Talk:International joint venture

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The suggestion of how to improve Part 9, which is Benefits and Disadvantages for IJV. I divide part 9 into two parts which is The factor we need to consider before the creation of IJV and The role of the international joint venture.

The factor we need to consider before the creation of IJV

Before the creation of IJV, there are some factors that businesses need to consider. ·Joint ventures are very difficult to integrate into a global strategy that involves substantial cross-border trading. In such circumstances, there are almost inevitably problems concerning inward and outward transfer pricing and the sourcing of exports, in particular, in favor of wholly-owned subsidiaries in other countries.[6]

·The trend toward an integrated system of global cash management, via a central treasury, may lead to conflict between partners when the corporate headquarters endeavors to impose limits or even guidelines on cash and working capital usage, foreign exchange management, and the amount and means of paying remittable profits.[6]

·Another issue occurs when the objectives of the partners are, or become, incompatible. For example, the multinational enterprise may have a very different attitude to risk than its local partner and may be prepared to accept short-term losses in order to build market share, to take on higher levels of debt, or to spend more on advertising. Similarly, the objectives of the participants may well change over time, especially when wholly-owned subsidiary alternatives may occur for the multinational enterprise with access to the joint venture market.[6]

·Problems occur with regard to management structures and staffing of joint ventures.[6]

·Many joint ventures fail because of a conflict in tax interests between the partners.[6]

The role of the international joint venture

After the creation of the new entity, there are a couple of factors that can reflect the role of international joint ventures. ·For those smaller organizations with insufficient finances and/or specialist management skills, the joint venture can prove an effective method of obtaining the necessary resources to enter a new market. Joint ventures can be used to reduce political friction and improve local/national acceptability of the company in some ways.[6]

·Joint ventures may provide specialist knowledge of local markets, entry to required channels of distribution, and access to supplies of raw materials, government contracts, and local production facilities.[6]

·In a growing number of countries, joint ventures with host governments have become increasingly important. These may be formed directly with State-owned enterprises or directed toward national champions.[6]

·Joint ventures make it possible to complete larger work projects.[6]

·Mutual financial assistance between partners is easier, making business operations smoother[6]

I have added a sentence, Joint venture can also reduce the financial burden in investment, and a citation to risk sharing section. Also, there is no citation in the economies of scale section, I found one and added it.AlanChancw (talk) 05:54, 21 March 2022 (UTC)[reply]