Problems In Joint Ventures Commerce Essay

Problems In Joint posts Commerce Es opineAs the whole world is running in the race of globalisation, avoiding the concept of reciprocal venture is not favoured by channel world. Joint venture is the contribution of two or more organisation for achieving a particular goal. Working in enunciate venture at internationalistic level is not that easy because of cultural restraints.Hofstede (1993) believe that extend of byplay onto the general step bring the concern of nationwide and atomic number 18a difference to the front. There is nighthing in all countries called management, but its meaning differs to a larger or small extent from one country to an early(a) (Hofstede, 1993).In this report it is mentioned negative and positive pecks of mutual venture in clothing sector. And to a fault describe the etymon and suggestions for a successful joint venture with the jockstrap of pest analysis.In joint ventures when a business enters into international commercialise many factors comes up and it is essential to remind these factors before starting any business internationally.The main factors argon-Cross-cultural aw arness.Sound knowledge of political and legal system in other countries.Varied negotiation skillsMulti-language skillsGlobal strategic consciousness i.e. Early mapping of opportunities and threats involvedThis report also gives information about the different problems and issues which china district can face in future in the developing of the business. With the tending of Professor Geert Hofstede the 5d model of cultural dimension is also mention in this report.And with these help mainland China Zone can think and take proper decision in joint venture and also in the future.TERMS OF REFERENCESAs a business consultant in Radhe Consultancy our firm provides services from the last 25 yrs to the clients who be looking for joint ventures in different fields like trade, industry, services, manufacturing, distributorship, housing, hotels, hospita ls, merriment parks, HR and any other viable venture.My office is Located in California, the States. This is easily access by all transports.Our clients argon in all over the world. Our main market is Africa, Middle East, Asia, Europe and China.And my client is a China community - China ZoneEstablished in 1999, manufacturer and exporter design study and production of wool clothing located in china main land with convenient transportation access. every of the company products comply with international tint standard and atomic number 18 greatly appreciated in a variety of different market through out the world.Have over 800 employees, boast an yearly sales figure that exceeds US 10000000 $ and currently export 85% of our products to worldwide places. Our well equipped facilities and excellent quality throughout all stages of production change us to guarantee total customer satisfaction.China Zone is a big manufacturing and export house in china but now China Zone wants to ente r in United States to expand his business and also in USA there be many big opportunities for the maturement of the business. With the theatrical role of his business partner he selects our consultancy to know more about the country in which they want to invest.OVERVIEW OF THE SITUATIONIn joint ventures mainly two or more companies are involved and shared their resources, rewards and risks and other spare-time activity points which are clearly mentioned in agreement.The reason why joint ventures are necessary is- dividing line expansionDevelopment of new products or moving into new marketParticularly overseasAlso there are many other problems are there when anyone want to do business internationally.Legal problemsCultural aspectsTo describe the differences between United States and china we take Hofstede five-spot cultural dimension.Data radical http//www.geert-hofstede.com/hofstede_dimensions.phpHofstede defines purification as a Collective programming of the mind, which di stinguishes the members of one category of people from some(a) other (Hofstede, 1980).After comparing Chinese and Hesperian countries there are somewhat conclusion is shown - (data source Hofstede, 1991)First, western countries give the impression to be on average lesser (United States of America 40, Canada 39, United Kingdom 35, Germany 35, and France 68 than China 80 in power distance. Second, in individualism, western countries are normally much higher (United States of America 91, Canada 80, United Kingdom 89, Germany 67, and France 71 than China 20. Third, western countries look like to have interim oriented at the same time as China is judge towards be present as long-run orient. Western countries, America are repeatedly investigated in cross-cultural study, because of economic power, and civilizing representativeness. In short we can say that the United States is indicating the so called western culture in between USA and China seems to be help and clarify all the civiliz ing differences.Data Source http//www.geert-hofstede.com/hofstede_dimensions.phpData Source -http//www.geert-hofstede.com/hofstede_dimensions.phpUSA and China has been significantly differ as their financial system, political systems, societal values and law in spite of the significant changes that have done for the current duration of long time in China. The civilizing measurement score of USA and China (data source Hofstede, 1993). There are some differences that can be found.First, power distance, the China is scoring double comparative to USA, this shows that China is centralised while USA is relatively decentralised. Second, USA shows the 1st rank in individualism and other side China is cover low score in individualism. Thirdly, USA scores higher than China in masculinity, its mean that USA has average masculinity whereas China is showing mean(a) femininity. Fourth, China scores higher values in uncertainty avoidance than USA, which indicates that Chinese are moderately ri sk-avoiding but at the same time Americans are quite risk-taking. And also USA has an interim orientation while China has a long-standing orientation.It has been broadly accepted by all that cultural differences deeply continue human behaviour and thinking.Geert Hofstede shows that only seven countries having the highest Individualism (IDV)- USA 91, Australia 90, United Kingdom 89, Netherland and Canada 80, and Italy 76.Types of Joint VentureThere are basically two types of joint ventures mentioned below-First option is to be in agreement to collaborate with another company in a partial and particular federal agency.Secondly is to designing another joint venture dealing probably a new company, for handling a particular contract.Joint Venture Benefits and RisksA small business can also use joint venture for increasing long term relationship.A successful joint venture can provide secure of entry to new markets and circulation networkBetter capacityContribution of risksEntranc e to bigger resources, which can include particular staff, skill and financeThe Risks of Joint VenturesTo ease up the right relationship and to do business with others probably many problems are arise if-The main prospect of the joint venture is not clear and discussed with everyone who is involved.All the partners have their own opinion for the joint venture.Difference in the level of sharing like assets, investments and other things which are bringing by all the partners into joint venture.Belongs to different cultures and handling the different management can show the non co-operation.In the joint ventures the partners are not interested to give full support and control.A successful joint venture can depend upon the investigation and achievement thorough examine and learning of the objectives and main aim of the venture.Choosing the Right Joint Venture PartnerSuccess of any business depends on taking right decision. Same happens with joint venture, success depends on some import ant points like with which you are breathing out to deal with, what are the goals of joint-venture, other party is financially strong or not, what are their resources, etc.Joint-venture in which two organizations are merged for achieving some particular objectives and before choosing a partner every organization must see that the other party is capable of bearing expenses and losses at some extent or they are on whom you can trust, same objectives are shared, credit tycoon of some(prenominal), resources, etc. these are pointed below-Financial positionCredit abilityAvailability of resourcesShared objectivesThe suitable partner in joint venture is the partner who has its own resources, asset etc. For better starting it is understood to prefer the convenience of customers and suppliers. In this the company must have also think about the existing competitors and other associates. But company have to review the followingClient can direct his partner according to their performance, r eputation and reliability. He has also to access their attitude to group efforts or association and what are their business objectives. Partner should be financially safe and sound. Identify that have they other business partners and what type of relationship do they have with them. You should also recognise customers view about your partner and how strong is their management.Legal analysis of the International Joint VentureThere are also some Americans legal issues which are also essential after analyzing the other business and other issues.Controls on ExportAntitrust laws of United Statesparliamentary reporting needs of United Statesoverseas barrier to Americans ventureAccounts and Taxes issuesTo create a lawful compositionRecruitmentCredentials of the global Joint VentureANALYSIS OF THE SITUATIONPEST ANALYSIS plague means-The pest analysis is a wonderful tool for understanding the position, growth as well as direction of the business. It can be utilise for marketing and business development.Political factorsImmigration controlGovt. Rules and regulations for NRIEconomical factorsLow inflation and unemploymentVery high spending in government.Very much intentness about the growth of economySocial factorsVariety of religionsMixtures of Indians, British and many other countriesEquality in mens and womens.Technological factorsMany ISP and airports available.International and national lines are good.A couple of TVs stations.Political factor Political factor is a big issue for regulating the business. There are many factors like perceptual constancy of political environment, government policies and tax laws, government policies which come under economy, culture and religion, trading agreements for e.g. Nafta, EU etc.Economical factors There are some factors are there when anybody is planning to start business internationally-Inflation level grade of interestGdp growth rateGdp Growth Rate Gdp is an essential part of the UK national accounts which can provides concise explanation of the total economic activities in a county. Presently 3% is the Gdp growth rate because of the economic crisis and excluding this development of the world economy, UK is also representing positive numbers of 10(Data Source http//www.statistics.gov.uk/CCI/nugget.asp?ID=56 )Social factors These factors vary from one country to another country. And it is useful to take these factors. These are-Religion, foreign products and services, language impact, mens and womens roles in society, stability of population and wealth about older generation, opinion about green issues from young generation.Technological factor Everyone knows that if technological factors are strong than its a strong tool is there with any country for globalization.There are also some points which can be considered-Does technology allows for products and services to make more cheaply and to a better standard of quality.Do the technologies offer consumers and business more in advance(p) product a nd services such as internet banking, mobile services, etc?How is distribution changed by new technologies? E.g. Books and Flight tickets purchases via the internet. Does technology offer companies a new way to communicate with consumers e.g. banners, CRM (customer relationship management).SOLUTIONS AND RECOMMENDATIONSIn overseas market the most common and favorable way to do business is joint venture. Also we can say that the perfect source for growing in international market is joint venture. There are many problems comes there which are already discussed above like political, economical, technical, environmental, cultural, legal, and many more. It is the best option before entering in foreign countries to do business is to go through these issues because either these factors can affect the company in the future.According to pest analysis and also there are some other solutions are available which are devoted below. -To finding attach market.Prelaunch studiesLack of infrastructu re counselCustoms and taxation policiesCredits and not bad(p)sMarketsComfort with agreementsChoosing a reliable partnerInterest in communityIn basis of to finding a suitable market If you are thinking about to business in overseas then u have firstly to choose the market where from the long term the growth rate is growing or high. Also examine the rate of interest, market demand/supplies and inflation rate.In this prelaunch follow or study It is very much important to do this before thinking a business in overseas because its gave information about the market, political factors, economical factors, legal issues, technology and much more. And after taking this survey u can examine that the market chosen by you is favorable for you in the future or not.Lack of infrastructure Includes the advantages of technologies and environmental issues like pollution, transportation. Because if the transportation is not available nearby than its a big problem for doing business globally.Manage ment A success is depends upon that how is your management works. And it is recommended that before entering into a joint venture just meet the management peoples and assure that the company has its own adapted management force.Customs and taxation policies Before entering into joint venture its also important to check the taxation and customs policies and after that compare its with the wampum margins.Capital and credit Before entering into joint venture or to do business internationally evaluation of the sources which already have and the required capital which we have required to the growth of business in the future and then compare the costs and returnsComfort with agreement While entering in the joint ventures it is important to check the contract because it is better to explain everything in the contract so after that everyone knows there responsibilities and not a single misunderstanding happen. fitting and reliable partner In the selection or choosing a partner just re member that the partner is reliable and having good image in the market and already have some future plans for the growth of the company.Interest in community Means that the both partners should have responsible and these all responsibilities are written in joint ventures.FORECAST AND OUTCOMESIt is analyzed that the joint ventures between China Zone and Radhe Consultancy there are some data is suggested before regarding many futures aspects which are beneficial in Joint Venture In this paper it is mentioned the purpose which is required for joint ventures internationally.Also suggest the recommendation of PEST analysis and Hofstede five dimension theories. In this the main aspects is culture as well as economic conditions.After describing this it is assumed that this joint venture will be going on accurately right because the capital of the company is good and having good management. With the Joint Ventures of companies and as per the Solutions and suggestion and Pest analysis and other factors that are given in this report it is assumed that the Chinese company will achieve its expected growth and work smoothly in the future as it wants with the USA based company.Now a day there are many businesses and account related reasons for entering in joint ventures. In this partnership both partners have ability and resources like distributor, technology, finance, man force, management which makes a strong venture.In a joint venture two or more parties are engaged to do business for a specific project. And in a partnership partners are involved to do a continuous business or long term relationship.In this case study there are a Chinese company which wants to establish its business in USA. And it has identified with the help of Hofstede and PEST analysis which problems are there for entering and doing business in USA for a Chinese company. After discussing the problems of joint venture at international level, solutions and recommendations are also given.