Business Assignment

“Business Assignment 1 - A Jeep in Beijing”

Business Assignment 1 - A Jeep in Beijing

Q. no. 1: What are the main reasons for the growth in joint ventures? Why are they become more popular in today's business environment?

In this contemporary business environment, competition across the globe has significantly increased and with the advent of internet, the notion of global village has emerged. Therefore, in this competitive business environment, there are several benefits associated with the joint ventures. First and foremost benefit associated with joint venture is the disclosure to a relatively unexplored market (Mann, pp. n.d. 1989). While entering in an entirely new market, joint venture helps businesses in getting assistance from the inhabitant collaborator. Since the foreign investor is principally unaware of the working conditions in the new market; thus, the assistance of inhabitant investor helps the business in deriving business strategies. Consider the case of Beijing Jeep Corporation, where AMC collaborated with Beijing Auto Works to operate in China, merely because the company was unaware of the working and business environment in China.

However, there are various other reasons, which are associated with joint ventures that help businesses to grow at a rather more efficient rate. One of the biggest reason is that joint ventures allow foreign exchanges; means that foreign currency flows to inhabitants country (Killing, pp. n.d. 2012). However, on the other hand, it helps the foreign investor to understand the market dynamics and gets a rather economical production cost. It gives a comprehensive insight of the new market to the foreign investor.

In today's business environment, competition is getting dense, which is compelling businesses to amalgamate with different ventures across the globe to explore new and undiscovered markets. In the past, industries of the developed countries do joint ventures with other developed countries (Mann, pp. n.d. 1989). However, now, every developed country has its own arrangement of business environment and it has become near to impossible to enter in an existing market and survive. Therefore, businesses of developed countries are now establishing joint ventures with developing or under-developed countries to further explore the undiscovered markets of the world.

Q. no. 2: What were the main reasons for the joint venture between AMC/Chrysler and BAIC?

AMC was principally an American originated automotive corporation, whereas, Beijing Auto Works was a Chinese corporation. AMC was initially a small scale organization, which has planned to expand its businesses and incorporate with a Chinese company to expand its business scope (Matthews, pp. 246, 1998). However, there are various intrinsic business benefits associated with this amalgamation, on the basis of which this joint venture was put into consideration.

The principal intention of this joint venture was that AMC wanted to get rather more equity with profit from the operation. The cost of production in China is principally very economical as compare to that in USA. However, despite of this “on paper” business reason, there were various other reasons also, which make this joint venture rather more appealing for both the organization (Matthews, ...