INTERNATIONAL JOINT VENTURES IN IRAN

International Joint Venture in Iran

Improving Iran's International Joint Ventures Performance

Introduction

The joint venture is an agreement between two partners from different countries and consists of the creation or acquisition of a subsidiary joint common market of the foreign partner.

The creation of a joint venture involves sharing of specific skills unique, whether commercial (distribution network), technical (production, licenses,) or managerial, but also means financial and human resources from each partner in a common spirit of cooperation. They share the management, control, risks and profits associated with this common structure. Successful joint ventures involve real cooperation and total adherence to a common goal. These depend strongly on the characteristics of the respective partners.

International joint venture is one of the significant form of FDI and globally expansion/development of the multinational companies. For the competitiveness in the global market this is very vital, the trend of international joint venture can be seen in Iran by the outflow of FDI and the Iran's equity investments in foreign countries (Woodside, 2009, 20-35).

Background

Flows of foreign investment in Iran remains very small compared to the enormous potential of this country. This is due to several factors, the dominance of state in the economy, political risks both external (U.S. embargo and economic sanctions, the nuclear crisis) and internal (impoverishment, social risks, inflation, crisis of the regime policy), bureaucracy in all sectors. Foreign investment has somewhat developed in the era of President Khatami, who gave an opening to international countries and many foreign companies, notably French and Italian have invested in oil and gas projects. Iran's FDI isn't that much the maximum foreign participation in the joint companies of Iran is 49%. The performance of these international joint ventures should be improved in Iran by implementing various control methods.

Hypothesis

The better performance of the international joint venture in Iran can be getting through tight and formal control implemented by the foreign parent company. And performance can be improved by following some steps in the business processes of international joint ventures in Iran.

International joint venture performances

For improving the performance of the international joint ventures in Iran there should be certain controls should be implemented in the companies, the control of international joint venture can be defined as the influence of the foreign parent company on the operation of the joint venture operations. There are three dimensions of controlling the international joint venture in Iran .first is the control mechanism.

It includes a variety of instruments that includes formal and social controls which are available to companies in order to implement efficient control their members. the formal control includes hierarchies, standards, rules, measures, objectives, and regulations that identify desirable patterns of deeds, in the social control various mechanisms come under such as informal communication, information exchange and training, counselling, develop common culture of the organizational, and establishment of personal relationship with IJV managers. And the second is the Control focus, in this.

The parent firms can decide to have a broad control focus and go to implement control over ...