Here is a compilation of essays on ‘Joint Venture’ for class 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘Joint Venture’ especially written for school and college students.
Essay on Joint Venture
Essay Contents:
- Essay on the Meaning of Joint Venture
- Essay on the Forms of Joint Venture
- Essay on the Advantages of Joint Venture
- Essay on the Disadvantages of Joint Venture
- Essay on the Strategies of Joint Venture
- Essay on Joint Venture and Competition
Essay # 1. Meaning of Joint Venture:
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Joint venture is a kind of business venture usually on the basis of an agreement, where two firms or companies pool their resources to form a business association but one firm or company does not acquire the other, and they do not form actual merger. In a joint venture, two firms together produce, warehouse, transport, and market products.
The profits and losses from these operations are shared in some predetermined proportion. A collaboration agreement with specific terms and conditions with respect to areas of operation and others is important in case of joint venture to avoid any future complications.
Joint venture is a management proposition and creates a synergistic condition— the addition of two parts is greater than the whole. It does not require basic structural changes in business and management but provides strategic posture to obtain synergistic effects in many areas like sales, operations, investment, and management.
Essay # 2. Forms of Joint Venture:
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The term ‘joint venture’ in the context of international business situations refers to certain special forms illustrated below. Such joint venture may be an association between the multinational corporation (MNC) and private local firms, local government agencies, or other foreign companies.
(i) Management Contract:
A MNC may allocate capital across international borders and/or may sell managerial capability.
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(ii) Co-Production and Technology Supply:
The partners in the western and eastern globe may collaborate in the production of components or bulk products for a final assembly or final packaging by one of the partners. One partner supplies the technology but the marketing of products is done in each partner’s respective market.
(iii) Subcontracting:
A partner of a socialist country may manufacture the product as per capitalist country’s partner’s specifications and deliver the same to the latter. To cite another cause, a leading MNC may offer a subcontract to an Indian firm to produce a product to be sold to another country’s market.
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(iv) Turnkey Operation:
A partner of one country may sell plant and equipment, and technology to its partner in another Country and is paid in terms of products of the newly created plant.
Essay # 3. Advantages of Joint Venture:
Joint venture offers the following advantages:
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(i) A major means to raise local finance, and to reduce risks from devaluation and price inflation.
(ii) Spreading of investments by the MNC over a number of countries.
(iii) Identifying sources of key materials or providing marketing assistance.
(iv) Provision of other facilities like local currency loans/tax incentives, etc.
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(v) Avoidance of political risks like risk of nationalisation or expropriation in case of international base of joint ventures.
Essay # 4. Disadvantages of Joint Venture:
Joint venture has certain disadvantages also. These are:
(i) Loss of control;
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(ii) Lower profitability;
(iii) Compulsion to share new or different ideas;
(iv) Compulsion to accept out-dated technology at times;
(v) Compulsion to accept sophisticated technology with a backward partner; and
(vi) Management conflicts
Essay # 5. Strategies of Joint Venture:
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Three types of strategies can be identified in a joint venture.
These are:
1. ‘Spider-Web’ Strategy:
This kind of strategy is usually adopted by a small firm which does not have sufficient capital to bid on its own on different technical projects even if the rate of success is bright.
Such firm, in order to avoid the chance of being taken over by other larger firms, enters into joint venture agreements with a number of firms for joint bidding for mining or drilling rights. This way, it can retain its own identity and ensure survival and growth in the face of competition.
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2. ‘Go-Together-Split’ Strategy:
For a strategy of this nature, a firm enters into joint venture agreement with another firm for an identified product or service line, or engineering project(s) for a definite period of time. With the completion of projects, the venturing firms split. This way a firm can retain its own independence, yet facing a challenging task.
3. ‘Successive Integration’ Strategy:
In this type of strategy, a firm initially devotes to have some joint ventures with another firm in relation to certain projects and then decides about the feasibility of a merger scheme.
This way, a firm is in a position to understand another firm’s business philosophy and policy before an actual merger takes place. Thus, any management pursuing this strategy can test the business risks beforehand.
Essay # 6. Joint Venture and Competition:
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Joint ventures can meet the challenges of business competitions in the following ways:
1. An individual firm has strengths and weaknesses in certain areas of its operation. Through joint ventures with other firms, it can balance its SWOT position.
2. A joint venture allows a firm to understand and undertake R&D effort, product quality improvement and so on—which are essential to face competition.
3. Acquiring new process system or novel technology and improving efficiency and productivity, etc. are vital in a competitive business situation—a joint venture provides them.
4. Diversification and globalisation processes, in this present day competitive world, are possibly direct contributions of joint ventures.