Business

Beijing Jeep

Beijing Jeep

Introduction

This report aims to discus important elements regarding the 1983's joint venture between American Motors Corporate (AMC) and Beijling Jeep Corporation (BIC). The report will include the major reasons and attractive factors that have caused significant increase in joint ventures between companies around the globe.

The analysis of case study shows that a twenty year agreement was signed between American Motors Corporation (AMC) and Beijling Auto Works (BAW) as joint venture equity. The formation of both of the companies was named under Beijling Jeep Corporation (BIC).

Discussion

AMC was initially a pioneer Chinese brand in the new market of automobile and it is one of the major reasons for arduous and lengthy creation of BIC. The practices of both of the companies were uncertain for one another because of the commercial isolation in the region of China. The formation of BIC has caused some modifications in the Chinese joint venture law of 1979.

Joint Ventures Growth Reasons

The phenomenon of joint venture in corporate world refers to the joining of two or more companies for carrying any definite business venture along with sharing the profits on the basis of joint venture agreement (Hess, 2007, pp.139). The agreements of joint ventures are on temporary basis depending upon the time required for the accomplishment of joint ventures' mission (Harrigan, 1985, pp.53).

There are many reasons that have contributed to the increased number of joint ventures between companies around the globe. It enables an organization or entrepreneur to have wide access to larger geographic areas and markets. As a result of joint venture, two or more organizations are able to get advantage from skills, capabilities and resources of other joint venture partners. It offers tremendous benefits for all the parties involved in the joint venture (Penrose and Pitelis, 2002, pp.100).

Other major reason for the growth of joint ventures is that it enables individuals and organizations to extent their marketing efforts to various areas. Getting engaged in joint ventures enable organizations to easily access new and different markets without investing a lot of money. There are some long term goals that are quite impossible for a single company to achieve. Therefore, companies can combine together and achieve those goals and objectives that would have otherwise be impossible for them to achieve individually (Pretorious and Nieman, 2004, pp.152).

Main Reasons for AMC and BAIC Joint Venture

There were many reasons that contributed to the joint venture of AMC and MAIC as the Beijing Jeep Corporation. Firstly, it offered benefits for both the companies to come together and work collectively. Individually, it was difficult for both of the companies to focus on producing a four wheel jeep which possess a global reputation and brand. Second, the joint venture enabled both the companies increase their market share and set of competencies. It not only reduced the competition for both of the companies, but also enabled them to gain a high market share as BJC (.pk, 2010, pp.42).

The major reason why AMC involved in the joint venture was to minimize ...