The paper 'Hunan China Sun Pharmaceutical Machinery Co and ACIC Fine Chemicals Inc" is a good example of a finance and accounting case study. Corporate alliances take many forms of relationships such as partnerships, takeovers, and joint ventures among others. Other forms of alliances include revenue sharing agreements, licence acquisition, disposition, and indirect acquisition of business just to mention a few. This reports analysis a joint venture that is defined as an organization that brings together two companies of different forces and strengths. It is, however, important that the management structure of the joint venture be fair to both parties (Cole, 2014, para.
1). This report will, therefore, look at the potential risks involved in a joint venture between Hunan Sun Pharmaceutical Machinery Co. and ACIC Fine Chemicals Inc. In addition to this, the report will also look at the suitable mode of payment for the joint venture. A recommendation will also be given regarding the possibility of success for the venture. Introduction A joint venture is an organization that brings together two companies of different forces and strengths. They have been common among small companies that team up to form one large company that is able to compete with other companies in the same market.
It is important to note that joint ventures are normally formed to exist and operate in the long-term thus involve huge investments. Depending on the involved companies, the level of risk of the joint venture could be high or low. This case of study involves a joint venture by the name Venus Pharmaceutical Machinery LLC that is expected to be formed by the partnership of Hunan Sun Pharmaceutical Machinery Co.
and ACIC Fine Chemicals Inc. This report is, therefore, an in-depth analysis of the potential risks and returns of the aforementioned joint venture as well as an analysis of the best mode of payment. About the Partner company There are basic considerations that the parties to a joint venture ought to put in mind before forming the alliance. This is done through the evaluation of the potential partner or partners to select the best option. In this case, the potential partner is ACIC Fine Chemicals Inc. , which is a Canadian Company in the pharmaceuticals sector.
Among the first things to be evaluated is whether the potential partner has been in a joint venture before. The success of the previous joint ventures should also be put into consideration (Geringer, 1988, p. 145). This information can be obtained from the companies that they have collaborated with in the past. Research indicates that ACIC Fine Chemicals Inc. has not been involved in any joint venture. It is therefore not possible to determine their success in the partnership with Hunan Sun Pharmaceutical Machinery Co.
When choosing the potential partner, Hunan Sun Pharmaceutical Machinery Co. should also evaluate whether ACIC Fine Chemicals Inc. has similar goals and objectives to theirs. This is important in avoiding conflict of interest, which could pose the danger of competition from other companies hence leading to the failure of the joint venture. “ Just because some company wants to partner with you, and they have the name recognition or customers, doesn't mean they are right for you” , says Dahl (Para. 4). Secondly, the fact that the partnering companies are from different regions of the world that is China and Canada with the new company Venus Pharmaceutical Machinery LLC expected to be based in the United States, cultural differences should also be evaluated to determine the existence of the joint venture.
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