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Partner Selection for International Joint Projects (IJV)

INTERNATIONAL JOINT VENTURES

Partner selection is regarded as being very important to the success of any collaboration. Taking into consideration the lessons from the Cooperation Exercise, the course materials and any publicly available information available to you, critically discuss the relevant issues worried about partner selection for collaboration, specifically in the context of a global Joint Venture company. The questions provided below provide some help with the issues you may cover:

What are the key characteristics to look for in a "good" collaborative spouse? What would your selection requirements include? Consider also the strategic, political and tactical implications of your choice (30%)

What factors are essential in determining if you as well as your partner are a "good match", i. e. , compatibility of culture? Again, what would your selection standards include? (30%)

What could you and your spouse do to make good conditions for a partnership? (40%)

Length:

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MODULE TITLE

Table of Contents

International Join Opportunity 2

Environmental characteristics 3

Partner Compatibility Evaluation 5

Creating good shape for relationship 13

Conclusion 16

References 17

Enter a full page break here and between each question

Partner selection is recognized as being very important to the success of any collaboration. Considering the lessons from the Collaboration Exercise, the course material and any publicly available information accessible to you, critically discuss the relevant issues concerned with partner selection for cooperation, specifically in the framework of a global JV company. The questions provided below provide some help with the issues you might cover:

What are the primary characteristics to consider in a "good" collaborative spouse? What would your selection standards include? Consider also the tactical, political and tactical implications of your decision (30%)

What factors are essential in determining if you and your spouse are a "good match", i. e. , compatibility of culture? Again, what would your selection requirements include? (30%)

What could you and your partner do to build good conditions for a collaboration? (40%)

International Join Venture

International joint venture between several companies has advantages of more resources and knowledge share as well as reward and risk share. Reasons that companies create joint venture could be initiated by new product development, opportunity to access wider marketing or broadening the company with at least one company headquartered outside country of operation (sponsor country).

The immediate benefits of joint endeavors partnerships are access to a wider selection of resources with complimentary set of skillsets and skills, access to extensive market area and capacity to utilise a broader range of technologies.

International jv collaboration is one of the vital factors to increase and develop economics and the very best methodology is by engaging with and utilising local business with strong market links and existing founded business sites.

Environmental characteristics

Government and Politics

One of the main conditions in choosing a global joint venture partner is the surroundings where jv will operate in, as this can have direct influence on the performance of both gatherings.

Host country's politics atmosphere and federal government policies are fundamental factors to consider when verifying the suitability of the environment; any pressure could straight or indirectly limit the foreign partner's participation and activities (Blodgett, 1991).

According to Ozorhon et al. (2007) web host government's unstable policies and regulations, regular changes in regulations and restrictions on repatriations and imports, jeopardise the effectiveness of joint venture collaboration.

In author's view host country's political procedures that disable effective IJV collaboration needs to be determined prior to any try out to begin a joint venture. An example of a political issue effecting IJV is politics mismatch and disagreements between international partner's government and the sponsor partner's government. This may hugely impact business agreements from occurring even if partner's skillsets, organizational policies and objectives match and work nicely together.

Stable economic situation, government regulations and political human relationships are crucial to a successful business collaboration; the foreign partner needs to find an adequate environment before making a decision on finding a matching partner, assessing economic, politics and financial areas of the surroundings.

Case study

This research study can look at current situation of Iran's International joint projects and influence of Western countries political romantic relationship with Iran on business collaboration with other countries.

The Current UN and Western sanctions on Iran over boasts that Iran is building nuclear weapons have afflicted new joint projects as well as people that have experienced place for quite some time.

One example is Rhum North sea gas field in Scotland owned by BP (50%) and the Iranian Essential oil Company (50%), the jv started out since 1970s. New Western sanctions have obligated BP to suspend this proposal and stop creation in Rhum North Sea (BP, 2010).

This shows politics contention between countries, impacting joint projects and finishing related contracts with immediate result, causing financial loss for both associates.

Other countries that are in arrangement with the United Nations restrictions and countries with good politics and economic connection and dependencies with the USA and the Western could also consider restricting and stopping their joint projects with Iranian companies. That is to avoid any breaking the United Country legislation as well as avoidance to jeopardising their relationship and dependency to traditional western countries.

A stable coordinator government creates a suitable environment for IJV lovers; this has long-term positive impact on the courtier's economic and immediate positive effect on the partner companies, allowing the people to focus on the within organisational progress and improvements.

Economic Environment

A partner's country monetary situation can affect the business environment and performance, having stable economic elements supplies the foreign partner a constant and secure investment climate (Ozorhon et al. (2007).

In author's thoughts and opinions economic local climate could have an impact on IJV partnership viability, monetary fluctuation, foreign exchange rates and inflation, with immediate impact on the partner selection process.

Businesses start joint endeavors far away considering monetary perspectives that fit their needs. The sponsor country's currency in comparison to foreign country's currency, gives an possibility to investors from overseas countries to benefit from cheap investments (Low priced of capitals) and increased prosperity position. Currency gratitude makes higher material and manufacturing cost in overseas country hence overseas partner moves the creation to sponsor country to benefit from lower costs and gain more opportunity to compete and be a innovator in the related market.

Market Power

The market electric power is focused on how businesses can get better and develop their market domain through international relationship (Child & Faulkner, 1998).

In author's impression, successful companies with high position in the existing local market could take benefits of other countries' market, get into international sales and stretch their industry by starting partnership with other successful company in various countries. Also companies with advanced systems and skillsets could start a joint venture partnership with small companies in other expanding country to take advantage of the raw market and prolong their domain name. Dominant market network, using relationship advantageous creates an International joint venture with mutual advantages to partners, increases growth opportunities and market vitality for both gatherings.

Business market vitality is an essential deciding factor in selecting a spouse. It is also critical to examine the business and economic history of the environment, current local climate and future predictions. The local and national business performance, quality of life and people expenditure on similar product and services help to point out the partner's financial environment suitability.

Development and management of international joint endeavors in different environments creates their own difficulties, above all social differences between two lovers from different nations adds additional complexness. Other related issues and issues are language barriers and consequence communication issues, management romantic relationship conflicts, unclear objectives, different targets, incompatible skills / facilities, insufficient partner support and participation.

Partner Compatibility Evaluation

Before making any decision on choosing the joint venture spouse, intensive research and thorough study are required to be completed to identify the partner's business potential customers, objectives and the environmental and organisational characteristics.

SWOT (advantages, weaknesses, opportunities and hazards) evaluation is very beneficial and may be utilised to recognize the partner's weaknesses and power and how they match the business's requirements. This might help to build if two businesses complement the other person (Barnes, 2010).

During the International sign up for venture module and the team exercises, publisher gathered a list of important criteria that are crucial in the partner selection process:

Past reputation and positive history of collaboration, good brand, culture (national and commercial culture), Organisation size, mutual gain potentials, compatibility of CEO's and the senior management team, capacity to work together in procedure levels, government laws and regulations, strategic quality and compatibility, management style, subject material knowledge and skills, experience in the related market and property (Barnes, 2010).

In this project author will analyse and explore "Cultural variations between companions" and " Suitable management style".

Culture

Why culture can be an important factor?

There should be considered a cultural fit between companies, for example it is difficult to complement a bureaucratic culture to non-bureaucratic culture, as resources are not used to obey rigid rules (e. g. manager's stamp or personal to process responsibilities).

International jv relationship cannot avoid social differences; there will always be a case of hybrid structures.

According to Swierczek (1994) majority of joint ventures relationship failures are brought on by social related issues and mismatches. A report of 110 joint projects between America and Asia shows 50% of inability is mostly afflicted by non-complementary ethnicities and incompatibilities.

Partner's culture influences commonly known assumptions, unrecorded regulations and common understandings. It's important to evaluate the potential impact of the partnership's effects on the overall skills, quality, resources and the company systems and organisational structure. Due to the cultural dissimilarities and the need of co-operation, there would be a need to bargain; however the aftereffect of this needs to be analysed and the impact carefully assessed (Swierczek, 1994).

One important factor that can determine the success rate of a global joint venture partnership is culture compatibility; without this companions cannot work together and conflict can occur. Compatible ethnicities can create same understanding and harmony between the companions.

To understand civilizations and the factors which could impact the opportunity of the compatibility, creator has assessed different sides and viewpoints of culture.

According to Hofstede (1984) main aspects of culture are:

High ability distance: Communication with higher positioned users and senior managers has formal process with hierarchy organisational system.

Low electric power distance: Members feel equal, contained in decision-makings and communication with senior members and environment is more relaxed and informal.

Individualism: Contributor is targeted on self-success, own benefits and objectives.

Collectivism: Contributor has more desire for team success and group interest

High doubt avoidance: Keeping away from risk and getting out of conflicts

Low doubt avoidance: Comfortable with approaching dangers and dealing with disagreement

Femininity: In Female cultures ideals and methods are modest, mental and considerate.

Masculinity: This culture is oriented by Competiveness, assertiveness and achievements

In authors thoughts and opinions it is evident that civilizations with different prices can face issues and disagreements, different nations can have different understandings and interpretations and culture as a groundwork affects the conflict management style. In multicultural joint ventures, companions' communication style will are different and may clash with one another; this may be very annoying and create unsuccessful results. Different culture means different dialects, different outlook, values and problem handling approaches.

According to Swierczek (1994) Asian culture generally avoids issues so when it occurs they seek help from senior associates to suggest alternatives but in European cultures there exists less esteem for hierarchy so when confrontation occurs, the negatives would be described directly.

In author's personal experience from Asian and Western cultures, people with different ethnicities have dissimilar attitudes in business, partially due to educational and discipline methods, that differs in cultural backgrounds.

Partnership between two businesses could achieve success if cultural variations are realised and analysed in early stages. This would be by identifying the actual problems and conflicts with proposed alternatives enabling lovers to benefit from constructive areas of multicultural methodology.

According to Swierczek (1994) creating a right and effective organisational culture and considering the involved civilizations could decrease the possible conflicts. To make conflict management far better two methods are unveiled:

1. Bargain style

To prevent any win-lose results, participants would make a deal and consent to quit their benefits partly so their partner would gain shared benefits as well. Also when same objectives cannot be come to or more than one contract is on the table, compromising must take place.

2. Collaborative style

All the individuals need to get included and identify roots of conflicts and assess the possible results and problems then introduce alternatives decided by everyone (Swierczek, 1994)

According to Al-Khalifa and Peterson (1999) in many failed international jv (IJV) cases, manufacturing process doesn't last very long which is caused by the lack of understanding of the neighborhood cultural, politics and monetary environment.

Cultures need to match between your organisations, a lot of international joint projects collapse because of ethnical misunderstanding and differences; it is useful to research the neighborhood market first before getting into the collaboration.

An exemplory case of cultural difference is viewed by Lynn (2002) between Japanese and American companies, where Americans possessed the impression that Japanese are successful and hardworking but were disappointed when found different results after starting the international jv in the us.

In Japanese's view deadlines weren't as important as it was for People in the usa, Japan were more focused on what they would like to achieve no matter time but People in america aimed to finish the work by the deadline however possible. This is a large problem for Us citizens when they used one of Japanese suppliers and received the order six months late.

In author's judgment the definition of hardworking and efficiency in several ethnicities differs where Japanese seem to be to be aiming for the best effect and improving the quality and less worried about the deadlines. This could be very aggravating to opposite partner with different attitude.

It is important that companies find somebody that are suitable and have the same perspective and understanding. Culture consciousness and a complete initial analysis period, to gather the required information, helps associates to judge the possibility of working along successfully and offer the bases so that parties design a platform and set a realistic plan that could benefit both civilizations.

Partner complementary skill

According to Zahra and Elhagrasey, (1994) most International jv failures are caused by choosing the wrong partner. Partner selection by their brand level of popularity or reputation is not enough and additional research is required to determine if the associates are compatible

If Partner's skills and durability suits or compliments the business requirements, the relationship goals could be efficiently achieved; these requirements could be market, skills or resource access related.

The selection of skills that every partner can donate to a relationship varies. An objective of a collaboration would be to match the business requirements where the necessary skillsets such as specialized skills, market knowledge skills, creation skills, management skills or reference access skills are not at an adequate level.

This may be due to the associated costs or time constraints difficulties with producing these skills locally / internally.

When two partner's skill pieces complement each other, partnership can work well along, however if two lovers have similar or indistinguishable skill, disagreements and competition could take place.

Organisations could learn from the abilities and experiences proposed by the partner within an international jv to enhance their offerings and expertise. This could decrease the needs of future partnerships.

Management Style

It is challenging to control International jv (IJV) companies which may have been created by two or more parent companies. These companies have different structures, goals, management style and organisational cultures.

People management conflicts become apparent when partners discuss how the company will be been able and who will be in fee.

According to Matthews (1999) the problems with international joint venture that want control and organized management are:

Different backdrop and cultures

Business physical locations

Inevitable IJV short lifetime

Joint business politics issues

The opportunities where management style may have a critical impact include:

Combination of technological and business skills

Access to IJV parents' staff

Organizational learning

According to Matthews (1999), expanding ethnocentric mindset in organisations will concentrate on parent company's management methods, be narrow-minded and inflexible. Traditional IJVs used to concentrate on parent company's management procedures and problem solving process which mostly finished up unsuccessful but some chose to plan global mentality and try to understand different cultures, agree to variety and apply different management methods where needed.

Multiple IJVs management style

Within multiple IJVs it is compiled that decentralised strategy is more successful than centralised approach. After creating IJVs in various locations and establishing the operations efficiently each overseas IJV would plan and react to local market demand. This might improve efficiency and make sure they are able to react to local customers immediately.

According to (Yan and Duan, 2004) coordinating partners have to have compatible management culture and strategy, consensus on strategies, control and procedures management.

In authors view suitable management style is approximately managers with reliable communication and skills in making a balanced relationship between lovers.

Management control and strategy is the key to be arranged by both celebrations to prevent any conflicts during the IJV and management control to avoid problems such as dash growth, ineffective use of resources and autonomous goals.

Within this process partners need to have a organised management system and build an independent organisational culture.

According to Gil and Butler (2003) it is better to work with a global partner when managers have international business experience and ethnical knowledge, this recognition enables those to adapt to environment, have positive attitude, respect multicultural environment and identify business lovers' capabilities

Therefore having multicultural market knowledge can create a chance for both partners to understand and respect cultures, agreeing on what's best for joint partnership.

According to Gil and Butler (2003) the balance of the partnership is determined by trust, conflict and dependence influenced by management skills impacting on IJV performance.

Some of the key skills in managing IJV are:

Negotiation skills: Bargain, exchange ideas and make decisions at different levels e. g. Designers and Stakeholders

Management Political skills: Negotiate and communicate with government members involved in IJV

Diplomacy: Dealing with conflicts and level of resistance within the spouse relationship

Inter-partner skills: Managing partnership, communication, goals and placing objectives

Influential skills: Impact and motivate team members

Managing ambiguity: Taking objectives and vision as close as is possible.

In author's judgment in hybrid IJV organisations, it is difficult to avoid issues and control system with openness management style.

First steps in IJV first stages are:

To identify problems and related alternatives arranged by everyone

To plan and ensure that the management strategy matches the IJV environment

Flexible management approach to choose as changes happen

Balanced marriage creates harmony and trust, successful management of a global jv mainly is determined by a balanced relationship which is based on trust and distributed ownership, where celebrations converse effectively and obviously to help reliable move towards common goals and clear aims.

At once extra cautious must be studied when coping with sensitive ethnical and local issues, with a certain degree of diplomacy, people and language skills.

Creating good shape for partnership

Prior to begin of any engagement when creating a jv partnership, it is essential for both parties to create an agreement obviously defining prospects and scope. This may form a clear understanding between lovers and helps with effectiveness of marketing communications between people (Barnes, 2010).

In authors opinion to improve the chances of relationship survivor it's important to be open about every aspect of the business enterprise from beginning in especially about financial concerns to get the lovers trust.

Agreements on goals, duties and performance measurements (KPI) in early stages could point out any problems and warnings, that could be settled and avoided in first stages.

In the meantime flexible romance and atmosphere is essential to allow liberty of conversation and engagement in suggesting advancements or even change of original objectives. Any relationship would face problems and disagreements, however taking a look at problems favorably and promoting an attitude to build situations where win-win way (Barnes, 2010) is applied is the main element for creating a good shape for an effective partnership.

There are lots of elements that could significantly impact the condition of an international jv experience and conditions:

Invest time and effort to access know the partner

In a global joint venture collaboration it's important for the functions to take time to become familiar with each other's organisational composition, cultural patterns and methods of work.

Clear objectives

Setting clear goals and goals prior to any engagements is essential to avoid any ambiguity and issues.

Management style

IJV complicated environment could create conflict and ambiguity between lovers, appropriate management skills could create balanced relationship.

Roles and responsibility description and assignment

In a intricate joint venture relationship with a large amount of unknowns and a mixture of cultures, habits, buildings and skillsets, jobs and responsibilities should be defined plainly to avoid disappointment and ensure effective relationship condition.

Expectation management

Open and honest communications from start of the business to the end is essential, people involved need to comprehend what will be performed and when this will be performed. Everyone needs to understand the aims and progress of these. Misunderstood or unrealistic prospects can make a successful process closing as a failure.

Create Trust

When a host is stabilised and partners have decided on compatible goals with place common benefits, both gatherings need to focus on increasing each other's trust to allow smooth process steering clear of unneeded "red tapes" to maximise efficiency and workforce effectiveness.

Risk forecast, analysis and prevention

It is important for companies in a jv partnership, to identify and measure the hazards related to the partnership program and the associated influences.

Identifying problems and risk evaluation in early stages would prevent any surprising surprises through the process. Also this might give an possibility to analyse issues and find solutions.

Following are examples of potential risks with IJV collaboration:

Language barriers

Multinational partnership involves different languages; a remedy needs to be employed to overcome dialect barriers. Full reliance on interpreters and translators could introduce additional hazards where individuals do not have the required technical and related business experiences. It really is highly effective if the staff involved with the business strategy, have related knowledge, track record as well to be bilingual.

Culture

Different cultures signify unknowns and hazards. Respecting multicultural environment and having consciousness could prevent future conflicts, create opportunities to utilise multinational benefits and lessen the level of disagreements between parties.

Politics

Government regulations vary in several countries. Time have to be invested to totally understand the neighborhood policies where the venture is based.

Organisational strategies

Organisational strategies mismatch between companies could immediately or indirectly affect the targets. These inconsistencies must be identified and outlined to be looked at during the planning period to avoid potential future issues.

Geographic consideration

Local and related market condition as well as work ethic should be considered and complementing business environment appropriately applied.

Communication

Clear communication is vital in IJV environment where a lot of conflicts and bafflement could happen because of ethnic differences. Setting up an open sites and liberty where employees can approach management levels easily could create a chance for everyone to get involved.

Conclusion

For countries to develop, create new technologies, use new facilities market and products, joint venture is very beneficial. Joint venture is an possibility to boost businesses and continues that occurs in more countries. Every international jv begins with different ethnicities and due to its multicultural aspect it is inevitable to see disagreements.

Creating common benefits and harmonious conditions with common objectives and agreed worth can triumph over the cultural differences and create common culture which benefits associates and uses the positive aspect of multicultural collaboration.

It might become more effective to invest in countries that have similar cultures since it would be better to understand the business networks, market needs also to solve problems.

With countries developing to be multicultural and expanded communication network achieving further ranges, it is getting easier to plan new opportunities. People are interested to know other ethnicities and learn about others. The challenges and complexity in different cultures is inescapable but nation's awareness is high hence their approach to each other is very positive and laid back.

While achieving proper fit is more fundemental to the viability of an partnership, a good ethnical fit optimises the potential of the partnership and helps to avoid the hazards to its continuation which occur from misunderstanding and antipathy.

While it is important for partners in an IJV to establish a tactical fit to assist in improving feasibility of any partnership, an efficient cultural match between your companies creates opportunities for a more powerful relationship. This can help to avoid misunderstanding, dangers and potential conditions that could cause destruction the partnership.

Partners need to determine trust, credibility and priorities to comprehend components of successful IJV, structuring comparative management style, which is self-employed from parents company strategy and assigning companions management responsibilities matching to their expertise promises positive outcome by the end of the partnership.

Partners require setting up a relationship predicated on honesty trust. It is vital for the people to get time and reference to understand fundamentals of an effective IJV collaboration. Reforming and creating a member of family management strategy, which is 3rd party from spouse companies' are fundamental to a successful joint venture relationship.

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