JOINT VENTURE



Joint Venture

Joint Venture

Introduction

The first party receives direct foreign investment in its economy, and the second party, income. In economic literature, there are three groups of arguments (reasons) in favour of the creation of international joint ventures: First, the inner motives: - risk sharing - funding opportunities to make up for accounts receivable firms - economies of scale - the union of distribution channels, and separation of administrative costs - the achievement of the most favoured - the division of the costs of research and development - exploring new methods of management - the accelerated penetration of foreign markets the improving accesses to local human resources - to increase the knowledge about the culture, economy and politics - the pooling of resources with less value separately than together - the organization of staff training - reducing contract costs. Secondly, the external reasons: - reduction in competition due to the leader of the benefits - easing of political tensions - to local governments - to create more effective competition. Thirdly, the strategic motives are the possibility of doing business in the country in the future - technology transfer - the diversification of production (Agrawal 1992, 98).

The host state, participating along with the foreign investor in the joint venture and having a share in its authorized capital, may influence the activity of this company. The State may require the purchase of locally made products to attract local labor and local managers to impose other restrictions on the operation of the joint venture. In this lies a danger to the foreign investor guided by the national law of the country in which they were set.

In international practice, there are several ways of joint ventures: a) the partners from different countries set up in one of the firms of the joint, and b) the foreign partner acquires an interest in a local company, with the saved status of the company and its former management and governance, c) foreign partner shall enter into business relationships with several local companies in the country, and d) a joint venture established with the participation of local government or public authority, and e) a joint venture established on the basis of a local company, but its shares through the sale go to many owners, former owners lose, so the opportunity to participate in the management and control.

First, it is a form of international economic cooperation, which involves at least two partners from different countries. In other words, its essence is to combine capital. Second, it is a legal and organizational unity. Finally, the joint venture can be regarded as a form of attracting foreign capital. In a joint venture, according to the just remark N. Ascension, the capital provided by both parties in any form (cash moneys, services, technology products, machinery and equipment, etc. In addition to the association of capital (investment), a joint venture is considered by many authors as a union of entities (Ashkenas 2011, 126).

Discussion

Cross-culture negotiation is process of negotiation from country to ...