Mkt630 GDB No. 3 Solution
Monday, June 13, 2011 Posted In Mkt Edit ThisMKT630 - International Marketing
GDB NO. 3
Total Marks 5
Closing Date Tuesday, June 14, 2011
Question:
In recent years it has been seen that number of cross-border joint ventures are increasing. But it is dangerous to ignore the fact that the average lifespan for alliance is only about seven years, and nearly 80% of joint ventures ultimately end in a sale by one of the partners. List only the four reasons for the failure of cross-border joint ventures.
Objective:
To know the different modes of entry into international marketing
To know the cross-border joint ventures
To know the basis for joint ventures
To know the factors that influences the joint ventures
SOLUTION MATERIAL
WHY JOINT VENTURES FAIL
Inconsistent government interference is a difficult problem to overcome. For example, the United States government has long maintained restrictions against exporting certain technologies to selected foreign countries, such as those utilized to produce jet engines and computers. These restrictions place American companies at a competitive disadvantage, since other countries do not place similar constraints on their businesses. Thus, American companies are unable to engage in certain joint ventures.
Another problem with joint ventures concerns the issue of management. The managers of one company may be more adept at decision making than their counterparts at the other company. This can lead to friction and a lack of cooperation. Projects are doomed to failure if there is not a well-defined decision-making process in place that is predicated on mutual goals and strategies.
For example, if two auto manufacturing companies engage in a joint venture, it is imperative that they be similar in their structures and approach to business. If one company relies heavily on nonunionized workers who operate in an autonomous team-building environment, and the other comprises a unionized workforce oriented toward assembly line production in which workers specialize in narrow tasks, the chances of success are poor. The workers at the first plant would be prone to making decisions and solving problems on their own, which would reduce the levels of bureaucracy needed to manage production. Conversely, the workers at the second plant would likely defer to higher-level managers to make decisions. The differences would be difficult to overcome and would lead to higher costs and slower production. While the differences could be alleviated through planning before the actual manufacturing process began, the time expended might lead to technology gaps and other impediments to earning a profit. Most companies engaging in joint ventures would prefer not to deal with such problems after a project was implemented. Rather, they aim to eliminate them through careful planning. Doing so increases profits in the long run, which is one of the many benefits of successful joint ventures.
