6. Ownership Mode

Question 1

What are Joint Venture Characteristics?

Answer 1

• Equity investment alliance of (at least) two partners
• Involves creation of a separate organization
• Equity investment should be substantial enough to confer control over and
  commitment to the JV (typically at least 10 to 20 percent)
  -dominance in Asia region
  -overcome a resource shortfall

Question 2

What is an IJV?

Answer 2

International Joint Venture

Question 3

What is Motivation for an IJV?

Answer 3

Overcome a resource short-fall because of

• Entering a new geographic or product market
• Need to become more efficient in existing markets

Question 4

What is a Scale Joint Venture?

Answer 4

Partners contribute similar resources; advantages through

    - Economies of scale
    - Greater market power

Graph slide 100

Question 5

What are the three Fits Between Partners?

Answer 5

• Strategic fit
• Cultural fit
• Process Related Fit

Question 6

What does a Strategic Fit in a joint venture entail?

Answer 6

• Aims/strategies
• Negotiating
  positions
• Capacities/
  capabilities

Question 7

What does a Cultural Fit in a joint venture entail?

Answer 7

• Values/standards
• Management style
• Organizational
  structures

Question 8

What does a Process Fit in a joint venture entail?

Answer 8

• IT systems
• Accounting/
  controlling

Question 9

High R&D

Answer 9

Lots of knowledge with high risk of giving away to potential competitor if you partner up

Question 10

High Advertising Intensity

Answer 10

Consumer products, Coca Cola, already established branding. Way better off to be on their own as opposed to merging.

Question 11

What is a Link Joint Venture?

Answer 11

Partners contribute
different resources through
  - Foreign partner (tech + marketing skills)
or
 - Local partner
               - Country knowledge
               - Distribution system
               - Raw materials
               - Nationality

Question 12

Internalization instead of international trade tends to occur when handling

Answer 12

• Knowledge
• Perishable goods
• Preliminary products
• Scarce materials

Question 13

Internalization to circumvent international market imperfections such as?

Answer 13

􏰀 Lack of workable futures markets
􏰀 Few buyers and sellers: lengthy negotiations
􏰀 Difficulties to value products
􏰀 Host country interventions

Question 14

What are some problems of internalization?

Answer 14

􏰀 Fragmentation of markets lead to lower economies of scale
􏰀 High costs of communication (transaction costs)
􏰀 Discrimination of FDI in certain host countries

Question 15

What is some empirical evidence that supports internalization theory?

Answer 15

PG 114 TABLE
-Gatignon/Anderson (1988): The multinational corporation’s degree of control over foreign subsidiaries
-Hennart (1991):The transaction costs theory of joint ventures
-Pak/Park (2004): Global ownership strategy of Japanese multinational
enterprises

Question 16

What are characteristics of Public Private partnerships?

Answer 16

• long-term partnerships between public sector entities and the private sector
• public sector determines outputs
• private sector chooses method

Question 17

What are critical success factors for PPPs?

Answer 17

• Effective procurement
• Project implementation
• Government guarantee
• Favorable economic conditions
• Available financial market