OPPORTUNITIES ASSOCIATED WITH A GLOBAL APPROACH-JOINT VENTURES

Achievement in global business markets is possible through more method than just the sole growth efforts of personality organizations. Development into new markets and new industries can also be productively accomplished through the process of a Joint venture. What, precisely, constitute a joint business venture can and does vary from circumstances to circumstances. This suppleness is one of the main reasons that joint venture make possible growth in or else unfeasible situation.

All joint ventures have convinced attributes in common. Simply put, a joint undertaking happens when two or more parties agree to assume a project together where property, liability, and profits will be shared.  As legal agreement, joint venture comes in three forms:

1. Contractual Joint Ventures.    Under this understanding, the joint venture is not shaped as a divide legal corporate individual. Rather, it is a venture in the form of an unincorporated connection, created to carry out clearly defined activities and to attain specific goal over a detailed time period. A clear disjointing exists between the companies that are in agreement to cooperate where each of them is accountable for its own liabilities.

2. Equity Joint Ventures.    Beneath this understanding, two partners agree to the arrangement of a legal corporation with inadequate responsibility and joint management. There is pooled equity in the corporation, from which an evenhandedness ratio is determined, as well as the profits and losses connected with the business enterprise.

3. Hybrid Joint Ventures.    Under this understanding, partners agree to continue the corporate standing of disconnect legal entity, but may do without the limited responsibility option. Partners also agree to the specific responsibilities and time constraints described in the contractual joint business enterprise.

In her work managing for Joint Venture Success; Kathryn Rudie Harrigan explains the explicit benefits of joint ventures in their variety of forms. She also highlights the potential benefits of joint ventures as strategic alliances and as methods of establish sustainable core competencies for both business parties concerned.

Fundamentally, the precise form a combined venture takes on should depend largely on the collective and personal objectives of the parties forming the joint venture, as well as external factors operating in the market the two partner organizations are incoming. Collectively, firms normally believe a joint venture option to minimize the risk concerned in pursuing a new line of business or industry by distribution the risk with another organization. Further, a rigid that maintains an aspiration to enlarge operations would almost certainly do so its own if it had all of the possessions, both physical and human, mandatory to do so. Joint ventures usually arise out of two firms recognizing that they have a common interest in a given business search and that, collectively, they have complementary possessions and capabilities wanted to succeed in the particular pursuit.

Joint venture projects can supply both organizations participating with various advantages.  Yet, it should be recognized that, almost without exclusion, joint venture businesses are far harder to administer than their solely-owned subsidiary counterpart. The prevalence of joint venture projects, how- ever, stands as a sign that the advantages of this type of corporate cooperation overshadow the limitations, and that corporate executives will continue to select joint venture options. This makes managers with the challenge of adapting to these new conditions by developing new methods to manage them more efficiently.

Just how innovative and flexible a joint venture manager needs to be depends on internal as well as external factors. To start with, if the two venturing parties are having an especially long or difficult time learning to work together, any competitive advantage or synergistic benefits potentially gained from a joint venture can be squandered. Joint venture man- agers must be especially flexible, both in determining how each entity's corporate strategy must change to accommodate the other, as well as in the ability of the joint venture company to adapt its product or service to the changing needs of the marketplace.

This is mainly true of fresh or emerging industries, where the requirement for products and services is not grown-up and there is a high degree of indecision as to how a product or service will require to be customized to fit within the market. In cases like these, Harrigan advocates that the joint venture agreement be calculated such that it is short in period and as unbinding as probable. If an industry is rising so rapidly that the product idea around which a given venture is produced becomes obsolete previous to it can even be delivered to the market-like in the technology industry-short-term agreements manage each venturing party from being stuck in a relationship that drains possessions and may prompt managers to manage losses slightly than cut them. In many emerging markets, being an beginning entrant and acquiring leading market share creates sustain- able competitive advantage.

Cases also are present where the two venture parties experience a learning curve so steep when working together that its occurrence eliminates any suppose of the new venture gaining early entrant standing and dominant market share.  Here again, a shorter  term, less binding agreement  enables each party to move on when it becomes understandable that the venture will either not work or has missed its window of entry opportunity.

Lastly, short term, loosely binding joint venture agreements offer organizations much more reliable and many more opportunities to learn and adapt. More specifically, they allow organization to work with and learn from other organizations, and then move on to repeat the procedure with other organizations. This kind of plan can be particularly useful in developing markets or industries, where joint venturing with various partners can keep one organization appraised of new industry trends and developments through intercompany information share.

Let's look at the opposite side of the coin now. In the similar manner that there are business contexts where short-term, non- impartiality joint venture agreements are best possible, certain contexts also exist in which longer term and more concretely binding agreements facilitate greater success. This phenomenon happens more often when the two venturing partners are planning on entering an industry that is just starting to mature.  This means that there is some standard for the product itself, customer demand and excellence levels already in place. In such cases, the two venturing partners are usually working together to attain sustainable competitive advantages.

For example, two partnering companies may be working together so that any unproductive production methods that either company may have can be replaced with competent ones with- out either organization running the risk of producing to excess. To accomplish this end needs rather significant capital investment on both parties, as well as the exchange of data on best-in-class production methods. When the level of investment in a joint venture is high, a long and involved commitment among partners adds a comfort intensity to the interaction. This is accomplished by giving an assurance that the joint object will exist long enough for both parties to profit, and that it is in both parties' most excellent interests  to facilitate each other's profit making, rather  than connect in competitive and undermining behaviors.

In yet another long-term application, maturing organization can use joint venture partnerships to invite industry giants from associated industries to enter. It is good for these associations to be jointed in a joint venture ordered to be longer lasting and more legally connected for two primary reasons. First, partnerships among well- built and respected entities develop interesting power alliances. The advantages these types of alliances reap in an organization are more fully harvested if the two entities in question are dedicated to a long-term relationship.  Say an industry recognizes each commercial venture partner independently as a bigger industry player, and the industry believes that the partnership will be long-lived. The industry is more likely to accept the dominant power situation of the joint venture partners in the organization, instead of trying to find ways to dominate or undermine the joint venture entity competitively.

Another one, in cases like these, the two venturing entities have more of a common respect for each other. This stage of respect manifests itself in a more intense loyalty and effort to work mutually, rather than for one partner to attempt to dominate the other. There are occasions when a budding business will join forces with an established industry giant to bring a product or service to market. For the budding company, access to the larger organizations production, allocation, and materials base, as well as its reputation is the clear advantages. Meanwhile, the larger organization gets the opportunity to enter into a line of business or market that otherwise might have gone ignored. Yet, in these conditions, the larger company knows that the smaller organizations very existence depends largely on them. As a result, the larger companies have been known to use many methods to exploit this power imbalance. The imbalance manifests itself in ways ranging from the larger company's management style used to handle problems in the partnership to how the profits are divided. This type of behavior happens far less frequently when both oppression and inadequate learning, for example. In contrast, supporters contend that by enabling smaller entrepreneurs to play in the league of huge corporations, globalization breaks down inhibiting problems of geography and population, thus bringing the world closer to the classic theoretical model of capitalism.5 While advocates reiterate  that globalization must be pursued to make sure viable economic interaction between develop and less-developed countries, critics continue to claim that the dealings  is inevitably lopsided to unevenly advantages the former.

Whether or not one believes it has succeeded, the global economy-propelled further by the lightning speed of technological advances to eliminate isolation and give real-time data-holds the potential to raise productivity, open previously inaccessible markets,  spur entrepreneurship, stimulate economic innovations, and allow knowledge to permeate the globe.