![]() Profits are shared - this may be regretted by the firm if subsequently they feel they could have carried out the activity quite easily themselves.Avoidance of taxation, or at least rates on tax in the country of production.Enable a firm to move into a new product or market much faster.Allows firms to work together without being burdened by these costs.This may lower distribution costs and may also reduce any problems due to language or cultural issues. By partnering with a local firm, there may be fewer logistical problems entering a new and/or overseas market and it may be possible to take advantage of the local knowledge and distribution channels of the partner firm.A synergy is created where the joint skills, resources andĮxperience of the businesses collaborating far exceed those of the two.Competition may be reduced - by working in cooperation with another firm.This arrangement allows the participating companies to grow, while maintaining their own identity and brands.Ī joint venture and strategic alliance offer the following advantages and disadvantages: Advantages: The alliance ends when the goalsĪ joint venture means setting up a separate organisation in which all the 'partners' have a stake. More firms to pursue a set of agreed goals, but the firms remainĬompletely independent organisations. 1.7 Growth and evolution - simulations and activitiesĪ strategic alliance is a collaborative agreement between two or.Economies and diseconomies of scale - examples.Internal and external economies and diseconomies of scale.1.6 Organisational planning tools - notes.1.5 External environment - simulations and activities.1.3 Organisational objectives - questions.1.1 Nature of business activity - questions.1.1 Nature of business activity - notes.Some policies may be allowed in one country but not in the other to slow down the business. ![]() You may require the services of a translator, making it difficult to carry out interaction. There are always language and cultural barriers in a JV if the language spoken in the partner’s market is different. Differences in cultural values and work ethics play a part in perceptions and partners may get annoyed quickly because of these differences. The gap in communication is often a culprit in the development of conflicts in a joint venture.Įven though the goals and responsibilities are clearly defined in a joint venture, there are always commitment issues levelled at each other by the partners. There is no single owner with full control and disputes may arise over management policies, long-term vision, and handling of capital. In a joint venture, it is easy for conflicts to arise between partners. ![]() Shared resources mean the business can be started with fewer resources than are required from a single owner.Ĭonflicts may arise over a period of time You don’t have to worry about the staff and the equipment that is arranged by your partner. The advantages and disadvantages of a joint venture allow individual companies to join forces, share risks and reap rewards. In joint ventures, different partners bring to the table their own strengths and weaknesses. Shared resources increase chances of success Similarly, you can negotiate with your JV partner on the issue of costs and risks so that you don’t have to bear the cost completely if the project fails in the future. In a JV, the roles and responsibilities of both partners are clearly defined. In a JV, the outsider partner gets the advantage of the customer base of the partner to grow and expand quickly and easily. It is very difficult for a new company to make forays into a new market without spending money on large scale advertising. In a joint venture, a company gets the advantage of the already existing customer base of the partner. You can tap the customer base of your partner
0 Comments
Leave a Reply. |