An evaluation of joint venture as a mode of entry. The example of "Volkswagen"

An evaluation of joint venture as a mode of entry. The example of

Author: Lars Steilmann

Publisher: GRIN Verlag

Published: 2017-10-31

Total Pages: 27

ISBN-13: 3668560374

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Seminar paper from the year 2014 in the subject Business economics - Business Management, Corporate Governance, grade: 2,0, University of Applied Sciences Essen, language: English, abstract: In the last years the globalisation has increased the competition amongst the companies and forced them to enter foreign markets. The development of a market entry strategy is very complex and has long-term concerns for a company. Therefore choosing an adequate market entry strategy is of great significance. This term paper is concerned with the evaluation of joint venture as a mode of entry for the German car manufacturer Volkswagen entering the Chinese market. Therefore I will give a theoretical introduc-tion into international market entry strategies and clarify advantages and disadvantages in chapter two. In the next chapter the emergence of possible market entry strategy for the Chinese market is checked. Therefore, the importance of the Chinese market will be shown at the beginning. Then the when and where will be explained. The fourth chapter shows Volkswagen ́s way for entering the Chinese market.

Evaluation of Joint Ventures as a Mode of Entry into the Chinese Market

Evaluation of Joint Ventures as a Mode of Entry into the Chinese Market PDF

Author:

Publisher: GRIN Verlag

Published: 2016-04-22

Total Pages: 18

ISBN-13: 3668202664

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Seminar paper from the year 2015 in the subject Business economics - Business Management, Corporate Governance, grade: 2,3, University of Applied Sciences Essen, language: English, abstract: This term paper will first of all give an overview of existing foreign market entry modes. Secondly there will be a description of joint ventures in general by analyzing typical motives and risks for using a specific mode of entry to internationalize. At the end of the second part, the situation on the Chinese market is discussed to introduce the reader to the concrete business case of Volkswagen and SAIC Motors, which will be discussed in the third part. Finally, this paper will provide an evaluation of the success of this joint venture on the Chinese market. Globalization, in recent times, has generated a lot of interest in the business world. More companies are now seeking to escape their comfort zones (home markets) and enter into international markets to expand their businesses. Internationalization has seen several factors as its driving force. More countries have opened their markets to foreign entrants through liberalization and deregulation of previous trade-inhibiting laws. Consumers, in most parts of the world, have also exhibited a homogenous behavior that encourages internationalization. Products that sell well in one part of the world have shown the likelihood to perform the same in other areas, which has motivated more companies to explore international markets. Other external driving factors are an improvement in technology and logistics. It is now possible for companies to communicate and track the activities of each of its subsidiaries or branches in the world. Technology has offered a business with an appropriate infrastructure that ensures smooth running of their affairs worldwide. Some products also exhibit shorter life cycles; thus, limiting the amount a company can produce. Internationalization offers such company's ability to produce more by expanding their reach beyond local/home markets. Expansion into international markets by a company is motivated by several factors. One of the major factors is to spur growth and increase profitability. Many companies are seeking to enter into foreign markets to expand their influence and increase their sales and revenue. Internationalization for such companies means an access to a wider customer base, which implies more product sales and more revenues. Expanding the size and scope helps achieve the economies of scale.

Critically evaluate the hypothesis "Joint ventures are the ideal entry strategy to use when entering the Chinese market for the first time; it is a win-win situation"

Critically evaluate the hypothesis

Author: Isabell Keil

Publisher: GRIN Verlag

Published: 2004-09-08

Total Pages: 15

ISBN-13: 363830552X

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Essay from the year 2003 in the subject Business economics - Trade and Distribution, grade: 1,7 (A-), University of Glamorgan, course: International Business and Export Management, language: English, abstract: The People’s Republic of China (PRC) is the last Communist State in the world (Roberts and Kynge, 2003). Mao Zedong, the leader from 1949 until 1976, pursued a radical politicsorientated and self-sustained policy, which “had China’s door closed in front of the foreign countries” (Yahoo! Inc., 2003). Deng Xiaoping succeeded Mao Zedong and launched his economic reform programme, called the “Open Door” policy, in 1978, which encouraged foreign investment (Yahoo! Inc., 2003). This was the beginning of a new era for China. A great deal of international investors tried to gain a foothold in China’s fast growing markets in the form of joint ventures or direct investment. This paper is devoted to the joint venture (JV), and investigates whether or not this form of enterprise is the ideal strategy to enter the Chinese market. After a short survey of the Chinese economy, JV’s will be defined. The explanation of JV’s is made under consideration of the distinctive features of the Chinese culture. A lot of enterprises and JV’s as well failed because it is not easy to deal with the Chinese. This essay reports about failures of a Western JV and tries to examine the causes. Examples of successful JV’s are described as well before concluding whether or not “Joint ventures are the ideal entry strategy to use when entering the Chinese market for the first time; it is a win-win situation”.

Joint Ventures: The benefits and perils - why some are successful and others fail

Joint Ventures: The benefits and perils - why some are successful and others fail PDF

Author: Thilo Trost

Publisher: GRIN Verlag

Published: 2011-09-26

Total Pages: 25

ISBN-13: 3656014132

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Research Paper (postgraduate) from the year 2011 in the subject Business economics - Business Management, Corporate Governance, grade: 1.3, Zeppelin University Friedrichshafen, language: English, abstract: The concept of the joint venture was developed in the United States. First, we need to make a distinction between purely contractual, non-equity joint ventures, on the one hand, and equity or corporate joint ventures, on the other. The regular form of joint venture is a company that is founded out of equity provided from two other entities. This venture is similar to a business partnership but limited to a specific project or purpose. The equity joint venture manifests the founding firms‟ willingness to cooperate by providing each a certain percentage of the common capital stock as illustrated in the graphic below (in this case with each partner providing half of the capital stock).There are countless ways to build up an equity joint venture with each partner providing only a certain percentage of the common capital stock (e.g. 70/30%, 90/10%, 51/49% and so forth). The firms gain control over the founded joint venture and share revenues, expenses and assets in equal proportion to their respective contributions to the venture‟s registered capital. Differing arrangements are possible. Over the last decade, we were able to witness rapidly growing companies, some of them seeking for partnerships to take advantage of positive synergy effects to gain in size or to enter new foreign markets. The topic of this essay should be why firms seek to venture, what the benefits of venturing are and why some firms fail after the venture, what are the downsides of this concept?

The Impact of International Joint Venture Entry Mode on the Development of the Automotive Industry in China

The Impact of International Joint Venture Entry Mode on the Development of the Automotive Industry in China PDF

Author: Andrijana Bogdanovska Djurovic

Publisher:

Published: 2013

Total Pages: 0

ISBN-13:

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The scope of the article is the automotive industry in China, while its aim is to explore whether joint ventures as the only allowed entry mode in the industry was the best choice of a model when it came to maximizing industry's performance. In the concerned case, as the research question is exploring the impact of the entry mode on the industry as a whole, the performance is measured through the survival rate of companies, duration of their operations until termination and company's stability i.e. whether the original partners left or new joined the entity. The findings indicate that the identified external and internal factors which shape and have shaped the context of the Chinese automotive industry had limited impact on its performance. The international joint ventures have shown stability due to the strong commitment of foreign partners to succeed at the Chinese market, not due to the reflection of the climate in which the JVCs were forced to operate. When it comes to the impact of the external factors on the performance of the industry, findings emphasize that the Chinese policy which restricted the entry of foreign investors with joint venture mode has positively affected the growth in the sector. This is especially significant if one has in mind that the alignment of the strategic goals of the JV partners, and the use of a wise production strategy and marketing channels, had an impact on the production growth, accompanied with the introduction of free technological zones, favorable FDI policy and reduction of political risks throughout the research period.

Market Entry and Expansion Through International Joint Ventures

Market Entry and Expansion Through International Joint Ventures PDF

Author:

Publisher:

Published: 2007

Total Pages:

ISBN-13:

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International joint ventures (IJVs) are important modes for entering foreign markets. Yet, research shows that IJVs are volatile, difficult to manage, and often fail, especially when the joint venture is located in a developing country. Many studies look at a range of different factors behind IJV success or failure, and a few longitudinal studies have shed light on some of the complex management processes within IJVs. Many researchers have concluded that the high rate of IJV failure is due to internal tensions that are inherent to IJVs, but viable solutions for practitioners are rare. In the absence of a model that adequately explains the longitudinal aspects and determinants of IJV performance, we see firms electing to stay in underperforming IJVs, even though more profitable modes of entry into foreign markets exist. In this thesis I analyze market entry and expansion through IJVs using a multi-causal analysis of IJV performance. I begin with a critical evaluation of the IJV literature. I then develop a process-oriented model that may explain why firms persist with failing IJVs. Finally, I draw several important conclusions that have valuable implications for practitioners and for future research.

Fundamentals of Global Strategy

Fundamentals of Global Strategy PDF

Author: Cornelis A. de Kluyver

Publisher: Business Expert Press

Published: 2010-08-20

Total Pages: 272

ISBN-13: 1606490737

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The globalization of the competitive landscape has forced companies to fundamentally rethink their strategies. Whereas once only a few industries such as oil could be labeled truly global, today many-from pharmaceuticals to aircraft to computers-have become global in scale and scope. As a consequence, creating a global competitive advantage has become a key strategic issue for many companies. Crafting a global strategy requires making decisions about which strategy elements can and should be globalized and to what extent.

Patterns of Internationalization for Developing Country Enterprises

Patterns of Internationalization for Developing Country Enterprises PDF

Author: United Nations Industrial Development Organization

Publisher: UN

Published: 2008

Total Pages: 244

ISBN-13: 9789211064438

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The present training package is addressed to entrepreneurs and policymakers of developing countries. Part One of the training package presents the international development scenario, the competitive environment and the drivers for global expansion of enterprises. It highlights the patterns of multinational expansion, the various types of inter-firm collaboration agreement, the global manufacturing strategies of multinational enterprises and the related challenges and opportunities for developing countries. Attention is also given to the role of the governments of developing countries in creating suitable locational conditions for multinational enterprises and in providing critical support to domestic enterprises in their path for technological capability building and internationalization. Part Two will follow shortly.

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