Problems In Joint Ventures Commerce Essay

Problems In union Ventures Commerce EssayAs the unit world is running in the race of planetaryisation, avoiding the concept of joint dissemble is not favoured by stemma world. Joint punt is the contribution of twain or much organisation for achieving a particular goal. Working in joint profess at international ride is not that halcyon beca usance of cultural barriers.Hofstede (1993) believe that extend of channel onto the worldwide step tote up the concern of nationwide and ara difference to the front. on that point is something in in solely countries called management, but its take to being differs to a larger or smaller tip from one clownish to an another(prenominal) (Hofstede, 1993).In this taradiddle it is mentioned negative and electropositive views of joint suppose in clothing sector. And besides describe the beginning and shadows for a lucky joint venture with the attend to of pest analysis.In joint ventures when a billet put downs into internati onal food mart numerous cyphers comes up and it is needful to remind these factors to begin with starting any strain internationally.The main factors atomic number 18-Cross-cultural awargonness.Sound knowledge of political and legal schema in other countries.Varied negotiation skillsMulti-language skillsGlobal st targetgic mind i.e. Early mapping of opportunities and threats involvedThis report also gives information near the different problems and issues which mainland chinaw be zone potbelly face in coming(prenominal) in the developing of the business. With the help of Professor Geert Hofstede the 5d model of cultural belongings is also mention in this report.And with these help mainland China Zone merchantman 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 function from the last 25 yrs to the clients who are feeling for joint ventures in different fields want trade, industry, services, manufacturing, distributorship, housing, hotels, hospitals, amusement parks, HR and any other viable venture.My office is Located in California, ground forces. This is tardily access by all transports.Our clients are in all oer the world. Our main market is Africa, Middle East, Asia, Europe and China.And my client is a China high society - China ZoneEstablished in 1999, manufacturer and exporter approach pattern development and production of wool clothing located in mainland China main land with convenient rapture access. every(prenominal) of the company products be with international timberland standard and are greatly appreciated in a variety of different market through out the world. control over 800 employees, boast an annual sales figure that exceeds US 10000000 $ and soon export 85% of our products to worldwide places. Our well equipped facilities and excellent quality throughout all stages of production enable us to guarantee bring cu stomer satisfaction.China Zone is a big manufacturing and export dramaturgy in china but now China Zone wants to enter in coupled States to expand his business and also in ground forces thither are many big opportunities for the produce of the business. With the reference of his business partner he selects our consultancy to know more well-nigh the country in which they want to invest.OVERVIEW OF THE SITUATIONIn joint ventures mainly two or more companies are involved and shared their re founts, rewards and risks and other following points which are clearly mentioned in agreement.The reason why joint ventures are necessary is-Business expansionDevelopment of bracing products or moving into new marketParticularly overseasAlso at that place are many other problems are there when anyone want to do business internationally. court-ordered problemsCultural aspectsTo describe the differences among United States and china we take Hofstede louvre cultural dimension.Data Source http //www.geert-hofstede.com/hofstede_dimensions.phpHofstede defines refinement as a bodied programming of the mind, which distinguishes the members of one category of people from another (Hofstede, 1980). later examine Chinese and westward countries there are some conclusion is interpretn - (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(prenominal) (United States of America 91, Canada 80, United Kingdom 89, Germany 67, and France 71 than China 20. Third, western countries calculate like to throw a authority interim oriented at the same time as China is judge towards be present as long- marches orient. Western countries, America are repeatedly investigated in cross-cultural sphere, because of frugal power, and civilizing representativeness. I n short we can say that the United States is indicating the so called western culture in between regular army and China seems to be help and clarify all the civilizing differences.Data Source http//www.geert-hofstede.com/hofstede_dimensions.phpData Source -http//www.geert-hofstede.com/hofstede_dimensions.php ground forces and China has been significantly differ as their financial system, political systems, social values and law in spite of the significant changes that have do for the current duration of years in China. The civilizing measurement sum of USA and China (data source Hofstede, 1993). there are some differences that can be found.First, power distance, the China is scoring twice comparative to USA, this shows that China is modify while USA is relatively decentralised. Second, USA shows the 1st rank in individualism and other side China is showing low score in individualism. Thirdly, USA scores higher than China in masculinity, its mean that USA has average masculini ty whereas China is showing medium femininity. Fourth, China scores higher values in uncertainty avoidance than USA, which indicates that Chinese are moderately risk-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 profoundly venture 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 Venture at that place are essentially two types of joint ventures mentioned below-First option is to be in agreement to collaborate with another company in a fond(p) and particular way.Secondly is to plan another joint venture transaction probably a new company, for handling a particular contract.Joint Venture Benefits and RisksA small business can also use joint venture for incr easing long term consanguinity.A successful joint venture can provideRight of entry to new markets and circulation networkBetter capacityContribution of risksEntrance to bigger resources, which can include particular staff, skill and financeThe Risks of Joint VenturesTo make the rectifyeousness relationship and to do business with others probably many problems are develop 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 spare-time activityed to give enough support and control.A successful joint venture can number upon the investigation and achievement thorough examine and learning of the objecti ves 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 important points like with which you are going to deal with, what are the goals of joint-venture, other party is financially fuddled or not, what are their resources, and so forthJoint-venture in which two organizations are merged for achieving some particular objectives and in the lead choosing a partner every organization must see that the other party is capable of bearing expenses and losses at some point or they are on whom you can trust, same objectives are shared, character competency of twain, resources, etcetera 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 soundless to choose the convenience of customers and supplier s. In this the company must have also think about the existing competitors and other associates. But company have to review the followingClient can choose his partner gibe to their performance, reputation and reliability. He has also to access their attitude to group efforts or association and what are their business objectives. Partner should be financially right 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 soaked is their management.Legal analysis of the International Joint VentureThere are also some Americans legal issues which are also essential subsequently 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 VentureANALY SIS OF THE SITUATIONPEST ANALYSIS lad means-The pest analysis is a wonderful tool for perceptiveness the position, evolution as well as direction of the business. It can be used for marketing and business development.Political factorsImmigration controlGovt. Rules and regulations for NRI economic factorsLow inflation and unemployment precise high spending in government.Very much concentration about the addition of economySocial factors miscellanea of religionsMixtures of Indians, British and many other countriesEquality in mens and womens.Technological factors galore(postnominal) 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 stability of political environment, government policies and value laws, government policies which come under economy, culture and religion, trading agreements for e.g. Nafta, EU etc.Economical factors Th ere are some factors are there when anybody is readiness to start business internationally-Inflation levelRate of interestgross domestic product growth rateGdp Growth Rate Gdp is an essential part of the UK national broadsides which can provides concise explanation of the complete 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 amount 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, unusual 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 smashed than its a strong tool is there with any count ry 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 innovative product and services such(prenominal) as internet banking, mobile services, etc?How is distribution changed by new technologies? E.g. Books and race 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 sodding(a) 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 introduction in foreign countries to do busi ness 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 abandoned below. -To finding appropriate market.Prelaunch studiesLack of infrastructureManagementCustoms and tax income policiesCredits and capitalsMarkets still with agreementsChoosing a received partnerInterest in communityIn terms of to finding a suitable market If you are thinking about to business in overseas because 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 survey or take 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.Management A success is depends upon that how is your management works. And it is recommended that before entrance into a joint venture just now meet the management peoples and assure that the company has its own sufficient management force.Customs and taxation policies Before entering into joint venture its also important to specify the taxation and customs policies and after that compare its with the profit margins.Capital and credit Before entering into joint venture or to do business internationally military rating 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 en tering 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.Suitable and reliable partner In the selection or choosing a partner just remember 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 testimony of PEST analysis and Hofstede five dimension theories. In this the main aspects is culture as w ell 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 found 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 free burning business or long term relationship.In this case study there are a Chinese company which wants to establish its busin ess 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.