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When do we need a joint venture?
By: BALJINDER SINGH
Studies show a failure rate of 30-61%, and that 60% failed to start or faded away within 5 years. (Osborn, 2003) It is also known that joint ventures in low-developed countries show a greater instability, and that JVs involving government partners have higher incidence of failure (private firms seem to be better equipped to supply key skills, marketing networks etc.) Furthermore, JVs have shown to fail miserably under highly volatile demand and rapid changes in product technology.[citation needed]
Some countries, such as the People's Republic of China and to some extent India, require foreign companies to form joint ventures with domestic firms in order to enter a market. This requirement often forces technology transfers and managerial control to the domestic partner.
Another form joint ventures may take are the Joint Ventures (JV's) in the U.S., Canada, and Mexico dedicated to the conservation of priority bird species and their associated habitats. Each of these JV's is different in how they go about their respective missions, but all try to follow the principles of Strategic Habitat Conservation (SHC). SHC combines biological planning, conservation design, conservation delivery, and evaluation and monitoring. Gulf Coast Joint Venture, Lower Mississippi Valley Joint Venture, and Prairie Pothole Joint Venture are just three of the 20+ JV's found in North America.
Brokers
As well, joint ventures are practiced by a joint venture broker, who are people that often put together the two parties that participate in a joint venture. A joint venture broker then often make a percentage of the profit that is made from the deal between the two parties.
Reasons for forming a joint venture
Internal reasons
1. Build on company's strengths
2. Spreading costs and risks
3. Improving access to financial resources
4. Economies of scale and advantages of size
5. Access to new technologies and customers
6. Access to innovative managerial practices
Competitive goals
1. Influencing structural evolution of the industry
2. Pre-empting competition
3. Defensive response to blurring industry boundaries
4. Creation of stronger competitive units
5. Speed to market
6. Improved agility
Strategic goals
1. Synergies
2. Transfer of technology/skills
3. Diversification
Article Source: http://www.ezarticles.info
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