TCHIBO: LEVERAGING THE CREATIVITY OF THE CUSTOMER

Tchibo: Leveraging the creativity of the customer

Tchibo: Leveraging the creativity of the customer

Introduction

A joint venture is a contractual business which is commenced with mutual agreement between two or more entities or individuals. Joint venture is more similar to partnership business with one major difference which is in partnership there is an ongoing, long term business relationship, on the other hand joint venture is structured on a single transaction of business. There are various reasons for entering into joint venture; business or individuals enter into joint ventures to share strengths, enhance competitive advantage, and minimize risk in the marketplace. Joint venture could be a business unit which is different from the core business of partners or in joint venture there could enter in collaboration among businesses. In addition to this, businesses in collaboration, for instance, a business with high technology might have a contract agreement with manufacturer to manufacture the product based on their ideas, among this venture one give the ideas and other produces the same (Hawk, 2004, pp. 50-55).

There are also international joint ventures in which companies from more than one country agrees onto a contract. Specifically internationally, popularity of joint venture is in capital intensive businesses like oil and gas exploration companies, metal processing, and mineral extraction business. The main reason of venturing is to save money or utilization of less resources and share mutual risk. For instance, for starting operations in mining industry in U.S. individual or business required to invest huge amount such as around two million dollars or less for such operations. Only small number of companies exists which can finance such a huge amounts on their own resources, therefore he concept of joint venture is getting more attractive for small companies as it reduces the initial investment and the risk is mutually shared and could lead to economies of scale for the ventured business (Hawk, 2004, pp. 50-55).

Another aspect that contributes to the idea of joint venture in past era is the factor of cost associated with companies that are capital intensive and due to this reason the industry is incurring huge expenses for their operations. Therefore, businesses in such industries heavily rely on innovative and advance technology for cost reduction purposes. By investing their employees and money in joint venture, these companies increased the chance for their development for methods in technological advancement which further could reduces their production and exploration cost and in result can earn increased profits. Therefore joint ventures are becoming preferred method for continuing business in such industries and also other industries (Hawk, 2004, pp. 50-55).

Literature review

A joint venture is a contractual business which is commenced with mutual agreement between two or more entities or individuals. Joint venture is more similar to partnership business with one major difference which is in partnership there is an ongoing, long term business relationship, on the other hand joint venture is structured on a single transaction of ...