Shan Mohammad (MBA- International Business) Pondicherry University

1. SUBMITTED BY:
SHAN MOHAMMAD

2. INTRODUCTION
An International joint venture refers to a cooperative operation formed by two or more
independent entities from different countries to achieve common or complementary objectives.
 The IJV is created by the investment of two or more parent companies.
 The IJV is a separate legal organizational entity, and belongs entirely to neither/none of its
parents.
 It is jointly controlled by its parents.
 These parents are legally independent of each other.
 The headquarters of at least one parent is located outside the country in which the IJV
operates.

3. TYPES OF INTERNATIONAL JOINT VENTURES
1. Traditional equity joint-venture
Two parents from two different countries
2. Tri-national
Two parents from two different countries, set up a venture in a third country
3. Intra-firm
Two foreign subsidiaries of the same MNE
4. Cross-National
Two parents of same nationality, venture located in a different country
5. Greenfield( new ) vs. merging existing operations.

4. REASONS FOR FORMING AN ‘IJV’
The partners may have shared interests in forming an IJV that gives them both
opportunities to:
Create greater market power by combining resources.
Reduce risk by sharing risk.
Reap economies of scale.
Cooperate in order to avoid expensive competing .

5. CONTRIBUTION OF INTERNATIONAL
PARTNERS
 International know-how and access to international connections;
 International reputation;
 Access to international product markets;
 Access to international labor markets;
 Access to international finance;
 Access to international technologies;
 International distribution.
CONTRIBUTION OF LOCAL
PARTNERS
 Access to local connection, including government contacts;
 Local reputation;
 Knowledge of government regulations;
 Access to local product market;
 Access to local labor markets;
 Local distribution.

6. ELIGIBILITY OF COMPATIBLE
PARTNERS
Their different strategic interests are not in conflict.
Both need the IJV in order to achieve these different strategic goals;
Each can supply necessary resources.
Financial capabilities of partners.

7. COMMUNICATION PLAN IN ‘IJV’
 WHO ( in each partner, and the IJV ) should be responsible for
communicating, given a particular topic
 To WHOM ( in each partner, and the IJV ) should different
messages be communicated?
 WHAT topics should be communicated?
 HOW should messages be communicated? The plan indicates the
appropriate style and medium. These may change at different stages
of the project.

8. CCCC
 Reducing paperwork;
 Adopting new matrix structure;
 Flattening hierarchies;
 Breaking down boundaries between units;
 Rethinking roles, and relationships between headquarters
and units abroad.

9. REASONS FOR FORMING AN ‘IJV’
The partners may have shared interests in forming an IJV that gives them both
opportunities to:
Create greater market power by combining resources.
Reduce risk by sharing risk.
Reap economies of scale.
Cooperate in order to avoid expensive competing .

10. BALANCING OWNERSHIP AND
CONTROL
 Integrative mechanism creating direct contact between executives of the partners and the
IJV management;
 the participation of IJV board members in the IJV’s strategic planning and performance
monitoring processes;
 the socialization of managers in training sessions, meetings, seminars with parents;
 systems to motivate IJV managers to align their interests with those of the partners;
 staffing top management of the IJV with parents representatives;
 developing an IJV board of directors who participate in strategic planning and
performance monitoring.

11. IJV: SUCCESS AND
FAILURE
 Trust and Mistrust between partners
 Why change in the environment influences trust
 Trust and mistrust within the IJV
 Trust and mistrust between staff posted to the IJV and their Headquarters
 Trust between the IJV and its local environment
 Fit between national cultures
 Fit between organizational cultures
 The IJV organizational culture is inherently unstable.

12. ADVANTAGES OF IJV
 Penetrating protected markets
 Lowering production costs
 Sharing risks and high R and D costs
 Gaining access to marketing and distribution channels
 Gaining access to the partners know-how.