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The Four Key Differences Between Project-Based Partnerships And Equity Joint Partnerships

Satisfactory Essays
BAM 514- International Business Management
Unit # 3
Question #1. Discuss the four key differences between project-based collaborations and equity joint ventures. As focal firms internationalize they often run into risks that are beyond their capabilities to overcome by themselves. Consequently, many firms often conclude it makes sense to work with a strategic partner with capabilities complimentary to their own to achieve certain projects. When two or more firms come together to manage risks associated with internationalization, they form international partnerships, or international strategic alliances. By working together, focal firms use the capabilities, resources or other strengths of their partners to achieve projects they would otherwise be unable to do alone. There are two basic forms of partnerships, Equity joint ventures and Project-based collaborations. To understand the differences between these two basic types of partnerships it helps to understand how each is structured. (S. Tamer Cavusgil, Gary Knight, and John R. Riesenberger, 2012. International Business: The New Realities. Second edition, page 411).
An Equity joint venture is a traditional partnership in which a new entity is created through the combination of assets by two or more parent companies. Together, the firms share joint ownership of the new legal entity. Typically, this may be a result of one firm not having all the resources or assets necessary to exploit an opportunity, or it may be the only
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