JOINT VENTURES Flashcards
What is a joint venture
When two or more businesses create a new subsidiary company to which ownership, and the associated risks and rewards are shared.
In other words, it’s when two or more companies come together to create a new company, and they split the risks and rewards evenly.
Examples of a joint venture
Chery (chinese automobile manufacturer) and Jaguar Land Rover (these merged or one took over the other before the merge with cherry). Jaguar Land Rover wanted to move into the Chinese market, cherry automobiles have a knowledge of the chinese market, so they came together, built a new factory under the name Chery Jaguar Land Rover - This allows Jaguar Land Rover to get knowledge from Chery about the chinese market, the culture, the market, the consumers, the distribution networks, how business is done their etc. Also you cannot enter the chinese market without having a chinese owner of the board. Chery in return wanted Jaguar Land Rovers knowledge of engines, building cars etc.
What are the advantages of joint ventures
Benefits from synergies (market knowledge, design expertise, distribution networks)
Reduced risks associated with expansion into unknown markets
Use the skills, technologies and knowledge acquired in parent company
