Page 68 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 3: International Retailing: Internationalization and Globalization

As well, Joint Ventures are practiced by a Joint venture broker who are people that often put Notes
together the two parties that participate in a Joint Venture. A Joint venture broker then often
makes a percentage of the profit that is made from the deal between the two parties.
The phrase generally refers to the purpose of the entity and not to a type of entity. Therefore, a
joint venture may be a corporation, limited liability company, partnership or other legal structure,
depending on a number of considerations such as tax and tort liability.
Joint Ventures lead to increased exports of capital goods, spare parts and components from India
Exports of technical know-how and consultancy services also increase. In fact, joint ventures
help in projecting the image abroad as a supplier of capital goods and technology. They can help
in the utilisation of idle capacity in the capital goods sector and thus in reducing costs in general.
They might also lead to greater employment in the industries concerned. The country gains by
greater inflow of foreign exchange in the form of dividends, royalties and technical know-how
fees. Finally, they help fulfil the Governments aim of achieving collective self-reliance and
mutual cooperation among the developing countries.
It may not be out of place to mention that the export-import Bank of India provides overseas
investment finance to enable Indian parties to finance equity contribution in a joint venture.
Developing countries generally welcome joint venture because intermediate labour-intensive
technology developed by India is more suited to their requirements and they can adopt it
directly without any or with slight modification. Moreover, most developing countries, because
of their limited home market, may not be able to afford large scale capital-intensive technology
provided by developed countries and thus prefer the medium-scale technology developed by
India. Finally, host countries perceive little threat from Indian joint ventures to their political or
economic independence.

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

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