Page 199 - DMGT549_INTERNATIONAL_FINANCIAL_MANAGEMENT

International Financial Management

Notes
Did u know? A joint venture is differentiated from other types of strategic alliance or
collaborative relationship in that a joint venture is a partnership of two or more
participating companies that have joined forces to create a separate legal entity. Joint
ventures should also be differentiated from minority holdings by an MNC in a local firm.
Four factors are associated with joint ventures:
1. JVs are established, separate, legal entities

2. They acknowledge intent by the partners to share in the management of the JV
3. They are partnerships between legally incorporated entities, such as companies, chartered
organisations or governments, and not between individuals

4. Equity positions are held by each of the partners.
Nearly all companies active in world trade participate in at least one joint venture somewhere;
many number their joint ventures in the dozens. A recent Conference Board study indicated that
more than 50 per cent of Fortune 500 companies were engaged in one or more international joint
ventures. In Japan alone, Royal Dutch Shell has more than 30 joint ventures; IBM has more
than 35.
Figure 12.1: Foreign Market Entry

Source: http://highered.mcgraw-hill.com/sites/dl/free/0077122852/823243/gha22852_Ch11.pdf

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