A Review of Literature on How to Manage International Joint Venture - 1

A of on How to Manage International peg Venture Successfully - Literature review ExampleThis presents companies with greater opportunity to explore new foreign markets. IJV is an endeavor by a foreign firm to musical accompaniment its product with local inputs and knowledge or in a nonher case where the foreign firm has no right for property acquisition. Although IJVs have greater advantages, many severe problems appear to be intrinsic attributes associated with measly IJV commission. Many researches revealed that IJVs are volatile, hard to effectively manage and often fail especially when the venture is organise in a developing country. These researches stress that main reason for failure is inherent difficulties and tensions between the firms in managing the IJVs. Why interchangeable Ventures Fail Rond and Bouchikhi (2004) highlighted that this found of organization is quite challenging. In this context, cooperation as the main characteristic inherently required to defuse i nternal and external tensions. Hamel (1991) identifies the possibility of incompatibility with partners objectives resulting in conflict of resource priorities. This makes ventures prone to instability and ultimately to failure (Yan & Zeng, 1999). Many joint ventures are bound to failure because of following reasons- Unrealistic Idea In ideal scenario, companies form joint ventures because they do non have the required resources or expertise to undertake such efforts at their own. In fact, this form of union is more directed by risk sharing rather than resource sharing. Risks associated need to be evaluated because the risks identify by one firm prior to forming the venture would still be there and may not be mitigated by the cooperation of two firms turning into an unrealistic idea prone to failure. shortsighted formulation Usually, there are no plans and what is available is a statement of intention or a form of memorandum of understanding describing the contribution and pr ofit shares of both the firms. However, there lacks a proper plan for managing the venture, accomplishing the certain task and set the modalities of interaction and conflict resolution between the two firms. The plan must embroil- The arrangement on which Joint Venture is based Future tax planning Both societys contribution and obligation to provide resources Provisions for meeting the future needs Logistics planning decision making and management Distribution of earned assets Issue and conflict resolution Conditions and provisions for conclusion Inadequate Capital Investment- Both parties unremarkably allocate a fixed amount of budget that is deemed enough for the Joint Venture to meet its end objectives. However, costs overrun resulting in dispute and arguments. This necessitates thorough risk management planning and allocate contingency amount to cater for such berths. Lack of Leadership In Joint Ventures, each party would like to act in leadership role to take control of s ituation and credit to itself. This may result in stalemate causing huge damage to ventures. Thus it is real critical to define in the let downning the roles and the mode for conduct of daily operations. Lack of Commitment Companies usually expect huge and quick profits from a Joint Venture and when expectations are not realized, the parties begin to lose interest in the venture. Thus it is very