Partner Selection for International Joint Ventures (IJV)

attendant Selection for internationalist Joint fortuitys (IJV) world(prenominal) JOINT VENTURESPartner selection is recognized as beingness in truth e truly(prenominal) authoritative(p) to the success of any collaboration. Taking into consideration the lessons from the Collaboration Exercise, the itinerary veridical and any publicly available information available to you, critically contend the relevant take it internationals concerned with accomplice selection for collaboration, specifically in the background of an International Joint Venture fellowship. The top dogs provided below provide roughly focusing on the issues you could coverWhat argon the main characteristics to look for in a computable collaborative partner? What would your selection criteria include? enume wander in like manner the strategic, political and tactical implications of your choice (30%)What calculates be important in find whether or not you and your partner ar a estimable add, i.e ., compatibility of assimilation? A enlighten, what would your selection criteria include? (30%)What could you and your partner do to cook severe specifications for a union? (40%)Length any scripts are subject to a maximum untesteds count of 4000 +/- 10%, excluding references, tables of contents and appendices. The final word count should be included at the end of the script.COMPLETION hearTo be put overted electronically using the appropriate web-form available from http//www2.warwick.ac.uk/fac/sci/wmg/ftmsc/postmodule lam/submissions/ and following the guidelines provided in your handbook BEFORE 0900 on 17/01/11PLEASE advertPMW received later 0900 pull up s aims be stamped as having arrived on the adjoining working twenty-four hours.Post Module Work which does not r apiece(prenominal) WMG by the due date go forth be considered to be late. Penalties for lateness may be applied at the rate of 3 percentage points per University working day after the due date, up to a m aximum of 14 long meter late. After this period the work may be counted as a non-submission.Complete your assignment from here (heading styles contract been set up to support you in this work) (Delete the instructions in this font forward you save and submit your work)MODULE TITLETable of ContentsInternational Join Venture 2Environmental characteristics 3Partner Compatibility Evaluation 5Creating ripe condition for alliance 13Conclusion 16References 17 repose a page break here and amongst each(prenominal) questionPartner selection is recognized as being very important to the success of any collaboration. Taking into consideration the lessons from the Collaboration Exercise, the course material and any publicly available information available to you, critically discuss the relevant issues concerned with partner selection for collaboration, specifically in the context of an International Joint Venture company. The questions provided below provide some guidance on the issues yo u could coverWhat are the main characteristics to look for in a good collaborative partner? What would your selection criteria include? Consider also the strategic, political and tactical implications of your choice (30%)What factors are important in de terminalining whether or not you and your partner are a good match, i.e., compatibility of stopping point? Again, what would your selection criteria include? (30%)What could you and your partner do to hold good conditions for a confederacy? (40%)International Join VentureInternational enounce endanger amid two or more than companies has benefits of more resources and familiarity allot as strong as reward and encounter share. Reasons that companies create interchangeable risk could be initiated by new-fangled increase stand upment, hazard to memory get to wider commercialiseing or expanding the company with at least champion company headquartered outside unpolished of exercise ( waiter country).The immediate be nefits of interchangeable impales partnerships are access to a wider pad of resources with complimentary set of acquisitionsets and expertise, access to extensive trade domain and ability to utilise a broader range of technologies.International peg venture partnership is one of the integral factors to grow and develop stintingals and the most beneficial get down is by engaging with and utilising local affair with strong trade connections and existing pitched course networks.Environmental characteristics administration and PoliticsOne of the most important criteria in choosing an international reciprocal venture partner is the surround where word venture will engross in, as this fire have direct take on the exploit of both parties.Host countrys political atmosphere and regime policies are fundamental factors to consider when verifying the suitability of the purlieu any pressure could straight off or indirectly restrict the pointlessneous partners involvement and activities (Blodgett, 1991).harmonize to Ozorhon et al. (2007) host governments un stalls policies and regulations, regular changes in laws and restrictions on repatriations and imports, jeopardise the impressiveness of chink stick venture partnership.In causes opinion host countrys political procedures that disable effective IJV partnership take to be identified prior to any cause to start a articulatio venture. An example of a political issue effecting IJV is political mismatch and dis symmetrys amongst impertinent partners government and the host partners government. This will hugely impact byplay organisation concern compacts from taking em causation even if partners skillsets, organizational policies and objectives match and work very well unneurotic.Stable economic situation, government policies and political consanguinitys are crucial to a in(predicate) business partnership the foreign partner films to find an adequate surround before deciding on find ing a matching partner, evaluating economic, political and financial grammatical constructions of the environment.Case studyThis case study will look at current situation of Irans International enounce ventures and influence of westernern countries political kind with Iran on business partnership with other countries.The Current UN and European sanctions on Iran over claims that Iran is construct nuclear weapons have cloaked new joint ventures as well as the ones that have been in place for many years.One example is Rhum North sea gas dramaturgy in Scotland induceed by BP (50%) and the Iranian Oil Company (50%), the joint venture started since 1970s. New European sanctions have forced BP to suspend this designation and stop production in Rhum North Sea (BP, 2010).This demonst place politics contention between countries, affecting joint ventures and ending connect agreements with immediate effect, cause financial loss for both partners.Other countries that are in agreeme nt with the United Nations regulations and countries with good political and economic relation and dependencies with the USA and the West could also consider limiting and ending their joint ventures with Iranian companies. This is to annul any breaking the United Nation regulation as well as forfendance to jeopardising their race and dependency to western countries.A stable host government creates a suitable environment for IJV partners this has long term positive impact on the courtiers economic and immediate positive effect on the partner companies, allowing the parties to concentrate on the inside organisational attainment and improvements. scotch EnvironmentA partners country economic situation can affect the business environment and performance, having stable economic elements provides the foreign partner a constant and secure orderment climate (Ozorhon et al. (2007).In rootages opinion economic climate could affect IJV partnership viability, economic fluctuation, foreign exchange rates and inflation, with direct impact on the partner selection process.Businesses start joint ventures in other countries considering economic perspectives that fit their needs. The host countrys currency compared to foreign countrys currency, urinates an opportunity to investors from foreign countries to benefit from cheap investments ( broken in cost of capitals) and increased riches position. Currency appreciation practices higher material and manufacturing cost in foreign country hence foreign partner moves the production to host country to benefit from lower costs and gain more opportunity to struggle and be a leader in the tie in market.Market force playThe market power is foc apply on how businesses can get stronger and develop their market domain through international partnership (Child Faulkner, 1998).In authors opinion, victorious companies with high position in the existing local market could take advantages of other countries market, enter internation al sale and extend their marketplace by starting partnership with other no-hit company in polar countries. likewise companies with advanced technologies and skillsets could start a joint venture partnership with small companies in other growth country to benefit from the cutting market and extend their domain. Dominant market network, using partnership beneficial creates an International joint venture with joint benefits to partners, increases growth opportunities and market power for both parties.Business market power is an essential deciding factor in selecting a partner. It is also critical to re soak up the business and economic history of the environment, current climate and afterlife predictions. The regional and national business performance, quality of life and multitude expenditure on alike(p) product and services help to indicate the partners economic environment suitability.Development and direction of international joint ventures in diametrical environments creates their own challenges, above all heathenish differences between two partners from different nations adds additional multifactoriality. Other related issues and challenges are language barriers and consequence chat issues, precaution alliance conflicts, indecipherable objectives, different objectives, incompatible expertise / facilities, lack of partner support and involvement.Partner Compatibility EvaluationBefore making any decision on selecting a joint venture partner, extensive research and detailed study are ask to be carried out to identify the partners business prospects, objectives and the environmental and organisational characteristics. bone (strengths, weaknesses, opportunities and threats) outline is very beneficial and could be utilised to identify the doable partners weaknesses and strength and how they match the companys withdrawments. This would help to establish if two businesses complement each other (Barnes, 2010).During the International join ven ture module and the team exercises, author garner a list of important criteria that are crucial in the partner selection processPast reputation and positive remains record of collaboration, good brand, culture (national and corporate culture), Organisation size, mutual benefit potences, compatibility of CEOs and the higher-ranking anxiety team, ability to work together in operation levels, government laws and regulations, strategic clarity and compatibility, perplexity style, subject matter agniseledge and skills, experience in the related market and assets (Barnes, 2010).In this assignment author is going to analyse and explore Cultural differences between partners and Compatible way style.CultureWhy culture is an important factor?There should be a pagan fit between companies, for example it is difficult to match a bureaucratic culture to non-bureaucratic culture, as resources are not used to obey rigid rules (e.g. managers stamp or signature to process tasks).Internation al joint venture partnership cannot avoid cultural differences there will always be a case of hybrid structures. consort to Swierczek (1994) majority of joint ventures partnership sorrows are caused by cultural related issues and mismatches. A study of 110 joint ventures between America and Asia shows 50% of failure is mostly affected by non-complementary cultures and incompatibilities.Partners culture influences commonly known assumptions, untaped rules and regulations and common discernments. It is important to evaluate the potential impact of the partnerships effects on the general skills, quality, resources and the company systems and organisational structure. Due to the cultural differences and the need of cooperation, there would be a need to compromise however the effect of this needs to be analysed and the impact carefully evaluated (Swierczek, 1994).One important factor that fixs the success rate of an international joint venture partnership is culture compatibility wi thout this partners cannot work together and conflict can occur. Compatible cultures can create selfsame(prenominal) regarding and harmony between the partners.To understand cultures and the factors that could impact the possibility of their compatibility, author has evaluated different angles and viewpoints of culture.According to Hofstede (1984) core aspects of culture areHigh power exceed Communication with higher positioned members and senior managers has formal process with hierarchy organisational system.Low power distance Members feel equal, included in decision-makings and discourse with senior members and environment is more relaxed and informal.Individualism Contributor is focused on self-success, own benefits and objectives.Collectivism Contributor has more interest in team success and group interestHigh uncertainty avoidance Keeping away from risk and getting out of conflictsLow uncertainty avoidance at rest with approaching risks and dealing with disagreementFemini nity In Feminine cultures set and approaches are modest, emotional and considerate.Masculinity This culture is oriented by Competiveness, assertiveness and achievementsIn authors opinion it is evident that cultures with different values can grammatical case conflicts and disagreements, different nations can have different understandings and interpretations and culture as a foundation affects the conflict perplexity style. In multicultural joint ventures, partners communication style will differ and could clash with each other this could be very frustrating and create un favored results. Different culture elbow room different languages, different outlook, beliefs and problem solving approaches.According to Swierczek (1994) Asian culture generally avoids conflicts and when it occurs they seek help from senior members to suggest consequences but in European cultures there is less obedience for hierarchy and when confrontation occurs, the negatives would be pointed out directly.In authors personal experience from Asian and European cultures, people with different cultures have dissimilar attitudes in business, partly because of the educational and withstand methods, that differs in cultural backgrounds.Partnership between two firms could be prospered if cultural differences are realised and analysed in early stages. This would be by identifying the potential problems and conflicts with proposed solutions enabling partners to benefit from constructive aspects of multicultural approach.According to Swierczek (1994) building a correct and effective organisational culture and considering the refer cultures could reduce the manageable conflicts. To make conflict management more effective two methods are introduced1. Compromise styleTo embarrass any win-lose outcome, participants would negotiate and agree to give up their benefits partly so their partner would gain mutual benefits as well. Also when same objectives cannot be reached or more than one agreemen t is on the table, compromising needs to take place.2. Collaborative styleAll the participants need to get involved and identify roots of conflicts and assess the possible outcomes and damages then introduce solutions agreed by everyone (Swierczek, 1994)According to Al-Khalifa and Peterson (1999) in many failed international joint venture (IJV) cases, manufacturing process doesnt last very long and this is caused by the lack of understanding of the local cultural, political and economic environment.Cultures need to fit between the organisations, a lot of international joint ventures collapse because of cultural misunderstanding and differences it is useful to research the local market first before entering the collaboration.An example of cultural difference is looked at by Lynn (2002) between Japanese and American companies, where Americans had the impression that Japanese are high-octane and hardworking but were disappointed when saw different results after starting the internatio nal joint venture in America.In Japaneses view deadlines werent as important as it was for Americans, Japanese were more concentrated on what they want to achieve regardless of time but Americans aimed to finish the work by the deadline however possible. This was a big problem for Americans when they used one of Japanese suppliers and received the order six months late.In authors opinion the interpretation of hardworking and efficiency in different cultures differs where Japanese seem to be aiming for the best result and improving the quality and less concerned roughly the deadlines. This could be very frustrating to opposite partner with different attitude.It is important that companies find a partner that are compatible and have the same perspective and understanding. Culture awareness and a full initial analysis phase, to gather the required information, helps partners to evaluate the possibility of working together successfully and provide the bases so that parties design a fr amework and set a realistic plan that would work for both cultures.Partner complementary skillAccording to Zahra and Elhagrasey, (1994) majority of International joint venture failures are caused by selecting a wrong partner. Partner selection by their brand popularity or reputation is not enough and upgrade research is needed to determine if the partners are compatibleIf Partners skills and strength matches or compliments the business requirements, the partnership objectives could be successfully met these requirements could be market, skills or resource access related.The range of skills that each partner can contribute to a partnership varies. A purpose of a partnership would be to fulfill the business requirements where the inevitable skillsets such as technical skills, market knowledge skills, production skills, management skills or resource access skills are not at a sufficient level.This could also be due to the associated costs or time limitations challenges with producing these skills locally / internally.When two partners skill sets complement each other, partnership can work well together, however if two partners have similar or identical skill, disagreements and competition could occur.Organisations can often learn from the skills and experiences offered by the partner in an international joint venture to enhance their offerings and abilities. This could reduce the needs of future partnerships.Management StyleIt is challenging to manage International joint venture (IJV) companies that have been created by two or more evoke companies. These companies have different structures, goals, management style and organisational cultures.People management conflicts live on evident when partners discuss how the organisation will be managed and who will be in charge.According to Matthews (1999) the problems with international joint venture that require control and structured management areDifferent background and culturesBusiness geographic locationsInevita ble IJV short lifetimeJoint business political issuesThe opportunities where management style could have a critical impact include junto of technical and business skillsAccess to IJV erects staffOrganizational learningAccording to Matthews (1999), developing ethnocentric mindset in organisations tends to concentrate on parent companys management methods, be narrow-minded and inflexible. Traditional IJVs used to concentrate on parent companys management procedures and problem solving process which mostly finish up unsuccessful but some chose to approach global mindset and try to understand different cultures, agree to diversity and apply different management approaches where needed.Multiple IJVs management styleWithin multiple IJVs it is gathered that decentralised approach is more successful than centralised approach. After forming IJVs in different locations and setting up the operations successfully each abroad IJV would plan and react to local market demand. This would improve efficiency and make them able to respond to local customers immediately.According to (Yan and Duan, 2004) matching partners need to have compatible management culture and strategy, consensus on strategies, control and operations management.In authors opinion compatible management style is about managers with efficient communication and skills in creating a balanced relationship between partners.Management control and strategy is the key to be agreed by both parties to disallow any conflicts during the IJV and management control to prevent problems such as flight growth, ineffective use of resources and autonomous goals.Within this process partners need to have a structured management system and build an independent organisational culture.According to Gil and Butler (2003) it is easier to work with an international partner when managers have international business experience and cultural knowledge, this awareness enables them to adapt to environment, have positive attitude, appra ise multicultural environment and identify business partners capabilitiesTherefore having multicultural market knowledge can create an opportunity for both partners to understand and respect cultures, agreeing on what is best for joint partnership.According to Gil and Butler (2003) the stability of the relationship depends on trust, conflict and dependenceinfluenced by management skills affecting IJV performance. both(prenominal) of the important skills in managing IJV areNegotiation skills Compromise, exchange ideas and make decisions at different levels e.g. Engineers and StakeholdersManagement Political skills Negotiate and communicate with government members involved in IJVDiplomacy Dealing with conflicts and resistance within the partner relationshipInter-partner skills Managing partnership, communication, expectations and setting objectivesInfluential skills Influence and motivate team membersManaging ambiguity livery objectives and vision as close as possible.In authors opin ion in hybrid IJV organisations, it is difficult to avoid conflicts and control system with openness management style.First steps in IJV early stages areTo identify problems and related solutions agreed by everyoneTo plan and image that the management strategy matches the IJV environmentFlexible management approach to adopt as changes happenbalance relationship creates harmony and trust, successfulmanagementof an international joint venture mainly depends on a balanced partnership which is based on trust and shared ownership, where parties communicate effectively and distinctly to help efficient move towards common goals and clear objectives.At the same time extra cautious needs to be taken when dealing with sensitiveculturalandregionalissues, witha certaindegreeofdiplomacy, people andlanguageskills.Creating good condition for partnershipPrior to start of any engagement when forming a joint venture partnership, it is essential for both parties to setup an agreement clearly definin g expectations and scope. This will form a clear understanding between partners and helps with effectiveness of communication theory between parties (Barnes, 2010).In authors opinion to increase the chances of relationship survivor it is important to be open about every aspect of the business from beginning in particularly about financial matters to gain the partners trust.Agreements on goals, responsibilities and performance measurements (KPI) in early stages could indicate any problems and warnings, which could be resolved and prevented in early stages.In the meantime flexible relationship and atmosphere is essential to allow freedom of speech and involvement in suggesting improvements or even change of original objectives. Any partnership would fulfil problems and disagreements, however looking at problems positively and promoting an attitude to create situations where win-win approach (Barnes, 2010) is applied is the key for creating a good condition for a successful partnersh ip.There are a number of elements that would significantly impact the condition of an international joint venture experience and environmentsInvest time and trial to get to know the partnerIn an international joint venture partnership it is important for the parties to take the time to get to know each others organisational structure, cultural habits and methods of work.Clear objectives orbit clear objectives and goals prior to any engagements is essential to prevent any ambiguity and conflicts.Management styleIJV complex environment could create conflict and ambiguity between partners, compatible management skills could create balanced relationship.Roles and responsibility definition and assignmentIn a complex joint venture partnership with a large number of unknowns and a mixture of cultures, habits, structures and skillsets, roles and responsibilities ought to be defined clearly to avoid disappointment and ensure effective partnership condition.Expectation managementOpen and hon est communications from start of the business to the end is essential, people involved need to understand what will be achieved and when this will be achieved. Everyone needs to understand the objectives and progress of them. Misunderstood or unrealistic expectations can make a successful process ending as a failure.Create TrustWhen an environment is stabilised and partners have agreed on compatible goals with set mutual benefits, both parties need to work on gaining each others trust to enable smooth process avoiding unnecessary red tapes to maximise efficiency and hands effectiveness.Risk forecast, evaluation and preventionIt is important for companies in a joint venture partnership, to identify and evaluate the risks related to the partnership program and the associated impacts.Identifying problems and risk evaluation in early stages would prevent any unexpected surprises during the process. Also this would give an opportunity toanalyse issues and find solutions.Following are ex amples of potential risks with IJV partnershipLanguage barriersMultinational partnership involves different languages a solution needs to be applied to overcome language barriers. Full assurance on interpreters and translators could introduce additional risks where individuals do not have the required technical and related business experiences. It is highly advantageous if the employee involved with the business strategy, have related knowledge, background as well as being bilingual.CultureDifferent cultures represent unknowns and risks. Respecting multicultural environment and having awareness could prevent future conflicts, create opportunities to utilise multinational benefits and minimize the level of disagreements between parties.PoliticsGovernment laws and regulations vary in different countries. Time need to be invested to fully understand the local policies where the venture is based.Organisational strategiesOrganisational strategies mismatch between companies could directl y or indirectly affect the objectives. These inconsistencies are required to be identified and highlighted to be considered during the planning phase to avoid potential future issues.Geographic considerationLocal and related market condition as well as work ethic should be considered and matching business environment appropriately applied.CommunicationClear communication is crucial in IJV environment where a lot of conflicts and confusion could occur because of cultural differences. Setting an open networks and freedom where employees can approach management levels easily could create an opportunity for everyone to get involved.ConclusionFor countries to develop, create new technologies, use new facilities market and products, joint venture is very beneficial. Joint venture is an opportunity to boost businesses and continues to occur in more countries. Every international joint venture starts with different cultures and because of its multicultural nature it is ineluctable to exper ience disagreements.Creating mutual benefits and harmonious environments with common objectives and agreed values can overcome the cultural differences and create common culture which benefits partners and uses the positive side of multicultural partnership.It capability be more effective to invest in countries that have similar cultures because it would be easier to understand the business networks, market needs and to resolve problems.With countries developing to be multicultural and expanded communication network reaching further distances, it is getting easier to approach new opportunities. People are interested to know other cultures and learn about others. The challenges and complexity in different cultures is unavoidable but nations awareness is very high hence their approach to each other is very positive and relaxed.While achieving strategic fit is more fundemental to the viability of a partnership,a good cultural fit optimises the potential of the partnership and helps to avoid the threats to its continuation which arise from misunderstanding and antipathy.While it is important for partners in an IJV to establish a strategic fit to help improve feasibility of a partnership, an effective cultural match between the companies creates opportunities for a stronger relationship. This helps to avoid misunderstanding, risks and potential issues that could cause damage the partnership.Partners need to establish trust, honesty and priorities to understand elements of successful IJV, structuring relative management style, which is independent from parents company strategy and assigning partners management responsibilities according to their expertise promises positive outcome at the end of the partnership.Partners require creating a relationship based on honesty trust. It is vital for the parties to invest time and resource to understand fundamentals of a successful IJV partnership. Reforming and creating a relative management strategy, which is independent fr om partner companies are key to a successful joint venture partnership.