The partners ideally complement each other in terms of skills, infrastructure, and resources, and contribute a wide variety of assets, such as operating facilities at different locations, land, qualified employees, relevant specialist knowledge, proven market knowledge, important contacts, and specific management skills. Together, supply chains can be designed more efficiently and market risks can be mitigated or even avoided. Companies can easily reach the customers and can avoid initial hardships of new business by getting into alliance with already existing companies in the market. Medium-sized companies hoping to establish themselves internationally often choose this path. Speed up the entry into a new market: A strategic alliances is an effective way to enter a new market. It could also simply be a matter of asserting common interests over third parties.Ĭompanies entering into joint ventures often pursue long-term goals, including new product developments or fundamental research. Cooperations like these can also be helpful to give the business a better position against the competition or to open up new markets – e.g. The above-mentioned Airbus-Bombardier collaboration is an example of a majority joint venture: Airbus owned 50.01% of the joint company when it was founded, whereas Bombardier owned 31%.Ī joint venture is particularly suitable for implementing major projects that are difficult or impossible for a company to implement on its own. So, it is important to establish adequate co-decision rights – up to the corresponding veto rights of minority shareholders. This option is sometimes chosen in order to simplify decision-making processes or to curb (too) one-sided knowledge-sharing at the expense of the majority shareholder. If this is not the case and one of the partners dominates, it is referred to as a majority joint venture. If the capital shares are equally distributed, this is known as a joint venture on an equal basis. They share the management functions and bear the financial risk of the investment or project in question. As described above, the partners each contribute capital to the joint venture. This excludes unlimited financial liability of individual partners. a legally independent third-party company, usually in the form of a corporation. In an equity joint venture (EJV), the partners establish a joint subsidiary, i.e. For instance, the joint venture entity may enter into a distribution agreement with one of the joint venture partners (typically the one located in the host country), and a license agreement with the other joint venture partner for access to intellectual property rights necessary for the venture.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |