...Background Joint Ventures Agreement Sheraton Asia Pacific and Chinese Ministry of Foreign Affairs In August 1966, a joint venture was shaped between Sheraton Asia Pacific and Chinese Ministry of Foreign Affairs. Basically, Sheraton Asia Pacific Corporation is a Subsidiary of ITT Sheraton. Andrew Wilson was appointed by Sheraton, an Australian by origin, for the Deputy General Manager position, along with Clara Chan, a Singaporean Chinese, in the Chief Auditor position. These two higher officials were appointed in 1996 only after the regulatory authorities had given formal approval to the project. Agreement Launching Ceremony Incident At the very beginning, a lunch was organized by Yang Zhao, who happens to be the General Manager of the Beijing International Club Corporation. He was also the appointee of the Chinese Ministry of Foreign Affairs. During the lunch session, Clara Chan received her first lesson in JV management and experienced what it is like to be in a venture with the Chinese. Yang Zhao gave a rather subtle complement to Chan by saying that she belonged to the Chinese background and due to which she will be culturally in sync to help Sheraton and Chinese Ministry of Foreign Affairs to establish a good understanding and a better network of communication between these two companies. Chinese Economy: At a Glance Chinese government is tried to make a favorable market condition for the foreign investor to attract them to invest in China. The result to...
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...Executive Summary Joint venture is method or an approach which allows companies to further their interest internationally without taxing their resources b having a partner who is compatible to work on the project albeit in short term or long term project. Joint venture allows companies to pool their resources together and benefit each of the companies in reaching their potential. Apart from that, joint venture also allows company to complement each other short coming with what they do best. This is evidently shown when discussing Daicel Evonik Ltd where Daicel Chemical Industries Ltd and Huels AG complement each other in term market knowledge and technological capabilities know-how among them. But then, joint venture does have limitation where culture plays an important barrier to achieve success. In Danone Co. Ltd and Wahaha Co. Ltd which will be discussed further, the dissolution of ventureship between these two companies can be attribute to communication particularly in conflict management. Thus, managing cultural differences is important especial in term of managing conflict among the partners. Conflicts are parts of life and may appear in any organization. They particularly often occur in hybrid organizations whose parents coming from different cultures, different countries with different ways of thinking and doing things. Knowing how to management conflict with proactive approach (minimize conflicts to happen) and reactive approach (resolve conflicts) is crucial for firms...
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...RESEARCH ON JOINT VENTURE IN THE PHILIPINES Group Research Work Submitted to the Ramon V. Del Rosario College of Business De La Salle University – Manila In Partial Fulfillment Of the requirements in BUS520M Business Law Submitted by: GROUP 4 Amparo, Lourdes Lagman, Mia Marie Legaspi, Jill Noreen Submitted to: Atty. Antonio Ligon April 6, 2016 I. Background 1. Philippine Business a. History 2. Doing business in the Philippines b. Forms of business 3. Definition and Origin of Joint Venture (JV) II. Statement of the Problems 1. What are the applicable laws in joint ventures? 2. What are the tax implications? 3. Are our current joint venture laws sufficient? Especially with the Asean integration? III. Statement of Objectives The research study aims to: 1. Identify the applicable laws in joint ventures 2. Identify the tax implications in joint ventures 3. Identify insufficiencies (if any) in our current joint venture laws and make recommendations IV. Discussion 1. Nature of Joint Ventures in Philippine setting 2. Governing Laws 3. Foreign Investments 4. Scope of Joint Venture Business Activity 5. Taxes in Joint Venture 6. Example of JVs in the Philippines V. Analyses VI. Recommendations VII. Learning Points VIII. References I. Background of Philippine Business History Historians state that the early start of business...
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...IFRS 11: Joint Arrangements Contents I: Objectives and references 1 IA: Outcomes 2 IB: References 3 2: How to distinguish between jointly controlled operations and ventures 5 Structure of the arrangement 6 Legal forms 6 Contractual arrangements 7 Other information 7 3: How to account for a joint operation 8 4: How to account for a joint venture 13 5: Disclosure 16 6: Case Study: Group Five 16 I: Objectives and references Objectives When you have completed studying the material provided in these notes together with IFRS 11 and you have completed the set tutorials without referring to the solutions you should be able to meet the following outcomes. These outcomes and competencies must be read in conjunction with the analysis of core and financial reporting competencies presented in the course Introduction. The following key is used to identify the professional competencies that are used to develop the outcomes listed below. |IC1 |obtains information | |IC4 |communicates effectively and efficiently | |IC2-2 |performs calculations | |IC2-4 to IC2-6 |evaluates information and ideas | | |Outcome |Financial Reporting Competency |Professional |Focus |Tut | | | ...
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...Partners lacked surely the first and, probably, also the second. The company tried to secure resources from Thai banks, but this strategy failed – the local banking industry was probably very sceptical of the new initiative. As to the managerial know-how required for an aggressive growth strategy, it is part of the company’s culture. It has been created on the basis of a long history of experience and is sustained by the people who are truly committed to the company’s principles. These two elements cannot be enshrined in the licence agreement[1]. Comment on question 2: The key point to answering this question is to explain why it is more advantageous for Starbucks to enter into joint ventures than to license its business format. This question appears at first glance to be identical to question 1, but note that whereas question 1 asks for the specific reasons why Starbucks became disillusioned with its licensing strategy, question 2 asks how joint ventures overcome the...
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...Danone’s entry mode in China Basically, Danone chose joint venture as their entry mode at the early stage of entering Chinese market. More specifically, in 1996, they began a joint venture with the other two companies: Hangzhou Wahaha Group Corparation (Wahaha Group) and a Hong Kong corporation called Bai Fu Qin (Baifu), and formed five new subsidiaries in China. However, it should be noted that Danone and Baifu did not directly invest in the JV, but established Jin jia Investment, a new corporation in Singapore instead with Danone as their controlling shareholder. In this case, Wahaha Group held 49 percent of the entire shares of JV while Jinjia owned the remaining 51 percent. The reasons why Danone decided to form a joint venture rather than a wholly owned subsidiary or other formats can generally be associated with the considerable benefits they may gain from it. Firstly, as a French company who has just entered the Chinese market for no more than 10 years since 1980s at that time, Danone’s knowledge about domestic market was still limited and may face a challenge if they run their business solely. Therefore, it is essential for them to learn from their partner in terms of related market knowledges, such as the competitive conditions, culture, political and business systems in China. Secondly, the partnership enabled Danone to share related costs and risks of developing a new product or process, in turn, led to the increase in their profit margin. It can be generally seen...
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...Chapter 9 1. One of the most common entry strategies for MNCs is the joint venture. Why are so many companies opting for this strategy? Would a fully owned subsidiary be a better choice? 1） wholly owned subsidiary is an overseas operation that is totally owned and controlled by an MNC. This option is often pursued by smaller companies, especially if international or transaction costs, such as the cost of negotiating and transferring information, are high. When MNCs make an initial investment in the form of a wholly owned subsidiary in a foreign country, it is sometimes referred to as “greenfield” or de novo (new) investment. The primary reason for the use of wholly owned subsidiaries is a desire by the MNC for total control and the belief that managerial efficiency will be better without outside partners. Due to the sole ownership, it has been found that profits can be higher with this venture and that there are clearer communications and shared visions. However, there are some drawbacks. Typically, wholly owned subsidiaries face a high risk with such a large investment in one area and are not very efficient with entering multiple countries or markets. This can also lead to low international integration or multinational involvement. Furthermore, host countries often feel that the MNC is trying to gain economic control by setting up local operations but refusing to include local partners. Some countries are concerned that the MNC will drive out local enterprises...
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... Company: Starbucks Country: China Going to do an international joint venture with “----“company in China. Advantages International joint ventures allow for much faster and less costly access to foreign markets than can be achieved by purchasing an existing company in the jurisdiction or starting a new venture. IJVs provide quick access to channels of distribution, and they provide access for the non-resident partner to knowledge and know-how of the local marketplace, which substantially enhances the probability of success for the venture. The resident partner also often has existing relationships with key suppliers and customers, and proficiency in the local language and customs. These benefits can be especially critical to a small or medium-sized business that does not have the capital, resources or Expertise necessary to pursue the opportunity unless it is able to share the risks and the costs through an alliance such as an international joint venture. IJVs allow the partners to move quickly, cost effectively and with credibility (provided by the reputation of the resident partner) in the local marketplace. The parties to an IJV can also take advantage of complementary lines of business and synergies that may exist between the two companies. Disadvantages An international joint venture can result in a frustrating experience and ultimately a failure if it lacks adequate planning and strategy. Factors such as...
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...capturing a share in the new market rather than focusing on only reduced labor. Open a small office in china staffed with one of their people to collect information about the Chinese market, distribution channels, local conditions and laws, as well as identify potential joint venture partners. In that way the management group could be clearer on how they should proceed. This is a very good strategy. The laws are different in many countries, and by taking the time to study how the Chinese markets operates would be a great idea. However, instead of hiring one of their people to operate the small office in china, you should hire a local person who already knows about the Chinese Laws. Being that this person is Chinese, the people would be very receptive to him, and he would have the information Eldora needs soon. Establish a joint venture whereby Eldora would provide the product and process knowledge and the joint venture would manage both the manufacturing and distribution capabilities. Joint ventures are an easy access point to entering a new market. Forming a joint venture will not only get the ball rolling for Eldora, but it will also help mitigate Eldora risks. However, with joints ventures, you face the possibility of surrounding your newest and greatest technology which in this case happens to be Eldora’s greatest strength. Forge an alliance with an Asian company and establish a final assembly plant....
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...and the development and testing of new pharmaceuticals. The company’s strategic growth objective was to grow its existing business by between 12% and 15% annually and its entire business by 20%. This plan left a strategic growth gap of 5% to 8% each year, resulting in CRL’s pursuit of growth opportunities in the form of joint ventures, technology licensing and strategic partnerships. Key Issues Primary: Should CRL invest up to $2 million to create a state of the art specific pathogen free (SPF) egg farm? In order for Dennis to win over the Board of Directors, he must convince Jim Foster (CEO) of CRL. Foster views this proposal as a potential distraction for Specific Antigen Free Avian Services (SPAFAS), which continues to grow in the United States. Given the number of companies involved, different geographic locations and capital requirements, CRL must carefully decide whether this investment will fill their strategic gap growth. Secondary: Would IDISA be reliable partners in a joint venture The complex organizational structure of Group IDISA, is made up of five legally independent companies all owned by the same family. When considering a joint venture with ALPES, CRL has concerns regarding the number of transactions between the companies and the overall transparency of the IDISA. This family owned company holds a board meeting once a year, and has no strategic plans, operating budgets, meeting minutes or formal corporate documents that are routine for U.S. companies...
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...beverage conglomerate and signed an agreement with the Hangzhou Wahaha Group in 1996, a Chinese beverage company, to set up a series of joint ventures in China. The partnership was established to market products under the Wahaha brand name. Ultimately, the agreement resulted into thirty-nine joint ventures. Those joint ventures were hugely profitable as the Wahaha brand became a household name in China. In spite of these successes, the relationship started to deteriorate. After years of court battles, Danone finally pulled out of the JV and ended this partnership with Wahaha. Based on the case study, this essay will firstly analyze Danone’s market entry mode and limitations of this mode. Subsequently, this essay will discuss contributions of both Wahaha and Danone in this relationship. Finally, this essay will present reasons for the Danone-Wahaha dispute and lessons derived from this dispute. Danone’s market entry mode Danone entered the Chinese market selling consumer drink products, including fruit juice, dairy products and bottled water, all with Chinese joint venture partners who were market leading brands in China. A joint venture is a special type of strategic alliance, which requires establishing a firm jointly owned by two or more otherwise independent firms (Hill, Wee and Udayasankar, 2012). Danone and Wahaha in this case are the two strategic partners to establish joint ventures together. Danone chose to create joint ventures in china since this entry mode can allow...
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...PREPARED FOR: MADAM NORHANINAH BT A.GANI CONTENT: JOINT VENTURE DEFINITION: An association of two or more individuals or companies engaged in a solitary business enterprise for profit without actual partnership or incorporation; also called a joint adventure. A joint venture is a contractual business undertaking between two or more parties. It is similar to a business partnership, with one key difference: a partnership generally involves an on-going, long-term business relationship, whereas a joint venture is based on a single business transaction. Individuals or companies choose to enter joint ventures in order to share strengths, minimize risks, and increase competitive advantages in the marketplace. Joint ventures can be distinct business units (a new business entity may be created for the joint venture) or collaborations between businesses. In collaboration, for example, a high-technology firm may contract with a manufacturer to bring its idea for a product to market; the former provides the know-how, the latter the means. All joint ventures are initiated by the parties' entering a contract or an agreement that specifies their mutual responsibilities and goals. The contract is crucial for avoiding trouble later; the parties must be specific about the intent of their joint venture as well as aware of its limitations. All joint ventures also involve certain rights and duties. The parties have a mutual right to control the enterprise...
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...Q.1 What are the unique advantages and disadvantages of International Joint Ventures? Try to relate to the case when you answer this question. The case illustrates the possibility of a Joint Venture between Nora, a leader in telecom equipments in Malaysia and Sakari, a Finnish Conglomerate that deals in the manufacturing of cellular phone sets and switching systems. Joint Ventures between local players in developing countries and foreign companies have become an apt means for both managements for satisfying their business needs and objectives. Local partners bring local expertise of the target market, familiarity with local governance and government regulations, understanding of the regional work ethics and culture, while, the foreign players get the latest technological know-how, advanced operational frameworks and access to export markets to the table. It can be seen as a symbiotic tryst between two mutually co dependant parties. In the light of the aforementioned case, some of the unique advantages and disadvantages of an International Joint Venture are as follows: Advantages of an International Joint Venture: y y y y y y Access to new markets and a wider distribution capacity: As shown in the case, Sakari was interested in enhancing its global market share by means of a Joint Venture. A Joint Venture allowed it to foray into lesser known foreign markets with the help of an established local player. This allowed the Finnish company to gain the much needed expertise and...
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...leading companies in the telecom business in Malaysia. It was established in 1975. Since it was created it has a lot technical know-how in cable-laying projects, installing payphones and manufacturing telecom handsets. This is through vast experience gained in its operations in the cities of Malaysia. The company also has experience in distribution of radio associated equipments, Apple computers, dealing with broadcasting equipments and the making of automotive wares. Sakari Company was established in 1865 in Finland. The company started as a paper mill producer. During the 1960s the company expanded its venture into the cable and rubber industry. In the year 1975 the company entered in the consumer electronics, cellular phones and computers industries through alliances, mergers and acquisitions. The year 1979 marked the joint venture of Vantala and Sakari. The joint venture was created to increase in making mobile phones. By the year 2001 Sakari became Finland’s largest traded industry Company and provided its majority services overseas. In 2003 Nora Holdings submitted its interest in providing the TMB contract of supplying switching exchanges to support four million telephone lines. Nora did feel that it was important to secure this contract because of the financial gain. It was also important to obtain this contract because it would enable the company to...
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...Professional report on negotiation between Danone and Wahaha (2007-2009) On the 30th of September 2009 an almost 12 year relationship between French multinational enterprise Danone and Chinese Wahaha group ended by Danone withdrawing from the IJV (International Joint Venture) for monetary settlement. This report analysis the negotiation journey of the dispute and tries to classify the different negotiation steps based on the challenges of negotiating business deals in China. As a tool IRENEs framework on “Who/ How/ What” is used. Based on the analysis of the negotiation and the review of the cultural differences between western oriented and Chinese businesses suggestions will be made what could have been done differently by Danone. Overview of the Situation between Danone and Wahaha early 2007 The multinational Danone Group SA based in Paris in France is one of the biggest players on the global dairy product and bottled water markets. They are active on all five continents and the net sales in 2007 was more than 12 billion €. The Hangzouh Wahaha Group Co., Ltd. is a company that has grown from a small business, selling drinks to school children to become one of the most important and largest Chinese bottled-water companies already in 2007. Although it is difficult to find detailed financial figures on Wahaha it can clearly be stated that in 2007 the Group was much smaller than Danone. At that time Wahaha contributed approximately 6% of Danone’s...
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