The paper "Failure of International Joint Ventures" is a great example of management coursework. International Joint Venture (IJV) is one of the most popular forms of entry into the international market (Rugman, 2002). Over the recent years, most of the international organizations have been involved in joint ventures overseas. While there has been an increase in the number of IJVs, there have been several failures. The number of IJVs failures reported shows a high rate of failure. This is despite the fact that IJVS are the frequently used mode of business when multinationals want to enhance their international presence.
However, with the international collaborative business arrangements, it has become hard to manage the IJV successfully. In some instances, IJVs are faced with problems of instability and poor performance (Yan & Luo, 2016). This article is based on the reason why despite the failure rates for the IJVs frequently reported as being very high, the statement can be misleading. It discusses why companies enter into IJVs and what can be done to enhance their success rates. This is attained through the use of examples and relevant literature. Why firms enter into IJVs Globally, IJVs have been a vital tool in international expansion.
Through IJVs international firms are able to have access to complementary resources and also benefit from each other. IJVs are also important in bringing new technology to the market faster and in an efficient manner (Rugman, 2002). Moreover, joint ventures are able to give the participating firms a good status to the local business environment in the international market. It also becomes easier for the business to navigate the environment in which they are operating.
Through joint ventures, firms are able to cope with their new international relationships and enhance their social capital (Steensma et al. , 2008). An example is a joint venture between Jaguar Land Rover and Chery. The partnership known as Chery Jaguar Land Rover Automotive Company has enabled the firms to blend their technologies and experiences (Wachman, 2012). With both firms having experience in the car industry for a long time, the international joint venture acted as a chance to complement their experiences. It helped in harnessing their capabilities and come up with car models which are relevant to the local market.
Another successful joint venture has been between Kellogg Company And Wilmar International Limited in China (Kellogg Company News Room, 2012). Through the joint venture, both firms have been able to exchange skills and come up with products that are relevant to the local market (Currall & Inkpen, 2002). A joint venture acts as a form of direct investment into other markets.
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