Joint Ventures: the advantages

joint venture - is the most important form of organization of the international activities of any state.Such enterprises are in the form of co-ownership or licensing, which allows participants to use foreign trademarks and patents, trade secrets, to carry out the process of production in return for royalties or fees paid.

The joint venture involves contracting with a foreign company to manufacture its products in this country.This national company provides management experience and is engaged in the marketing of finished products.By entering into management contracts, the company acts as a consultant for a foreign company.If there is joint ownership, the national company agrees to sell and the production of goods manufactured with the foreign company, which reduces the cost of new and distribute risks.

Any joint ventures, working in sales or production must be clear about the consequences of the creation of the organization abroad with foreign partners.Creation of joint venture is expedient if the

following prerequisites:

- industrial plant does not have enough capital or production staff adequately prepared to carry out independent operations abroad;

- companies are given the opportunity to cooperate with the company, which already holds a strong position in the market;

- at the disposal of the company there is no required amount of raw materials, raw materials or components to expand production of competitive products;

- the company does not have modern technology and equipment, but has at its disposal the necessary human resources, raw materials for production of competitive products today that can find the maximum sales in the country with visiting production.

In some states prohibited the creation of companies that are wholly owned by foreign missions, and to enter the markets of these countries is absolutely necessary to organize joint ventures.

advantages of joint ventures

Partner activity is most advantageous for small companies seeking to conquer several markets, however, for this they do not have sufficient financial capacity.In practice, such enterprises do not have the personnel corresponding to international standards, they do not have information about the capacity and external markets.In exchange for the attributes of a successful foreign trade activities companies offer technical expertise.

Lacking financial assets, the company can work together with several foreign partners, issuing shares on the market.In this case, it should be noted that such joint ventures can be controlled only by having more than 50 percent of the share capital.

in foreign markets is much easier to get out in partnership with a local firm.And for some countries, the only opportunity in the market provide only joint ventures.

work of the joint venture could give a special effect in the presence of an intermediary who has an established system of relationships with customers and business reputation is vigorous in its market.

During the economic crisis, the creation of joint enterprises can be of great assistance to the industry and will enable the country to overcome the difficulties, which is important for the economy of the state.