouraged. Also, Dannon had a responsibility to its parent company and was accountable for a set of deliverables and data for reporting purposes. It believed in collaborative decision making and therefore major strategy

      Sakari proposed an equity split in the Joint Venture (JV) Company of 49 percent for Sakari and 51

Each company has chosen to participate in the joint venture rather than operate its own wholly owned subsidiary because each joint venture partner in Slimline benefits from the others unique knowledge and expertise. Mast industries provides a vast network of clientele, Courtaulds provides great production power due to it being the largest apparel manufacturer in the UK, and MAS provides Slimline with the world’s first carbon-neutral textile facility. Each partner brings something to the table that the others cannot, which is why they chose to participate in the joint venture.

There is a great chance that the deal would take place. Even though the cash flows from the Joint Venture will be roughly the same for both Jersey and Prince, except for the assistance fee, the fact that they are subject to different Cost of Capital leads to a big difference in their valuation for the joint venture. As Prince is a family-owned company, Mr. Nakit’s cost of capital is significantly higher than that of Jersey, which is a well-diversified company, which means the 50% of the joint venture would be worth more for Jersey than for Prince. After our valuation, we think Prince will accept for anything above 3.105 million dinars. And Jersey would be willing to pay

Diageo, one of the world’s leading consumer goods companies, was formed from the merger of GrandMet and Guinness. In 2000, the company announced its intention to sell its packaged food subsidiary, Pillsbury, and 20% of its Burger King subsidiary. Because of the restructuring opportunity, the company wanted to rethink its financing mix.

It is because through the joint venture, the company is more familiar with the situation of the company there. The negative outcome is that the management system different between the company. So it is hard to make a decision making. It is because there is different opinion of each person.

• Success in a joint venture depends on thorough research and analysis of the objectives.