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Joint Venture

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Since 2007 the global recession has been remarkable for all entrepreneurs, and gradually had to go looking for alternative ways to take their businesses forward. The following paper will analyze the basics that can help or hurt a company in order to become internationally succesfull, and also remark the keys to business survival with the aim of expanding its presence in emerging markets.
 exporting
 licensing
 joint venture
 equity stake/acquisition

EXPORTING
Pros:
 In developing countries it is necessary to reach an international level of quality, to upgrade machinery, raw materials and processes, based on imports needed for export.
 In countries with higher manufacturing costs, probably out cheaper to import than produce, thus becoming resellers, from manufacturers to retailers.
 In countries with free trade treaties gradual reduction of import taxes to zero, lower the cost of international purchases.

Cons:
 Buy in another country reduces income country where the entrepreneur. Symptoms of economic problems as higher imports than exports, reduce sources of employment, output and cause national currency is exchanged for foreign currency.
 Imports are always implicit risk of increase in the price of foreign currency. Businesses tied to increased foreign currency for imports which are their main source of income, should contract hedging or futures brokerage firms in order to protect themselves.
 Imports, in high degree, dependent on the entrepreneur make international purchases. Any reliance weakens the company and even more so, by the distance international suppliers, deliveries and conditions.

LICENSING
Pros:
 Allows the licensee uses proven technology in the'' business'' in exchange for paying the license fees. Normally the total cost of development and maintenance of the technology is often higher.

Cons:
 It can cause the licensee to convert industrially reliant on on the licensor, which could produce a large number of problems when the time comes to renew the license.

 If other suppliers offers the licensor more in exchange for an selected license, then the licensor might refuse to license the technology to the licensee.

JOINT VENTURES
Pros:
 Gives the chance to influence the different powers of both parts
 Changes investment or funding costs vs improving marketable chances ‘’at home’’
 Provides rapid and low cost entrance to expertise in an area where companies are weak.
Cons:
 Still no overall control. There has to be a instrument to choose the best choice, and probably will not always bring each partner's wished outcome.
 Rewards of achievement shared with the JV partner
 Likely complex diligence process
 SPA and additional predetermined terms have be cautiously drafted
EQUITY STAKE/ACQUISITION
In this last section we study two automotive companies (Nissan and Renault) analyzing their entry into new markets, in addition to analyzing the pros and cons in this particular case. We will use the formula of the equity stake as an example trying to have the greatest level of interest alignment and having the chance also to monitor and control behavior. Strong competition between brands, the incentives war, rising raw material prices, and the pressure to develop cleaner cars and safer, have forced companies to weave a whole network of industry agreements to reduce costs, some with more success than others. This ruled companies implement a pure and simple merger, and opted for an alliance and industrial shareholder. This shareholder alliance was based in the market capitalization of the companies. Besides having partnerships with other companies like Mercedes or Infiniti. These agreements provide the opportunity to research into new areas of cooperation such as the ability to share modules and components between Infiniti and Mercedes-Benz (luxury subsidiary of Nissan) and develop joint projects in the United States, China and Japan. Also, the three partners plan to establish a new platform for future generations of Smart and Renault Twingo, similar to Tata cars (low cost).
Renault and Nissan continue to maintain its commercial independence, but share the development costs of the vehicles. Renault and Nissan understood that agreements in major car markets (U.S., Japan and Europe) were necessary as the market entered a phase of slowdown. In the last ten years, sales in these countries have grown at an average rate of less than 2%. The result is an excess of production capacity of the auto factories, the major problem faced by manufacturers. The plants could produce eighty million vehicles a year, but only 64 million ride (a utilization rate of 80%). In the motor industry, having half-empty plant is losing money. Therefore, most companies have launched a war of incentives and prices to stimulate demand for its vehicles. Manufacturers have focused more on a price-based competition in the product. Only those who have been able to offset these higher costs with increased sales and savings of alliances, have improved their profitability.
High costs invested in these agreements, and the upsurge in the price war, have been placed in a difficult financial situation for manufacturers who have not taken advantage of the synergies of their signatures. The clearest example is the American groups. General Motors lost last year more than eight billion dollars, and the division of Ford cars, more than a billion dollars.
The main consequence of the failure of these joints are restructuring. General Motors and Ford will close several factories and cut thirty thousand jobs, each in North America. Volkswagen, meanwhile, will reduce its workforce in Germany in twenty thousand. Faced with stiff competition from Western markets, companies are betting on growth in emerging economies, mainly in Asia. China and India, the two most populous countries, are concentrating investment firms hire. The example discussed this week (Tata) can serve as an example.

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