Chapter Fifteen: 15.1 INTERNATIONAL JOINT VENTURES INTRODUCTION WHY FORM AN IJV? THE COMPATIBLE PARTNER EXPLAINING SUCCESS AND FAILURE SHARING CONTROL IMPLICATIONS FOR THE MANAGER SUMMARY EXERCISE.

Chapter Fifteen: 15.2 REASONS FOR FORMING AN IJV In addition to financial rewards, the IJV offers opportunities to create greater market power by combining resources reduce risk by sharing risk reap economies of scale cooperate in order to avoid expensive competing benefit from the transference of technology acquire new management systems regain a competitive edge

(15.2) acquire symbolic benefits acquire experience as the first stage to taking over the project (the foreign partner), meet official requirements for doing business in the country (the foreign partner), learn about local markets and develop customer networks (the foreign partner), gain access to local resources, including production facilities, labor, and materials (the local partner), generate up-stream and down-stream industries (the local government) encourage foreign investment.

Chapter Fifteen: 15.3 WHAT THE PARTNERS CONTRIBUTE THE FOREIGN PARTNER contributes international know-how and access to international connections international reputation access to international product markets access to international labor markets access to international finance access to international technologies access to other international resources international distribution

(15.3) THE LOCAL PARTNER CONTRIBUTES access to local connections, including government contacts local reputation knowledge of government regulations knowledge of local culture access to local product services access to local labor markets access to other local resources local distribution.

Chapter Fifteen: 15.4 THE COMPATIBLE PARTNER The company is looking for a partner with which it has STRATEGIC FIT RESOURCE COMPLEMENTARITY COMPATIBILITY IN SIZE COMPATIBILITY IN TIME-SCALES TRUST

Chapter Fifteen: 15.5 TRUST AND MISTRUST The possibilities of success and failure are heavily influenced by the trust and mistrust between the different parties involved. Possibilities of success are increased when there is TRUST between partners within the IJV between staff posted to the IJV and their headquarters between the IJV and its local environment

(15.5) Trust is influenced by changes in the environment fit between the national cultures fit between the organizational cultures Trust is increased by the development of a COMMUNICATIONS PLAN.