reasons for global mergers or joint ventures

Question 1

what is a global merger?

Answer 1

where two businesses from 2 countries work as one entity

Question 2

what is a joint venture?

Answer 2

• 2 or more businesses from different countries use combined resources on a project/activity with shared ownership, returns and risks

Question 3

problems with global merger/joint venture:

Answer 3

• Cost of financing merger / JV
• Diseconomies of scale
• Culture clashes / different management styles = Ineffective communication
• Managing different goals/objectives = Misguided strategic decisions could be made

Question 4

reasons to undertake a global merger/joint venture rather than setting up yourself

Answer 4

• Low brand awareness outside of the domestic market
• Cultural barriers/language
• Lack of market knowledge
• Exporting costs/tariff