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International Joint Ventures

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Another reason for considering going into a joint venture is the competitive advantage that could be derived from the marriage of both firm’ s expertise which could necessarily expand the competence and capabilities of both partners.   The sharing of resources could be the stalwart feature as they go against existing competitors in the chosen industry (International Joint Ventures, n.d. ). The joint venture is "an enterprise in which two or more investors share ownership and control over property rights and operation (Market Entry Strategies, n.d. )” .  There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations.   Other benefits include political connections and distribution channel access that may depend on relationships.   The key issues to consider in a joint venture are ownership, control, length of the agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions (Foreign Market Entry Modes, n.d. ).

Looking at the concept of a joint venture, the partners enter in conflicting situations in which they would like to harness the benefits of the joint venture to optimize their competitive edge.   They also shared their resources for the venture’ s operations and yet they try to maintain the confidentiality of their proprietary resources.   Another point of conflict is that the joint venture is controlled through negotiations and coordination processes, while each firm would like to maintain hierarchical control (Foreign Market Entry Modes, n.d. ).

And yet the advantages of entering into a joint venture cannot be discounted and thus makes it a very attractive method of entry.   Joint venture is especially advantageous when “ the partners' strategic goals converge while their competitive goals diverge; the partners' size, market power, and resources are small compared to the industry leaders; and partners' are able to learn from one another while limiting access to their own proprietary skills (Foreign Market Entry Modes, n.d. )” .

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